Return on Spending

WHEN I STARTED MY sales and marketing career, one of the first mantras I learned was, “You have to spend money to make money.” Salespeople like me would always be asking the company to spend more—on commissions, product development and support.

The bean counters, as we called them, would always respond by telling us how tight the budget was and how we needed to cut expenses. Especially those expenses they didn’t think we needed, such as business travel and client lunches.

When my roles changed over the years and I became responsible for the operations side of organizations, I came to appreciate more fully the plusses and minuses of spending money to make money. While I never overran an organizational budget in the three decades that I was responsible for them, I’ve also never fully left my sales self behind. When I led nonprofits, I often found myself trying to convince others that, to make money, we needed to spend money—on fundraising.

But you don’t always have to spend money to make money. In fact, when investing, just the opposite is usually true. As mutual fund and exchange-traded fund expenses have plummeted, performance has improved. In investing, you get what you don’t pay for. What about spending money for expert advice on taxes, retirement planning and estate planning? That may indeed lead to more money—but not always.

My computer knows that I’m interested in retirement and finances. I’m reminded of that because of the many brokerage firm, investment and get-rich-quick advertisements I see every day. These organizations clearly believe they need to spend money to make money—for themselves, not me—and, given the size of some of these organizations, they’re right. But before I click on these advertisements, I try to remember another famous mantra: A fool and his money are soon parted.