I wonder if that many people are aiming for financial investment when they buy day to day stuff. Even when they buy property- which can be good to invest in if you're rich and know what you're doing. The majority of people though I imagine buy property to live in. They may hope to pass on that investment to loved ones when they die. They may end up needing to sell it- if they need money to pay for health/ nursing home care.
I tend to find people who buy stuff for investment do it consciously though. Collectors for instance- won't remove things from the packaging. They may not get the item restored- because they know it decreases the value. Some people get pleasure from both collecting and profiting from knowing when to buy and sell- almost like buying/ selling shares and, playing the stock market. I think maybe more people- especially those with less disposable income need to use what they buy though.
But sure- we invest money in the hopes of improving our emotions. We also do other things for that. We invest time and energy if we hope to improve our prospects in life. Education is both a time and money investment- in the hopes we might land a more enjoyable and higher paying job. We may invest effort and discipline into our appearance to try and improve our chances impressing others- both socially and romantically. We may also invest time, money and effort into our mental health, if we know certain issues hold us back. I wish I'd invested more into tackiling my social anxiety. Maybe the biggest investments we can make are into personal development. They may not be as financially profitable as a Ming vase but then, maybe some things money can't buy.
Would a pet be a good investment for instance? In most cases- probably not. It will require vast amounts of resources to keep. It likely depreciates in value as it ages. But, the emotional reward could be beyond measure. Of course, there will be 'prize' animals out there. Bought and sold as status symbols- sadly quite often- if it encourages illegal activity and cruelty.
In which sense is committing suicide an investment? Theoretically, there is an assisted suicide industry. People are investing in lethal substances and trade their money for it.
This is the conventional definition of investment.
1. the act of putting money, effort, time, etc. into something to make a profit…
dictionary.cambridge.org
"the act of putting money, effort, time, etc. into something to make a profit or get an advantage, or the money, effort, time, etc. used to do this:"
The advantage is for suicidal people that their sufffering ends. But do people actually get something in reward? Their life and pain is taken. They lose something even if this is what they intentionally want.
The process of contemplating suicide is different for every single individual. Some gain knowledge, many say it is very painful. I wouldn't be here in this interesting forum if I wasn't suicidal. So in some sense my suicidality opened me doors which I would never have opened otherwise.
But the actual act of committing suicide. Can this be seen as an investment? Maybe more in a metaphorical sense. I just had this question because in this forum because every question has this ubiquitious link.
Sorry if I was a bit unclear in how I explained ROI earlier — I realize it might have come across as confusing.
So I'll approach this from more of a Capital Expenditures (CapEx) / real estate / hotel perspective, since its physical assets.
This will be kind of all over the place but you should be used to that with me.
ROI — defined simply as profit ÷ investment — is quick, clear, and easy to communicate. It's the number most people think of when they hear "return." But ROI alone doesn't tell you two of the most important things about an investment: how long it takes and how efficiently your money is working over time. A 50% return earned in one year is very different from that same 50% earned over five years. ROI can't show that distinction, which is why professional finance relies on more complete tools — IRR and NPV.
Both are built on the same foundation: the time value of money. This is the simple idea that a dollar today is worth more than a dollar tomorrow because you can invest today's dollar, earn interest on it, or use it to generate returns elsewhere. Inflation also chips away at purchasing power over time, so the longer you wait to receive a dollar, the less it's actually worth in today's terms.
To make fair comparisons between spending now and earning later, analysts "discount" those future cash flows back to their value in today's dollars. The discount rate they use reflects the company's cost of capital, the project's risk, and the opportunity cost of using that money for one project instead of another. For a hotel or real estate company, that rate might be around 10–12%. For a venture capital firm taking on higher uncertainty, it might be 20–30%.
This rate is often set equal to or just above the company's hurdle rate — the minimum acceptable return that justifies taking the investment risk. In other words, the hurdle rate is your internal benchmark for whether a project is worth doing.
Net Present Value (NPV) takes all of this into account. It's the clearest way to measure how much value a project actually adds today, after accounting for time and risk. NPV calculates the present value of all future cash inflows and subtracts the present value of all outflows, including the upfront cost. Each year's expected cash flow is discounted using that rate — say 10% — to reflect how much it's worth in today's money.
Here's how it works in practice. Suppose a hotel is considering a $100,000 investment in high-efficiency laundry boilers that are expected to save $20,000 per year for seven years. Using a 10% discount rate, you'd apply this formula to each year's savings:
Present Value = Future Cash Flow ÷ (1 + r)ⁿ
where r is 10%, and n is the year number.
Each year's savings is worth a little less than the year before, because waiting longer carries both uncertainty and opportunity cost. Once you total all those discounted savings and subtract the $100,000 investment, the remainder is your Net Present Value.
If NPV is positive — say +$15,000 — that means the project adds $15,000 in value above what it costs. It's creating wealth for ownership. If it's negative, it means the project fails to meet the required return; that money would be better used elsewhere.
