The High Price of Being an Early Adopter

I learned a valuable money lesson early in life. I was about 14 years old, and the latest thing in watches had just arrived. Not an LED digital watch, not even a conventional LCD digital watch, but a multi-function LCD watch with stopwatch, alarm, hourly chime and other features I can't even remember. When this watch came on the market, I absolutely had to have one, regardless of cost. I used money from my savings to buy one at a then ridiculous price. When I brought it to high school, everyone wanted to see it, and for a few weeks, I proudly showed off this marvel of technology to a rapt audience. Soon afterward, the adulation of being at the cutting edge of technology faded, as the price of LCD watches tumbled, and within six months or so, these 'cutting edge' watches began appearing on more and more wrists. My financial lesson was that the cost of being an early adopter was extremely high and the cost-benefit equation was skewed excessively toward cost and less toward benefit.

Apparently this lesson has not been learned by a huge percentage of the world's population. Expensive lessons like paying a premium over list price for the New Beetle (although easily affordable by Jerry Seinfeld who was rumoured to have paid a premium to get one) or the Chrysler PT Cruiser when first launched, only to see these cars being virtually given away by their manufacturers these days as the demand has dried up.

Or like the owners of the first 50-inch rear projection TVs, behemoths that required not only about $5,000 in cash but also about four men to lift it and move it into place in your home. These are virtually obsolete and worthless now. I'm sure the owners of the first ($1,000) DVD players must be chagrined to see them selling for less than $100 a year or so thereafter, and now routinely sold for less than $30. Likewise the owners of the first flat screen LCD or plasma TVs.
Having experienced that painful financial lesson many years ago, I no longer buy anything when it is first introduced, but rather assess how much I really need (or want) it, and if so, when will be the entry point, price-wise ......... and wait to buy it when a newer model (often with very little technical modifications, and a lot of cosmetic changes), refurbished or a gently used one appears on the market.

In doing so, I now own/have owned high-end electronics, sports cars and sporting goods equipment for a fraction of their original price by being patient. For example, if you want to buy an imported sports car like a Saab or Volvo convertible - wait a couple of years, and buy a two or three year old model for usually almost 50% off the original list price. Or try asking a sporting goods salesperson what the main improvements between this year's running shoe, golf club or tennis racket versus last year's model are.

So, if you want to save your hard-earned dollars, don't be so quick to rush out and buy the latest, new fangled thing on the market. Your patience will pay off handsomely.