Friday Finance: Fair Value
One of the first questions that comes up in Personal Finance is: “How do I get a fair price for something: my time, my expertise, my handmade goods and services? In other words, what is a fair market value for those services and products?“
Definition of Value (Fair Market Value):
The value of a specific good or service is the price that a willing buyer and a willing seller agree upon in an open market. Let’s break down those parties and agreements.
- Willing Buyer: A willing buyer is a person who chooses to make a purchase freely, without being pressured, coerced, or threatened into doing so.
- Willing Seller: A willing seller is a person who decides to sell for their own reasons, without being forced, threatened, or compelled to sell against their will.
- Open Market: An open market is a setting in which the buyer and seller are able to negotiate and agree on terms of sale transparently, where others can view comparable sales, and where customary rights, such as the ability to return or reject goods according to market standards, are available in that transaction.
What are some examples of choices that have ✅Good Value and ❌Bad Value? And what might be examples for someone in their 30s, for example? Of couse the answer to value depends on the category of spending. Below are General Ideas & Concepts for Good Value and Bad Value, as well as sub-categories for Lifestyle & Spending and Personal Growth & Career. The final section of this Lesson from Friday Finance offers a handy “Rule of Thumb for Value” in our lives.
General Ideas & Concepts
✅Good Value
These are items that cost money $$$ up front, but deliver long-term benefit, flexibility, or growth:
- Investing in a retirement account (401(k), IRA, Roth IRA): Even modest contributions in your 30s can compound dramatically by the time you reach retirement age.
- Buying a reliable used car instead of a brand-new luxury one: You get utility without rapid depreciation. The saying goes, “a new car loses value the moment you drive it off the lot.” Why, you ask? Because it is now a used car and has started to depreciate in value every mile.
- Purchasing quality insurance from reputable companies (health, auto, disability, term life, universal life): It protects you from catastrophic loss, by transfering the risks to the insurance company and away from you for a premium fee. AM Best rates the providers in these sectors of the insurance landscape.
- Paying off high-interest rate debt: The guaranteed “return” from avoiding 20%-30% credit card interest fees on unpaid balances is better than many investments.
- Buying a home you can afford (vs. stretching): Ownership builds equity and stability without overburdening you financially. If you have to stretch beyond your means, the market is telling you to remain a renter.
❌Bad Value
These are purchases or decisions that look attractive right now but don’t hold up over time:
- Overspending on luxury cars or brand names: Rapid depreciation and little added utility.
- Carrying credit card balances for wants (not needs): Paying 15–25% interest is a terrible long-term trade.
- Buying a house beyond your means: Financial stress or foreclosure risk can outweigh the “dream home” in your ideal future neighborhood.
- Following “hot” investment tips or day trading: Risk of losses is high without a long-term plan.
- Paying for expensive subscription services you rarely use: Ongoing costs add up and provide little benefit.
Lifestyle & Spending
✅Good Value
These purchases improve quality of life, health, or meaningful experiences:
- Travel or experiences over excessive “stuff”: Memories and perspective grow in value over time.
- Quality mattress or ergonomic chair: You spend thousands of hours sleeping or working — comfort pays dividends.
- Healthy food and fitness memberships you actually use: Long-term health saves money and improves life.
- Tools, kitchenware, or appliances that last decades: Buying once and buying right often costs less in the long run.
❌Bad Value
These things consume a ton money but add little sustained happiness and no utility to your balance sheet:
- Trendy gadgets you barely use: They become obsolete quickly.
- Dining out constantly: Occasional meals out are great, but daily habit drains savings.
- Fast fashion: Frequent replacement costs often exceed investing in quality clothing.
- Subscription overload (streaming, apps, gym memberships you don’t use): Hidden “silent” budget killers.
Personal Growth & Career
✅Good Value
These are investments in yourself that usually have lifelong returns:
- Continuing education or skill-building (courses, certifications): Expands your career options and longer-term income potential.
- Professional networking (conferences, associations): Builds relationships now that can lead to more open doors later.
- Therapy, coaching, or mentoring: Helps with self-awareness, career strategy, and decision-making, while lowering your stress levels.
- Starting a side business or passive income stream: These ventures can start as a hobby and grow into rewarding major opportunities.
❌Bad Value
These consume time or money without providing real benefit or growth to the buyer:
- Expensive advanced degrees without clear Return on Investment (ROI): Taking on major debt for a degree with limited career prospects; e.g. computer science.
- Chasing lifestyle upgrades for status: Bigger houses, flashier cars — often short-lived satisfaction and buyer’s remorse.
- Ignoring skill development in your 30s: It’s a critical decade for positioning yourself for future earning power.
What is the basic Rule of Thumb for Value?
✅Good Value = long-term utility, growth, or joy that outweighs the cost.
❌Bad Value = short-term gratification with long-term regret, cost, or stagnation.Worth noting is that the term VALUE is also a category of stocks, that are worth more than their current stock price. More global investors are rotating into non-U.S. “value” stocks, fund managers say, as stretched U.S. valuations, rising fiscal strains, and weakening cash flow forecasts make rallying American equities look comparatively less attractive.
Investors have withdrawn $152 billion from U.S. growth funds in the first nine months of 2025, even as the S&P 500 advanced into record high territory, already equaling total outflows for all of 2024, LSEG data for September showed.
Asset managers overseeing more than $6 trillion told the Reuters Global Markets Forumthat investors expect non-U.S. “value” and small-cap equities to benefit from overseas dovish monetary policy, increased fiscal stimulus, and cheaper valuations.
Outside the U.S., stronger earnings, margins and returns highlight underappreciated fundamentals in small-cap and value stocks alongside already attractive valuations.
“From a valuation perspective, we like non-U.S. value stocks – so yes, a factor tilt,” Sebastien Page, head of global multi-asset and chief investment advisor at T. Rowe Price told the Reuters Global Markets Forum. The global investment management firm oversees $1.73 trillion in assets, with Sebastien’s multi-asset division accounting for $602 billion.
Value stocks appeal to investors seeking stability and income because they trade at low valuations, often pay dividends, and cluster in mature sectors like financials, industrials, and energy.
By contrast, growth stocks, including the “Magnificent Seven” and other AI-driven giants that have propelled the S&P 500 to record highs, trade at rich valuations, rarely pay dividends, and appeal to investors who are willing to weather short-term volatility in the search for long-term capital gains.
Spreads between value and growth in the MSCI Europe, Australasia and Far East (EAFE) indices point to cumulative outperformance by value, with index levels at record highs, according to MSCI data.
“EAFE Value, especially in dollar terms, has been one of the best-performing asset classes year-to-date. At the same time, by historical standards, the asset class remains cheap,” Page said.
Growth and value factors diverge by region: growth has historically led in the U.S., while value has dominated overseas.
“At the end of last year, we diversified away from our long U.S. equity position” into Europe, Japan and emerging markets (EM), said John O’Toole, global head of multi-asset solutions at Amundi.
“That’s not to say we went underweight (on U.S. equities),” O’Toole said, but on long-term valuations, “there’s a compelling case to diversify and expose yourself to other performance drivers.”
Even so, U.S. growth funds continued to dominate performance despite heavy redemptions, as the earnings strength of tech and communication giants, buoyed by artificial intelligence and buybacks, keeps growth in the lead.
Spreads between value and growth in the MSCI USA indices point to continued growth outperformance, MSCI data showed.
“In the near term, companies have limited options to hedge against U.S. concentration risk, as U.S. AI capex still dwarfs the rest of the world,” said Gary Tan, portfolio manager at Allspring Global Investments
Henry E. Hooper 