When
I was younger, I thought of the cost of acquisition as the price of an
object. If I paid a certain price for something, I was done. Now it
was mine.
As
I got older though, I gradually realized that the cost of acquisition was only the
beginning. Everything a person buys has a continuing cost. Houses,
cars, bicycles, boats. Each item has to be maintained, maybe even
repaired from time to time. If nothing else, it takes up space. It
has to be housed.
The
real price of an acquisition is what a person pays for it plus all the future
costs. For the future, every acquisition requires an endowment, either in
the form of money set aside for its lifetime costs, or more commonly, a share
of a continuing income stream for the life of the object. The more things
we own, the more continuing costs we’ve accumulated, the less flexibility we
have, and the more dependent we are on that endowment or continuing income
stream.
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