Internal Rate of Return (IRR) is the close cousin of NPV. It's the discount rate that makes the NPV equal zero — the break-even point where the project's value and cost are perfectly balanced. You can think of IRR as the project's true annualized rate of return, factoring in all inflows and outflows over its full life.
Once IRR is calculated, management compares it to the company's hurdle rate. If the IRR comes in higher than the hurdle, the project qualifies as a sound investment. If it's lower, it doesn't clear the bar. In capital planning meetings, this often gets phrased as, "Does this project outperform our cost of capital — and by how much?"
ROI (Return on Investment), by contrast, is really just a shorthand. It's simple, intuitive, and useful for quick comparisons or short-term projects, but it doesn't account for time, risk, or compounding. ROI can tell you how much you'll make, but not how fast or how reliably. That's why ROI is best used as a communication tool — not the sole decision metric for multi-year investments.
This framework applies everywhere — hospitality, real estate, private equity, venture capital, public equities, infrastructure, and beyond.
ROI still has value as a headline number, but for any serious capital planning, IRR and NPV are the real workhorses. They answer the questions ROI can't:
- How quickly does the investment pay itself back?
- How much value does it create today after adjusting for time and risk?
- And most importantly, does it beat the hurdle rate that defines success?
When someone asks, "What's the ROI on this new boiler?", what they really mean is, "If we spend extra money now, will it save enough in maintenance, energy, downtime, or increased revenue later to justify it?"
In practice, ROI isn't just about a percentage — it's about comparing incremental cost and incremental cash flow between doing a project and not doing it. To model that, you calculate the payback period, IRR, or NPV, with ROI sometimes used as a quick summary metric. These models can reflect both revenue increases and cost savings. For example, adding a lobby bar to drive new food and beverage revenue or expanding meeting space to capture group business would fall under revenue growth. On the savings side, projects like installing VFDs on air handlers, replacing an old laundry boiler with a high-efficiency unit, or retrofitting LED lighting all cut energy and maintenance costs.
Generally, only discretionary or "above-baseline" projects receive an ROI analysis. Routine or mandatory replacements — things like like-for-like carpet or end-of-life equipment swaps — are necessary to maintain operations and are simply expensed or capitalized according to policy. They don't typically require financial modeling because they don't generate incremental return.
ROI projects are discretionary and evaluate incremental profit, meaning new revenue or measurable savings beyond the baseline. Loss-avoidance projects, on the other hand, are protective — they measure risk reduction and the cost of doing nothing. In other words, they show how acting now prevents financial or operational losses later.
For example, if a broken pipe shuts down the pool or waterpark, the hotel might have to comp families or refund bookings, potentially losing $40,000 in ADR per day over two weeks. Spending now prevents that loss. Similarly, a roof replacement protects the building from water intrusion that could damage a $100,000 electrical panel and multiple guest rooms. In that situation, it's entirely appropriate to include the electrical panel repair under the same CapEx project as the new roof rather than charging it to operating expenses. Since both are functionally linked and restore the building's integrity, grouping them together as one capital project is logical, defensible, and GAAP-compliant.
Loss-avoidance analyses aren't about generating return — they're about preventing loss, maintaining operations, and protecting asset value. ROI justifies enhancement; loss avoidance justifies preservation. Both can be capitalized if they extend an asset's life or value.
That kind of justification — showing ownership that spending now prevents a much greater loss later — is perfectly legitimate, but it's conceptually different from projecting new revenue streams or long-term savings. What you're really showing is a cost-of-downtime or loss-avoidance ROI, not a classic return model.
Furniture behaves a little differently. Baseline FF&E replacements — for instance, replacing chairs every five years — are planned expenses that maintain brand standards. They don't generate incremental returns, so there's no ROI model. They're treated more like consumables, such as linens or paper goods. Strategic redesigns or repositioning projects, however, like a full lobby renovation or a luxury bedding upgrade, can justify ROI modeling if the intent is to raise ADR, increase occupancy, or improve group business performance. Most hotel owners fund FF&E through an escrow reserve account, typically around 3–5% of GOP, ensuring there's a steady source of funding for ongoing replacements without impacting the operating budget.
Hotels follow GAAP or IFRS and must assign a useful life to each asset category. For FF&E, five to seven years is standard, aligning with IRS class lives and typical market obsolescence. These lives drive book depreciation and also inform how much is set aside annually in the CapEx reserve, which is generally four to five percent of total revenue.
Major brands like Hyatt, Marriott, and Hilton mandate periodic refresh cycles through Property Improvement Plans (PIPs) to maintain consistency and guest appeal. Casegoods such as desks, dressers, and headboards are typically refreshed every seven years. Soft goods like carpet, drapes, and bedding are replaced every five to six years. Mattresses tend to be on a five- to seven-year cycle, while chairs and sofas are often replaced around the five-year mark or sooner if they're stained, sagging, or out of spec with brand standards.
