March 14, 2007

Waiting: Physical Products vs Financial Products

All desires have been denied to put me in this state of mind
Another year older and what have I done
My aspirations have shriveled in the sun
I'm crippled by guilt, blinded by science
I've been waiting for tomorrow all of my life.
--- The The (1983)
Around us, products keep improving but prices don't increase much, if at all. So waiting to make a purchase is a great idea. For proof, look at irons, lawn mowers, cars, computers and high definition TVs. By waiting, you get
  • a better product for roughly the same price
  • a lower price for the same product
Toyota is known for kaizen, which means continuous improvement. Their Cambridge, Ontario facility received 10,000 employee suggestions last year and implemented an astounding 9,500. You benefit from this "Relentless or Passionate Pursuit of Perfection".
For more details, see my review Comparing Factory Tours for GM, Ford and Toyota
Paralyzed by Waiting
It's easy to wait and wait for better and better. There's a trade off between having something good now and waiting forever.

Computers are a good example. New models are launched continually and the computer we have still works. More or less. Then less and less. Finally, we realize we've waited too long and buy. My solution is to get a new high quality computer every two years, cascade the older machine to eager family members and donate the oldest computer. That's a win all around.

A fixed schedule doesn't work for every purchase (or every budget). Do you buy a new house on a fixed schedule? Do you lease your cars or keep them forever? A compelling argument would be needed for us to replace our fridge.

Life and Health Insurance
While life and health insurance products usually improve, you'll probably end up paying more
  • you're older
  • your health may be worse
Both of these factors increase the prices. Your credit rating probably improves with time. Your insurability rating does not. You may not qualify for insurance in the future, even if you have the money. That can be a tough blow.

If your goal is to save for retirement, waiting works against you because your investments have fewer years to grow.

With insurance, now is better than later. Safe is better than sorry.

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