Do explain to me how it COSTS money when money is not invested? I am dying to hear the explanation for this misconception. Here is something to help those out who seem to be afflicted with the idea that if their money is not EARNING money then it must be COSTING them:
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cost/kôst/
verb
- 1.
(of an object or action) require the payment of (a specified sum of money) before it can be acquired or done.
"each issue of the magazine costs $2.25"
|
price, asking price, market price, selling price, fee, tariff, fare, toll, levy, charge, hire charge, rental; More |
Notice that the definition does not include the concept that if something is sitting doing nothing then it is COSTING. It is not costing anything. Nor is it EARNING anything.
It is absolutely true, you keep conflating COST with EARNING. They are two completely different things.
The idea that if your money is not invested somewhere it is somehow COSTING you is a sales tactic used by those who would like to play with your money on the stock market. You just have to give them your money because if you don't, it is COSTING you. No, it isn't.
Someone in this thread got quite insulting stating that I did not grasp K-5 mathematics. That is interesting because that individual cannot tell the difference between COST and EARNINGS.
Sit down with an accountant sometime, tell him that one of your COSTS is a machine you have that is doing nothing and you would like it listed in your COST of doing business column so you can deduct that COST on your income taxes. See what he says. If you are running a business and you do have a machine doing nothing all the time then it is in fact preventing you from EARNING more because it is occupying floor space that could be productive. Don't confuse COST and the potential to EARN. That is as bad as sales that tell you that you will SAVE X amount of money by SPENDING your money. You are not saving anything you are spending. What you are doing is lowering your COST. But nobody in marketing wants to tell you that it is going to COST you, SAVING sounds so much better.
Simply put: if you cannot put something in the expense column then it is not costing you anything. Labor is an expense, material is an expense, electricity is an expense, insurance is an expense, etc. A machine doing nothing is not an expense. What number would you write in the Expense column for it? How much it did not earn on the stock market? What if the stock market was in a decline? Would you then list it as an earning since having it prevented you from LOSING money?