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re: Car Guys: Keep, Sell, or Trade
Posted on 10/21/13 at 2:04 pm to LNCHBOX
Posted on 10/21/13 at 2:04 pm to LNCHBOX
quote:
Assuming you buy your first new car out of college at age 22 and carry a $500 note the rest of your life (let's say 85), that's $378,000 per person.
Principal over 63 years. You're assuming 0% interest?
Even at 3% average rate of return, that's well over $1 million.
5% is over $2 1/2 million
8% is over $11 million
10% is $31 million
quote:
Kind of unfair to assume that your investment will always make you money though.
Kind of unfair to assume that your money will get stuffed in a mattress somewhere.
What am I missing?
ETA: Wealth is a mindset. The difference between upper middle class and wealthy is that the upper middle class family has nicer cars, houses, vacations, still live paycheck to paycheck, working for money to pay for their stuff.
Wealthy people work to increase their stash of money, so they continually have more and more of their money working for them.
Ergo, a wealthy person can have a lower income and less things than an upper middle class professional who still has to bust his hump to pay his bills.
This post was edited on 10/21/13 at 2:12 pm
2
Posted on 10/21/13 at 2:10 pm to Ace Midnight
Well than let's also factor in all the savings on gas and maintenance. What's a reasonable number per month on that? $150? I'd say that's conservative given that your plan is to drive a car into the ground, which means high dollar repairs or a new vehicle. What about the costs of the car you buy every 10 or however many years? Gotta take that out too.
This post was edited on 10/21/13 at 2:11 pm
Posted on 10/21/13 at 9:03 pm to Ace Midnight
quote:
Even at 3% average rate of return, that's well over $1 million. 5% is over $2 1/2 million 8% is over $11 million 10% is $31 million.
That's assuming you are spending the 378k now, not over your lifetime. Buying a used car and paying cash isn't free either. If you can get a decent rate, sometimes it makes sense to take a note and invest your money instead(my last rate was 3%, I wasn't in any rush to pay that off). I'm not disagreeing with your arguement, but it's got plenty of holes.
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