A brief conversation on laptops.
When I bought the laptop I am typing this post on nearly two years ago, it was to be my first laptop. I know, I know, I am behind the times. Since my purchase of nearly $1500, the computing environment has changed a bit, as it usually does. I have come to realize that it is neither cost effective nor intelligent to buy an expensive laptop unless you are a specialized user. Here is my list of reasons why a user should buy a cheap laptop compared to a specialized laptop:
Most laptop users are casual computer users who use their laptop for little more than word processing/spreadsheets, internet, online games. Most users simply do not need a specialized (read: expensive) laptop with 1 TB of ram and a 900 GB solid state hard drive.
Most users will want a new laptop before their old one breaks or is otherwise completely unusable. Simply put, people like new stuff.
The cost of a new specialized laptop like the Alienware from Dell starts at $2199. The cost of the new laptop in the newspaper circular that I advised a friend to purchase instead, $400. Take the difference, $1799, and add it into your savings account. More on this later.
You won't use all the features you pay extra for. Really.
So four reasons may not be enough to dissuade you from buying a more expensive one for yourself or your loved ones. Let's look at the financial benefits, both immediate, and potential long term.
Take the difference of $1799 and save it for a rainy day.
Take the difference of $1799 and put it into a Money Market Account at 1-2% (MMA) and save for your next laptop or computing purchase.
Put the difference in a CD at 1-3% your bank.
Put the difference in a mixture of stock and bond index funds in your Roth IRA. Warren Buffet says the stock market will return 7% annually over time. Obviously last year that didn't work out, but keep the faith. Let's say you get 5% returns annually. That $1799 could turn into 76,084.82 if you add another $500 annually to it for 40 years. For a younger person, this could be a huge starter conversation for the benefits of compound interest and why the laptop may not be the most important thing in the world.