Do you count Investments as expenditure in a yearly budget?

mas2000

Any help with this?

Onawingandaprayer

Only in the year in which they're invested, unless I misunderstand the question. From then on, they're an asset (hopefully!)

easterbunni

Yes, I do. It's money that is no longer part of my day-to-day cash flow, therefore, to me, it has 'been spent' (on an income / asset!)

JohnRo

I don't see how an investment purchase, assuming ownership is retained in your name, can be construed as expenditure.

Expenditure is a permanent loss which an investment purchase or valuation are not

Scarpacci

No. I budget for expenses so I can maximise the amount I can invest. I view them as opposing forces - expenditure eats at the amount you have available to invest

polymaff

mas2000 wrote: »

Any help with this?

No, you've just converted one sort of asset into another.

jimjames

No. I count it only as a transfer between accounts in my tracking. It's still your money and is an asset then tracked in my investment account.

Pincher

It's just an asset.

If you were a bank, and you accept £100 deposit at 2%, and lend it out at 3%, it's like you bought something (use of £100 for one year) for £2, and sold it for £3. So, selling price £3 - £2 cost gives £1 profit.

Now, the bank has two books. On the deposit account side, it is listed as a liability, £100 to be paid back after one year. In the mortgage book, it is listed as an asset, because £100 will be paid back to the bank.

An investment is like you are acting like a mortgage lender. The £2 is like an expenditure, if you must look at it that way.

mas2000

Thanks for the replies. Its the time of year when I'm working out my annual saving.

le_loup

Investing is not spending, therefore you have saved the money converted from cash to investments.

enthusiasticsaver

It is money removed from disposable income but I classify it as a transfer rather than expenditure.