Economy

I like the way Andrew Tobias talks about bulk buying in The Only Investment Guide You’ll Ever Need: You can think of each bulk purchase as an investment, with a return equal to the savings you accrue by not paying a higher unit price for smaller purchases. If you lay out $110 today to buy a 12-bottle case of wine you’ll drink over the next month, instead of buying bottles one at a time for $10 each, that’s like earning a $10 return on a $110 investment in one month. On an annualized basis, that’s a rate of return well over 100 percent — far better than the stock market.

But that analysis relies on a few assumptions, the most important being that you will use the items you purchase. If you let products spoil, or you decide you don’t like them anymore halfway through the box, or if you forget what drawer your huge package of batteries is in, then you’re not getting as much value out of your bulk purchase as you had planned. Your effective investment return is likely to be negative; you would have been better off paying more per unit to buy less.