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Neopian Financial Literacy


by laurvail

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These days, it seems like one of the biggest complaints on the neoboards is that things cost too much. This is nonsense. 7.5 million for a paintbrush that gives your pet tattered clothing and a hunger for living flesh should seem perfectly reasonable to anyone with a brain. Which is unlikely if your pet is a zombie.

Okay, I’m just kidding. Prices do seem to be getting higher and higher every year, making the goals of many players seem entirely unreachable. Back in the early years of Neopets, your measly half million could get you a full lab map and a faerie paintbrush or two. Now you’d be lucky to scrape up a Strawberry Fields Forever Paint Brush and a Piraket.

If you had a time machine, this would be great. Not only could you go back in time and buy up tons of items that would be completely unaffordable for you now, you could also take our wonderful futuristic items back in time and sell them for millions. For example, if you went to the year 3 neoboards waving your paintbrush, yelling “I HAVE A PAINTBRUSH THAT WILL TURN YOUR PETS INTO A WALKING, TALKING PIECE OF FRUIT,” I guarantee, you would immediately be locked up in the Neopian nuthouse. The kind pets here would supply you with free food and a padded room until you reached the present, where all the stuff you bought in the past would be worth millions. A perfect solution to all your money woes.

For those unfortunate enough to lack a time machine, however, managing neopoints is an important skill. While restocking is almost certainly the best way to make money, it tends to be time consuming, and there are a lot of guides for it already. Instead, I’m here to give you suggestions as how you can keep up with inflation and reach your goals just a bit faster, with only a little extra work.

And my suggestion is very simple: use investments.

That’s all. Good luck getting that Draik!

Okay, that probably needs more explanation. Investments are where you buy a lot of things in the hopes that you get more money back. On Neopets, investing essentially consists of buying a bunch of items, then letting them sit in your safety deposit box for a while until they get more expensive. Technically this could be anything, from toy cars to petpets, but obviously not all investments work equally well.

So why do you need investments then? Both in real life and on Neopets, money tends to be worth less over time (i.e. inflation) so the money you’re saving won’t keep up with how much things cost. On Neopets, this is because people are playing games every day, which puts more and more money into the economy. If something is common, it tends to be worth less. This is why Strange Gold Coins are worth far more than Bottles of Sand, despite being equally useless in any practical sense.

The idea of investing is that as items rise in price, the items you’ve bought will rise in price as well, so your inherent value remains the same. In other words, if you have a million NP and simply keep it on hand, perhaps next year, you can only buy things that were worth half a million when you started saving, so you’ve essentially lost money. On the other hand, if you bought items worth a million, and then their value increases to two million as well, you’re in the clear. Better yet, if the value of your items increases to three million, you’ve actually gained value.

“But wait,” you cry. “The bank gives you interest, so I’m making money that way. Why should I buy all of these items if I’m already making money off my money?”

The short answer is, bank interest really isn’t that much when you put it in perspective. For example, with a five million neopoint bank account, you will make 11.5% interest per year. Over two years, you will have made over a million neopoints in interest alone. That’s a lot. But consider this. Two and a half years ago, Draik Transmogrification Potions were five million neopoints each. Now, they’re a whopping fifteen million. If you had gone out and bought a Draik potion two and a half years ago and simply let it rot in your safety deposit box, you would have fifteen million neopoints now, having done absolutely nothing. Dutifully clicking your interest button every day for that long will have only left you with a total of about six and a half million. See how useful investing can be?

Mind you, this doesn’t mean you should go out and buy items at random. Getting the wrong items can be worse than not investing at all. Generally, the two worst types of items to invest in are anything new, and anything given out by Tarla. When things are new, they tend to be fairly coveted just for the novelty. Furthermore, being just released means there aren’t too many of them in existence, making them rarer and making them cost more. As more and more of them come into existence, both their rarity and novelty drop, making them cheaper and cheaper. The mighty Biscuit Paint Brush, worth several million when first released, is now a mere 60k. Ouch. Imagine if you’d invested in that.

Tarla items are bad because a lot of them are given out at once to a lot of people, causing the price of previously expensive items to plummet. Furthermore, if Tarla gives something out once, she’s likely to give it out again, which is bad if you’re trying to invest. The first time Tarla gave out Cloud Paint Brushes, the price dropped to about 150k. Now, after the umpteenth giveaway, it’s dropped to a measly 70k. It might be smarter to avoid them.

This part only applies to long-term investments, however. It’s perfectly possible to make money with Tarla’s items (the better ones, not the lamps and so forth) if you’re willing to spend a bit more effort. Immediately after an item is given out, the price tends to drop a great deal, then slowly rises again as people buy and use it. If you manage to buy soon after the giveaway, you can get the item cheap, then resell as the price rises, but this tends to be risky. For example, Hundred Dubloon Coins were once given out twice within two weeks of each other, causing another 30k price drop the second time. Anyone who bought them the first time would have lost a great deal of money – in the short term at least. Also, if you wait too long to resell, Tarla might decide to give it out again, dropping the price and forcing you to wait even longer to resell at a good profit, which kind of defeats the point, since you want your items to rise faster than your bank account would. You have to decide if you’re willing to risk it.

