Purchasing staples like toilet paper, laundry detergent, or paper towels in bulk can save you lots of money and reduce the amount of times that you need go shopping. Buying in bulk is one of my personal favourite ways to get more with less. It also means that I almost never run out of stuff that is used regularly in our home. It is a frugal living must.
The key reason why buying in bulk is so terrific is that it gives you a very high and guaranteed rate of return. If I were to offer you a guaranteed, risk-free rate of return of, let’s say 33%, you would probably (in most cases, rightly so) think that my offer was too good to be true. In virtually all cases, you would be right; my deal would be too good to be true. The fact is, however, that stores offer sales on everyday consumables all the time.
The average yearly rate of return of the Dow Jones Industrial Average (DJIA) over the past eighty years or so (since the market crash in 1929) is just under 9%. Investors often measure their portfolio performance relative to this benchmark (over 9% = happy, below 9% = sad). These returns, of course, fluctuate wildly each year and there is no guarantee that the price you paid for a stock will be lower that the price you end up selling it for (i.e. making a profit) even if you do hold it for a long time. This underscored the beauty of buying something that you use regularly when it’s on sale and locking in your savings at a guaranteed and very high rate.
The guaranteed rate of return makes it easy for me to justify putting a lot of money up front to lock in my long term savings. This week, for example, I bought three large 62 use containers of Tide Coldwater laundry detergent on sale for $9.97 each. Their regular price was $15.99. This represents a percentage savings of ($15.99 – $9.97 = $6.02 –> $6.02 / $15.99 = 37.6 % ! This is music to frugal minded ears. Where else can I get a guaranteed rate of return anywhere near that? The answer is nowhere ! All other returns require increasing degrees of risk in order to increase potential returns. Only buying stuff you use all the time when it’s on sale offers you this unparalleled opportunity.
Once again, here are the benefits:
1. A guaranteed, risk-free, and very high rate of return
2. You never run out of stuff you use all the time
3. Fewer trips to the store
In short, buying in bulk makes a lot of sense (guaranteed!).
Another frugal living idea brought to you by froogalism.com