Money in the bank, or Guitars ?!

[vindibona1]

Originally Posted by Napman41

Money in the bank is always the best choose.

Forgive me, but I respectfully disagree. An asset is an asset is an asset. Musical instruments while not liquid are assets, have value and will never have zero value. While you cannot say for sure how much an instrument will be worth in 1, 2 or 10 years, you can say the same thing for money as well. Money floats, has token value and while it floats so does the cost of what other assets or services you can convert it into, particularly in a global market.

As a personal example, I used to collect used, higher end trumpets starting in 1996 or so. In 2013 I no longer needed nor wanted to keep all of my trumpets so I began selling them off and ended up purchasing my entire collection of guitars (at the time) with the PROFITS from the sale of my trumpets. In other words, I had guitars for free and still had the principal of the cash that I paid for my trumpets. If we examine what happened to our investments in 2008 and the interest paid on cash in the bank between 2008 and 2013 having that money in musical instruments didn't work out too poorly.

But as I said earlier... Buying instruments to park money is NOT an investment, but a hedge. It can go either way, which is why you need to have rules.

[lodi_55]

Depends on about a billion different factors...

At the end of the day, if you can afford it and are willing to come up short on your savings/investment plans, then go for it. People do the same buying cars, motorcycles, timeshares, etc. all the time.

I have a few nice guitars and am happy to have not had to make difficult decisions when buying them.

If the decision is really bugging you, then it's probably not the time to pull the trigger on 10k of anything.

[Adam Gatica]

Originally Posted by fazool

There is no difference.



A lot of people lose sight of this concept.



If I have a guitar that I could sell at any time for $2000, then every single day I have it I have made the conscious choice that I want this guitar instead of $2000.



Just because I spent the money and bought the guitar is doesn't mean "well I might as well keep it because the $2000 is already spent" - that is not real. If the item retains resale value then the money is never "spent" it just changed forms.

While that is true. If you invest the 2K to where it are getting annual interest added to the 2K; that is a more certain deal.

In regards to the instrument retaining its value; you’re right. But, you could have that $2K guitar and the market could be bad to where people don’t want to purchase.

[Johnny K]

Originally Posted by Erithon

This is precisely how I operate. $2000 in the bank is great, but $2000 in (the right) guitar can be interacted with. And if I want or need the liquidity, I'll just sell it.

I knew a guy who did this with Rolex watches.

[ghostnote]

I'd take the 10 grand. It'd be a nice down payment on a new car, which I could then use to go out and buy a new guitar.

[Adam Gatica]

Originally Posted by ghostnote

I'd take the 10 grand. It'd be a nice down payment on a new car, which I could then use to go out and buy a new guitar.

I mean, anyone can do as they wish with their money. If you look at a purchase (investment) and depreciation over time; buying a new car will not hold its value at all.

[beninma]

If you've got money you can buy guitars.

But I think it's a pretty steep battle to win if you're going to argue guitars are better investments than... actual investments.

Guitars look pretty volatile from where I'm sitting. The market could collapse, and your house could burn down or something. My guess is you're not getting the insurance to pay you what they're worth if something happens, and there's no insurance against the market getting flooded with used guitars at some point.

[aknow]

Originally Posted by 1Charlie

Guitars are wooden assets. But even purchased intelligently, you are unlikely to make any significant money off of them in the short term, should you need to liquidate.

In the longer term, Martins and Gibsons from the '30's to '50's are a pretty safe bet to keep appreciating. That is where most of my investment is.

There are no absolutes, and you can't predict what will always happen. Although it was an enigma, I sold my first electric guitar for 350X what it cost me, bought a nice home with the proceeds. I have a hard time understanding why bank interest used to be 3-5% and now interest is 0.10%. As an investor, I find that insulting and disingenuous.

[Steve-arino]

Originally Posted by ghostnote

I'd take the 10 grand. It'd be a nice down payment on a new car, which I could then use to go out and buy a new guitar.

Now you're talkin!!!

[guitar george]

Originally Posted by aknow

I have a hard time understanding why bank interest used to be 3-5% and now interest is 0.10%. As an investor, I find that insulting and disingenuous.

My savings account pays nothing unless I have a minimum balance of $5,000.00 during the month, so, I get nothing. My daily-interest chequing account pays about 0.10% on the daily balance, so, I get some interest. Doesn't seem quite right to me.

[jojobean39]

It really depends where you are in life. I believe people should have an emergency fund. Someone mentioned Dave Ramsey earlier. He recommends having 6 months of expenses saved up. That’s good advice. I’ve always had that. And it means I never have an emergency. I’ve had expenses come up- but they aren’t emergencies if you have money for them. If you don’t have $10k in the bank, you shouldn’t spend it on guitars.

Rant ahead... Your emergency fund isn’t really meant to ‘make’ you money. It’s meant to keep you safe. People who say it’s dumb to keep that much cash in the bank don’t really understand personal finance, in my opinion. Nearly every reputable financial advisor would recommend that you have several months expenses in a LIQUID account.

I was pretty young when I paid off my first house, 31. My wife and I worked hard and paid extra. When that was done, I spent about $8k on a guitar. I had the cash and it felt like a good present for me. It’s probably the only guitar I’ve ever purchased that I would lose a decent amount if I sold. But I bought it for me. I’ll never sell it.

For me, if someone gave me $10k, I’d pay down some more on my current house. I don’t have debt other than that. Trying to pay that house off soon too. I have a lot of guitars. I like my collection. In order to buy a new one, I save up. Maybe use extra bonus money or whatever. But if I got a large sum of cash, I’d throw it on the mortgage.

[Goodallboy]

Originally Posted by Frozen Rat

10k in the bank is the same as 10k in guitars. In fact the guitars will gain value in relation to inflation or other factors (assuming you don't damage them). Money in the bank will lose value in direct relation to inflation. Now, if we're talking stocks or bonds or otherwise, that's different.

No, not even close to being accurate.

10K in the bank is an emergency fund. It's meant to be able to be accessed immediately. 10K in guitars is quite something else. They aren't immediately marketable, so your comparison is completely false.

Young people, never take financial advice from a guitar forum discussion thread.

[Daveyo]

2 grand for a used d28 or larrivee d09
The rest in the bank
Dave

[Blueser]

Thankfully I am blessed, in that I have the guitars I want without worrying about the cash aspect, but if this was a concern, I would focus on cash and not guitars.

[Steadfastly]

I'll let John Anderson Answer this for me.