Still, there are a lot of potentially good investment items out there, but my personal favorites are Advent Calendar items and retired items. Why? Because there won’t be any more of them. Remember when I was saying that common things were worth less? Yeah, me too. Good times. Anyway, it still applies here. Retired and Advent Calendar items get less and less common over time, as they’re used or left on frozen/abandoned accounts. As they become more rare, they become more valuable, and thus will somewhat consistently rise in price.

A note on retired items, however – try not to buy them immediately after they’re retired. At that point, everyone else will be trying to buy them as well, in order to get them before the price rises. This is known as speculation, and will actually drive up the price to inflated levels, then drop shortly afterward. Actually, if you sense a buying frenzy in any way, avoid the item until a few days/weeks after it settles down. For example, right after White Onas were given out by the Advent Calendar back in year 5, people were convinced that they would be in huge demand later on, and no one would be able to get one without paying an arm and a leg. The price shot up to a whopping 60k, (while the normal price of advent calendar petpets immediately after the giveaway is around 5k) and anyone who sold one for even 500 NP less would be bought out immediately. Two weeks later, the price had dropped to a measly 20k, and has still only reached 40k five years later. Avoid speculation at all cost. Wait until the price has settled down a little and it will probably be cheaper.

Regardless of what you decide to invest in (though I strongly suggest sticking to retired things unless you plan to watch the market very carefully), you should always look for two types of items: things that are useful, and things that go away. If it’s both, that’s even better. Things that are useful include wearable items, stamps (to some degree), or petpets – things that a lot of people will want for their pets or accounts. Things that go away are items that are one use or break after a while, such as food or prize crackers. Again, as people use these, there will be fewer and fewer of them, and they will be more valuable.

An example of items that fit neither of these criteria is toys. People don’t really want toys, especially expensive toys, as your darling Fluffikins probably can’t tell the difference between a 5,000 NP retired plushie and a 2 NP key chain. Most toys never break, and aside from the slow process of being left on frozen and abandoned accounts, there won’t be many less of them two years later. This is why the Christmas Wocky Plushie, a retired relic from year 2, is still only 1,500 NP. On the other hand, books are a good example of something that fits both criteria: they disappear after one reading, and people want them in order to make their pets smarter. For example, the book My Neighbour the Zombie given out from the advent calendar three years ago, is now worth 10k. Back when it was first given out, it was probably worth around 1k. If you’d bought a thousand of these books right after their release, three years later, you’d have ten million neopoints worth of these books. That’s enough for a Zombie Paint Brush and a brain transplant, just for letting a bunch of books sit in your safety deposit box for a couple years.

Still, investing is not for everyone, and there are plenty of reasons why people would just want to keep their money in the bank. For one thing, if you buy something expensive, there’s always the possibility that Sloth will come by and zap it into a worthless pile of goo. This is known as “liquidity.”

No, just kidding. Liquidity is essentially how easy it is to spend your worth, and low liquidity is another reason why investing may be inconvenient. Neopoints are the most liquid of your assets, because you can spend them with a click of a button. If you see a 20k petpet and have 20k on hand, you’re in the clear. On the other hand, if you have 20k worth of books, you’re going to have put them in your shop, twiddle your fingers as you wait for someone to buy them, collect the points from your shop till, then run back to the store. By that time, the petpet will likely be heading happily home with someone else.

Also bear in mind that the more expensive something is, the harder it is to sell. You may be pleased if your books now cost 50k a pop, but there will be fewer people willing to shell out that much just for a book, so it’s going to take a while before people buy them all. Furthermore, if you have a lot of your item and you dump them all into your shop at once, you may very well trigger a drop in price, so you might want to plan ahead.

No matter how carefully you choose your items, investing is always risky. It’s easy to look back and think “oh, if I’d bought this then, I’d be rich,” but trying to predict prices is much more difficult. Lab maps, for example, used to be a very solid investment, until Tarla decided to give them out on a regular basis. At its peak, the most expensive piece was around 800k, while today, it’s only around 200k. Now imagine if you’d bought ten of those. Ick.

While usually price changes aren’t this dramatic, the items you want to invest in may stay the same price, or slowly drop in value as time goes on. For that matter, even if the price for an item rises, it may not rise fast enough to make it worth buying. The best way to deal with this unpredictability is to have diversity in your investments, or in other words, to invest in a lot of different things. If you buy a hundred of an item, if its value ends up dropping, you’re going to lose a lot of money. On the other hand, if you buy ten each of ten different items, if one loses value but the rest gain, overall you’ve still made money. While you might not make as much as you would if you’d invested solely in the best of those ten items, spreading out your investment is always the safer path.

So those are the basics of investing your money wisely. If you’ve read through all of this and decided you’d rather keep your neopoints safe in the bank, that’s great too. But if you want to strike out into the mystical land of item investing, just remember to buy smart, and fortify your home against zombie attacks. (You need your brain to make good financial decisions.) That’s all. Good luck!

 
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