Investment vs. consumption 1 | Finance & Capital Markets | Khan Academy

The difference between investment and consumption. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/investment-vs-consumption-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/return-on-capital?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: When are you using capital to create more things (investment) vs. for consumption (we all need to consume a bit to be happy). When you do invest, how do you compare risk to return? Can capital include human abilities? This tutorial hodge-podge covers it all. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Comments

1. This is obviously a concept that has been simplified for ease of understanding, as well as to send a message, however the message sent seems counterintuitive to the rest of the video. A better example of raw consumption would have been gambling, or to take the $100,000 and buy an expensive car, or on a smaller scale buy into the technology upgrade cycle. Upgrading your house may or may not be frivolous, but it isn't prudent to make a blanket statement that says it is, and should be avoided.
2. investment，lol u can go talk to your mom
3. What is the blackboard computer software used on videos?
4. The problem with thinking of these things as investments is the time between when you build your improvement and when you are able to sell it. If you bought the house in order to sell it, that would be one thing. But to "invest" in something that you're going to hold onto for another 10 years will give you very low rates of return. The additional risk makes it an even poorer choice.
5. Playing Devil's Advocate for a moment, one might argue that the extra money that you can make by installing the new bathroom, etc. is a result of your willingness to put up with the construction (noise, work) and of your artistic vision. There is the risk that the future buyers won't enjoy the fruits of your labor as much as you'd hoped, but that doesn't mean that your speculation isn't an investment; you just misjudged the market.
6. In capitalism investment doesn't exist without concumption. I would argue that consumption is productive to society by allowing the granite factory worker to be paid, the company that makes the hardwood floor to be profitable, ect. The only problem is that it has to be an ever growing system finding new products to sell. We end consuming conspicuously consuming. However the economy demands consumption to exist. Easy profits in useless products. Captialism
7. @djsuperstar717 If you read only for entertainment it's Consumption. If you read only to educate yourself it's an Investment. Probably it will be both, it's up you you what the ratio is.
8. @djsuperstar717 freakan geat question. i would argue that it is an investment because the future of waste will be e-waste (and on a side note you are helping save trees) . The E-waste industry will invest in new plants. no longer which will create new electronics products from your old electronics. but it comes down to how efficient they can be in executing their plans
9. I really enjoy the way you laid this out. good job buddy
10. what you dont invest, you consume and vice versa. countries with a high savings9investment) tend to be technological better off and hence have a higher output per worker and higher standard of living. yhowever the united states gdp is mostly made up of consumption, about 70% if not higher. if anything a consumption tax seems like a viable solution to decrease consumptions and hence increase investment which would lead to more growth.
11. very nice
12. Is an Amazon Kindle an Investment or Consumption?
13. First off as others have said buying granite and such likethat creates further jobs a direct benefit to the community. Investing on your house isn't as direct as 100 k and 150 k out . It's very tricky. Too much investement and you won't get return if the land in your area is too cheap. However if your 100k house is on a street with 300k homes your better off doing the upgrade, to help everones on your streets wealth
14. my wife is gonna kill me.....i spent all of the sunday attached to your financial video's..... it is sooo addictive.......thanks
15. yeah we are so brainwashed by consumerism that we confuse indulgence and investment
16. i dont agree with u sal when u said that spending $100000 on items like granite counter tops etc will not make any collective contribution to society. Think about a person who who deals in granite business dont u think his business will flourish when you are spending money on these features of the house. that business will do flourish and he may be able to contribute positively towards society when lets say.. he pay bonuses to employees working in the granite sector.
17. I'm definitely happy renting right now vs owning a home mortgage. But I would imagine that you could get some damn good deals out of this mess if you have the money on hand to buy a house. Financing is obviously not going to happen too easily.
18. Lol, your wife must not like this video. I'm most certain in the back of her mind she would like that kitchen with the granite counter tops and the wooden floors.
19. Very egalitarian ideas that you resolve on. Yes, the bubble was constructed on social ideas of egalitarianism but ended with America's brokers once again searching for unlimited wealth. Promising a dream of homeownership is evil, but falsifying profits on a proven bad security concept from the original savings and loan bailout is simply criminal.