What is investing in Raw goods? Simply put, it means buying the typical food and goods a household would typically use in larger quantities at reduced prices to save money over the long term. This savings is equivalent to interest earned on investments. So when you save money on items that you would be purchasing anyways for household use, you are investing in raw goods, and may be able to get a better rate of return than some of the best choices on the stock market.
The savings is equivelent to interest earned on investments only when the purchases are items that would have been purchased regardless of the price.
Here are some examples:
First, if one were to normally purchase a loaf of bread for $1.00, but had a $0.50 off coupon for a premium brand of bread that cost $2.00, and purchased the premium bread instead. The Shopper has taken a loss of $0.50 instead of earning an investment. This is because money has spent money that would typically would not have been spent.
If there was a paticular brand of hair shampoo and conditioner that was prefered, and cost $1.00 per bottle, and a coupon could be found (in larger quanities) or a sale was offered for a Buy One Get One Free, where each bottle effectly cost $0.50, the shopper could save (or earn an return) of $0.50 for each bottle they purchased and used under normal conditions. Lets assume that a bottle of each would last a month before running out, and that the shelf life was estimated about 3 years. The wise shopper, could decided to purchase a 6 month, 1 year, or even 2 year supply of shampoo and conditioner. There are many considerations (listed below) in how much of a supply to buy, but as long as they would have been purchased anyways, and used normally, the shopper can earn quite a return on their investment. If the shopper were to buy a 1-Year supply (12 Bottles of each), which would cost $12.00, they will instantly save (earn) $12.00 that they would be spending on these goods throughout the year. Thus over the year, they will have earned $12.00 by not having to buy shampoo or conditioner again during that time frame.
Considerations to Purchasing Amounts
Expiration Dates - Products thrown away because they are expired are a LOSS, and must be deducted from your earnings. Be very aware of expiration dates.
Consumption Rates - The rate that products are consumed by a family will need to be generally known, so that items are not over purchased, and left in stock past the Expiration Dates.
Lower Sales Prices Later - Just because a price is 50% off now, does not mean that the price may not be lower later. A good Raw Goods Investor can use Sales and Coupons together and get many items at 70%, 80%, 90% off or even Free! Knowing how often an item goes on sales is important. Buying a 3-Year supply at 50% off of something will cause a great sinking feeling when 30 days later the entire 3-year supply could have been purchased for Free.
Desire - Sometimes a product looses its interest after a period of time. A family favorite today may be distasteful next year, and with 2 more years of the item in stock…
Locations - Everything must be stored somewhere. Most needs to be stored at a reasonable temperature, which means in the house. Paying for storage should not be an option.