"Does an iPad 2 “Really” Cost $2,000?"
Brett Arends of Smart Money says an iPad 2’s not worth the $2,000 it costs, which some of us would think is why Apple doesn’t try to charge $2,000 for it. But he explains that $500 is “really” $2,000:
But I figure $2,000 is the minimum that Steve Jobs’s new toy is going to cost me. How come? Simple. If I don’t spend that $500, I’ll invest it. Historically, the stock market has produced average long-term returns of maybe 5% a year above inflation. (More on this below.) At that rate, in 10 years’ time my $500 will have grown to about $800. That’s in today’s dollars—after inflation. In 15 years it’ll be about $1,000, and in 30 years, $2,000. I figure I’ll be retiring in about 30 years, which is when I’m going to need lots of capital. I can have the iPad now, or about $2,000 then. Thanks, but I’ll take the $2,000.
That’s fine, I guess, if you enjoy switching back and forth between real and nominal dollars in a confusing way. But what does it have to do with an iPad 2? It just seems like a generic argument in favor of saving money.