Like many people in the crypto space, and even more in the financial arena, I am interested and follow various metrics for my financial investments. One of them is the return on investment.
I imagine most people reading my blog know what ROI is, but let's add here a definition of it from Investopedia:
I don't really want to talk about ROI in this post. I had done that on other occasions.
What I'd like to talk about instead is what you calculate ROI for.
After a pretty long conversation I had today with someone, I've realized that I am more inclined to calculate ROI for financial investments, rather than physical ones.
I am not involved in real estate, otherwise, that would likely be a domain where I'd want to know after how many years I get my investment back.
But for smaller physical investments I didn't have this habit of calculating, where possible, after how many years I get my money back, and to decide if it's worth investing or not based on that number.
It was mostly a decision based on wants or needs, but not going into details regarding costs versus benefits long term. That's only half true. If we take a new fridge, its power consumption is pretty high on the list of things to check. But for a vacuum cleaner, I have no idea how much power one would use because I never check that when I purchase it.
Here's an area where the guy I talked to convinced me it's very important to calculate ROI: when choosing the heating system and whether to switch to a new one or continue with the one you have (or upgrade it). Something important I haven't considered for example, in all cases: they all have a limited time of functioning within parameters or until they break down. So, in the case of a heating system, is a new one more profitable than the old one? If yes, does it return the investment in a short enough time that you still enjoy the higher profitability until it "expires" (or until you change it again)?
That's a sound judgment, I must admit.
This is one example, but we can find more if we keep thinking in ROI terms. This guy certainly thinks this way.
