John Chow made a very hard-hitting point recently, when he decided not to purchase a new Corvette Z06. And I quote -
‘This doesn’t mean I can’t spend $100,000 on a new car. I certainly can and she wouldn’t get mad at me for doing so. However, my financial planning background says $100,000 invested at 12% for 10 years equals $310,584.82, where as the $100,000 car is worth $10,000 in 10 years (if even that).’
That really is a novel way to look at a car. If you’re fortunate enough to be in a situation where you can afford a 100k car ( A Z06 is actually 85k ish if memory serves correctly, but we’ll go with 100k because it’s round ) , then good for you. You should ask yourself though, is the car I’m about to purchase worth $300,000? Chances are, you’ll say no way, it’s not worth nearly that much. And if that’s the case, you really should rethink that purchase. Having $300k in the bank is a much wiser financial choice than having a money-burning supercar sitting in your driveway, don’t you think?