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October 05, 2025, 05:08:17 PM |
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Does the increase in the price of the invested product mean only profit or loss of purchasing power?
Is the main goal of investment simply to earn more dollars by investing less? Or should people's goal be the desire to maintain the value of their assets through investment. I have heard many people say that I bought such and such a thing for so many dollars, but after saving it for 10 years, I was able to sell it for so many dollars. In that case, is the entire profit that they were able to sell for more dollars? Not at all -
As time goes by, due to the inflation of fiat currency, the prices of things are increasing day by day, which we see as profit, but at the same time our purchasing power is decreasing. For example, suppose that 10 years ago, the amount of money that was needed to meet the needs of a family per month could have purchased 1 ounce of gold at that time. In the present time, the price of gold has increased a lot, but with the increase in the price of gold, the cost of meeting the same amount of demand of the same family has increased. If we calculate that at the present price of gold, the family has to sell 1 ounce of gold to meet the demand of that family for 1 month. Maybe a little money can be saved from the price of one ounce of gold. That little money may be its profit.
So it seems to me that if we have stored something for a long time and then sell it at a price higher than the purchase price, then the entire price at which we sold it would not be right to count it as profit.
Therefore, we can calculate the amount of profit like this,
Profit = (Sales price - Purchase price) - Decrease in purchasing power
For example, suppose a person invested $ 3,000, which is equal to his family's one-month expenses 10 years ago. At the present time, the value of his invested assets has stood at $ 12,000, and his family's one-month expenses have increased to $ 9,000. That is, the purchasing power has decreased by $9000-$3000=$6000
Then the amount of profit of that person from that investment = (12000-3000) - 6000= $3000
That is, the amount of profit from his investment should be considered as $3000 instead of $9000.
Now the question is, if the amount of loss in purchasing power is excluded from the amount of profit, in which cases can the percentage of profit be increased by investing? In that case, the first name that comes to mind is Bitcoin. Since the inception of Bitcoin, we have seen that it has significantly protected the value of assets from inflation and since its supply is fixed, its price has increased a lot in a short time due to its decentralization, so it has been possible to profit a lot from it due to previous investments. If the coin can maintain its current status, then it will play an effective role in maintaining the value of assets in the past as well as gaining the trust of investors by providing more profits than other assets.
What is your opinion on this? Will Bitcoin play an effective role in bringing investors maximum profits, excluding the indicator of declining purchasing power?
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