Meaningful Returns

When I was a kid with an amazingly active imagination and a good bit of time on my hands, I would often find myself rummaging about the house for tape to use on some brainy idea or other, generally involving Batman figurines. And I can remember to this day how frustrated I would get with masking tape. I mean, have you ever tried using masking tape as a structural adhesive? To tape a Batman to the top of a remote controlled car or something? IT’S THE WORST. I would just sit there and be stupefied by the fact that adults actually spent money on this tape, because clearly it was broken.

But of course masking tape isn’t meant to tape things together or repair things or seal things–it’s only really meant to stick on a wall when you’re painting it, or at the most as a price tag on a sweatshirt at a yard sale.

Adults often do the same thing–mix up one thing for the other because we haven’t truly understood the purpose of the thing. And unfortunately our finances are one place where the mixups happen quite frequently. Here are some to watch out for:

• Insurance is not meant to be an investment. So generally, don’t buy insurance that is trying to act like an investment (permanent life insurance, many annuities, etc.) unless a qualified someone who’s not selling the product has advised you that it’s a good idea.
• The stock market is not meant to be a short term savings vehicle. Wanting to buy a house in a couple of years? Don’t save in the stock market.
• A home is not meant to be a financial investment. An emotional one? Sure.
• Your spending habits are not meant to be an indication of your wealth. In fact, these two are often at odds with each other. It’s a pithy but true statement that to be a millionaire is literally the opposite of spending a million dollars.