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Old 11-23-2010, 08:50 PM
Financeman Financeman is offline
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Location: Wichita, Ks
 
Join Date: Jan 2009
Posts: 254
Mein Auto: 2003 530IA
Quote:
Originally Posted by njstrane View Post
This is very simple. Leasing is more costly than owning. There is a caveat. You should own and keep a car well maintained for 8-10 years.

Let's talk about the duration of adulthood.

Let's for argument sake say from 18-68, you leased a car for $900/month. By age 68 you would have spent $540,000 in car payments.

In contrast, let's say you bought a $50,000 car every 10 years. During those 10 years your cars were well maintained. For those worried about maintenance, let's for argument sake say there were an average of $1,000 in repairs and maintenance yearly from years 6-10 out of warranty. Each car with taxes, interest, etc would cost about $60,000. This would be $55,000 if bought out right with cash. By age 68, you would have spent only $300,000 on car payments.

Listen close everyone. Here's the catch. Take the difference of $240,000. Over 50 years that's $4,800/year. Take that money and invest in an index fund like Vanguard annually. With the average rate of return over the past 30 years of the S&P 500 of 8.8% you will hit retirement age (68 in this case) with . . . Drum roll. . . .

$4,700,000

If you don't believe me, believe the power of compounding interest and check the numbers yourself.

Long story short.

Buy, keep your money and get rich.

Lease, waste your money and make BMW rich. ;-)
I read your post this evening...and I strongly agree with the concept....entirely. That said, things don't always work out with investments. Ten years ago I had a penny stock that increased in value from $500 to $60,000 in about six months. This was really easy money and I decided I wanted to splurg on a new 540i; but the conservative side of me ultimately settled for a $30,000 Maxima which was purchased with stock sale proceeds. I left the remaining $30,000 invested in the penny stock...and ended up losing most of it when some bad disclosures became public. Moral to the story - wish I had bought the bimmer (Of course I really wish I had sold the whole thing and purchased Apple stock)
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