Of course, actual wear depends on how hard the asset is used — cleaning frequency, humidity, occupancy, and turnover all play a role. For example, a desk in a high-traffic business hotel with 70%+ occupancy will wear faster than the same desk in a slower resort market. Many manufacturers offer five-year structural warranties, and those often serve as informal benchmarks for planning replacement timing.
Depreciation life and economic life aren't the same. Depreciation life — what's used for book or tax purposes — is usually around five years for FF&E. The economic life, or how long an item remains usable in service, is typically seven to ten years depending on condition, use intensity, and brand standards. Depreciation drives accounting; economic life drives reality.
Take cabanas, for example. If they're just furniture at the pool, replaced every five years to maintain appearance and comfort, there's no ROI — they're a planned FF&E expense. But if those cabanas become rentable assets, or if the property is considering adding more to capture demand, then ROI can be modeled based on projected rental revenue, utilization rates, and maintenance costs. The same item moves from an expense to an investment depending on how it's used and whether it generates incremental cash flow.
Beyond capital projects, ROI also applies to people, service, and leadership. From an operational standpoint, if A hotel resolves a guest issue with empathy and care, they're making an investment in service quality — one that yields a return in guest satisfaction, loyalty, and reputation. Those outcomes might not show up on a balance sheet, but they have real financial and cultural value.
I have often told my teams that ROI exists in everything we do. If say a building's working order completion score is low, and you identify the key issues, focus on them, and see measurable improvement, that's ROI. You invested time, coordination, and attention, and the return was a more efficient and reliable operation. It may not fit the textbook financial model.
Ultimately, ROI is about cause and effect. In finance, it measures cash flow. In operations, it measures performance. In leadership, it measures growth, trust, and team development. Thinking in terms of returns — whether monetary or intangible — keeps both people and organizations moving forward with clarity and intention.
Every ROI or loss-avoidance case compares two scenarios:
1. What happens if you do nothing or replace in kind (the baseline).
2. What changes if you move forward with the proposed project.
The difference between those two outcomes — whether it's higher revenue, lower operating costs, or avoided losses — represents the incremental cash flow, which is what really matters. You're not measuring total cost or total revenue; you're measuring the delta created by the decision. That's the essence of professional capital budgeting.
Also, from my perspective, ROI isn't limited to cash or equipment. I use the concept more broadly. Personally, I like to show ROI in everything we do. I hope this is clear and doesn't hinder the way you look at ROI:
In practice, capital projects are often divided into functional categories that reflect their purpose.
ROI / Revenue Enhancement, which drives incremental revenue or profit;
Energy / Cost Savings, which reduces utilities or operating costs;
Asset Preservation / Risk Mitigation, which protects the property's integrity or prevents loss; and
Regulatory / Compliance, which covers code requirements, safety systems, and brand mandates.
…
Ultimately, ROI is about cause and effect. In finance, it measures cash flow. In operations, it measures performance. In leadership, it measures growth, trust and team development
It might not be the textbook approach, but it's worked well for me.
Sometimes its not about
return on investment but rather
reason for investment…
The time value of money (TVM) assumes the present value of money will grow through investment.
www.investopedia.com
The internal rate of return (IRR) is a metric used in capital budgeting to estimate the return of potential investments. Here is the formula for calculating it.
www.investopedia.com
"Discount rate" has two distinct definitions. It can refer to the interest rate the Federal Reserve charges banks for short-term loans, but it's also used in future cash flow analysis.
www.investopedia.com
Net present value (NPV) is a key finance tool that compares the present value of cash inflows and outflows to measure profitability.
www.investopedia.com
In which sense is committing suicide an investment? Theoretically, there is an assisted suicide industry. People are investing in lethal substances and trade their money for it.
This is the conventional definition of investment.
1. the act of putting money, effort, time, etc. into something to make a profit…
dictionary.cambridge.org
"the act of putting money, effort, time, etc. into something to make a profit or get an advantage, or the money, effort, time, etc. used to do this:"
The advantage is for suicidal people that their sufffering ends. But do people actually get something in reward? Their life and pain is taken. They lose something even if this is what they intentionally want.
The process of contemplating suicide is different for every single individual. Some gain knowledge, many say it is very painful. I wouldn't be here in this interesting forum if I wasn't suicidal. So in some sense my suicidality opened me doors which I would never have opened otherwise.
But the actual act of committing suicide. Can this be seen as an investment? Maybe more in a metaphorical sense. I just had this question because in this forum because every question has this ubiquitious link.
Scalable business gives profit or cash flow. This is where you make a lot of money. The next step high-return investments. This builds your net worth and that creates wealth. This is where you hold your wealth.
Me making me money. People and systems making me money. Money making me money.
..leveraging people, systems, technology to go to the next level.
