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Thought leadership series
Should you buy a new car or keep investing that money? Run your decision through these questions.
Should you buy a new car or keep investing that money? Investing the money wins by a wide margin. And it goes beyond the math. Most people focus just on whether they can afford the payment. For our clients, affordability isn’t the issue. The more interesting conversation we get into with any big purchase, is what that payment gives up over time. The opportunity cost. A $1,132 per month car payment, invested instead over five years at a 9% return is about $86,000. That’s real money that could go towards retirement, an education fund, a life changing trip Not to mention that the car loses 20% of its value before you have made a dent in the loan. And that $86,000 investment has the potential to keep growing. That’s the number we talk about when advising our clients on decisions like this. Here’s a three-part check worth running before any big purchase. What is the full real cost (payment plus insurance increase plus registration, etc.)? What does that number look like invested over five years? And does the upgrade genuinely improve your life, or do you stop noticing it in 90 days? (a lot of purchases fail that third question). I just hit 100,000 miles on my car. I have 3 kids under 7. I ran the same check and the answer was obvious for us. Shooting for 200,000 miles. If you have a big purchase on the table and want to run the numbers first, reach out. #FinancialPlanning #WealthBuilding #CFP #PersonalFinance #RetirementPlanning #OpportunityCost
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Securities and investment advisory services are offered through Osaic Wealth, Inc., member FINRA/SIPC and a registered investment advisor. Additional investment advisory services offered through Strategic Financial Advisors Corporation, a registered investment advisor. Strategic Financial Advisors Corporation and Strategic Financial Services Corporation are not affiliated with Osaic Wealth, Inc.
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