Save Money by Buying in Bulk

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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

Frugal dad – focusing my money and energy towards happiness and the things that matter most since around 1985.

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2 comments

    • Jenn on September 22, 2010 at 11:16 am

    How about buying in bulk plus using coupons. I have recently become a lover of coupons!!!!!!!!!! I got MORE for LESS last week when diapers went on sale …. $8 off per package!!! Big savings! Instead of $17 per/pkg. the diapers were $9. I bought 4 packages. Then I used my $2 off coupons per/pkg. So those 4 packages of diapers cost me $40 less than I would have paid at regular price… and they are the jumbo packs so they should last a while.

    Look for sales and combine with your coupons!!!!!!!!!!! I’m learning how exciting it is to save at the cash register. Thanks Froogalism!!!

    • Jason on September 22, 2010 at 3:40 pm
      Author

    Thanks for your comment, Jenn. You got a terrific price on those diapers. Combining coupons with buying in bulk makes your guaranteed rates of return even better. Good thinking. On occassion, you can even use multiple coupons on one purchase so that you can get the item for free. If the coupon doesn’t specify that you cannot combine it or that only one coupon is allowed per purchase, you should be able to do so. Thanks again for your comment. Keep them coming.

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