Your farm thing is interesting to me. I have build more than your NW in 7 years, so far but I love your have balanced life and family !! I think one thing I missed is not having my own family but its soo hard to trust someone specially if you have good wealth dude to divorce laws !! Hope you have Prenup, else things may sour badly
Good video. I have a couple of thoughts on the analysis. 1. concept is good. 2. Most people need a car to get to work. Therefore wouldn't a more accurate analysis compare the cost to purchase a good used vehicle and investing only the delta (between loan for new vs used)? 3. It appears you are using linear projects for the investment returns...a better approach is to use a Monte Carlo projection that takes into account sequence of returns risk. The results may be different. Also, the investment should be on a glide path towards more conservative as the investor gets older. The concept that new cars destroy wealth is spot on-thanks.
It is one of several possible outcomes. Over long (10+ years) US stocks, real estate, and other assets tend to go up as long as population continues to grow and inflation stays positive. If hyperinflation occurs then it would be very likely scenario which we currently do not have. If mass amounts of people leave the US and immigration is significantly reduced with the birth rate below the replacement rate then there is not as much of a need for all the houses similar to Japan which led to lost decades in many asset classes. I will provide a review over the next week.
I hate to sound like Dave Ramsey, but in 95% of cases, if you have to finance it - you can't afford it. I know there are scenarios where there's no choice but if you have the option, buy in cash.
You don't have to finance it, but usually, it is better to finance than to buy in cash. Personally, I do it this way. I can afford to buy my car in cash, but it is leased, and I use my assets elsewhere, where they outperform inflation and leasing interest rates.
This seems like an oversimplification. One overlooked aspect is the longevity of the vehicle-new cars generally last longer, adding value. Additionally, newer models tend to have better fuel economy, saving money over time. Maintenance costs are also lower initially for new cars, and while total maintenance costs may balance out over a vehicle’s lifetime, the average cost favors the new car. However, insurance for a new car is significantly more expensive. I don’t know what the total value proposition would be, but I suspect that the average cost to the consumer would be closer than you’ve made it out to be.
I talk with people on my discord channel after 8pm a few days a week. I do not charge anything to talk so if someone is trying to make you pay it is a scam: Discord Link discord.gg/TpcxEGVrY3
They have electric bikes that go 25 miles per hour and 20 to 40 miles. Could save some time and money. Plus they are fun to ride. I suggested this for a friend that did not live next to mass transit.
@ yea going to save for one, also its healthier overall, lemme ask you, I am 27 live at home and will live at home until 30-31 while i am back in school and planning to go to med school. I basically had to start from scratch a few months ago, is it worth trading options for a lil extra side income while I am in school? or should i just put all mt savings into an hysa, money market funds, mutual funds, maybe some crypto here and there🫠, and the occasional stock picks under 5-10$?
No. First off do not put more than $250,000 in a single account type at any one bank as that is the FDIC limit or $500,000 SIPC limit for investments and amounts above that can be lost if the bank/brokerage goes out of business. So spread larger amounts across multiple banks, institutions, brokerages to reduce the potential impact of a bankruptcy.
1.3 million in 40 years is not the same as 1.3 million now. Additionally, there are many risks involved over such a long period. If you're driving a cheap old car, you might be taking more risks because older cars are not as safe as new ones. I also don't think having a lot of money in 40 years is worth it if it means limiting yourself throughout all those years. As you mentioned in the video, the average loan term is 68 months, so you won't have to pay $520/month after 5.5 years. Of course, you can sell this car and get another one, but it’s not as dramatic as it seems. You would be able to sell a car you bought for $26k five years ago for at least $11k (according to your depreciation data). This means you'd have an $11k down payment for a new car if you decide to get one.
It is when you consider a 7% growth rate, that factors in inflation and so it would technically be 1.8 million in buying power in the future. Most index funds offer 9-11% a year but you subtract 2% to get your inflation adjusted return.
If the money grows at 10-11% the amount would be 4.7 million in 40 years. When factoring in inflation it could be closer to 7% which is worth 1.3-1.8 million in today's value. I know some people that buy new cars every 3 to 5 years and which is scenario 1 in the video and they do not save money and all it will take to ruin them financially is a single month of not working. This was just one example of a change in life decisions that could make someone a millionaire alone. I prefer to earn more income through learning new skills and investing. I prefer to have a really nice house and investments over a car. My family also values eating out more than a new car. Eating out can also keep someone broke if they do not increase their income.
Your farm thing is interesting to me. I have build more than your NW in 7 years, so far but I love your have balanced life and family !! I think one thing I missed is not having my own family but its soo hard to trust someone specially if you have good wealth dude to divorce laws !! Hope you have Prenup, else things may sour badly
Good video. I have a couple of thoughts on the analysis. 1. concept is good. 2. Most people need a car to get to work. Therefore wouldn't a more accurate analysis compare the cost to purchase a good used vehicle and investing only the delta (between loan for new vs used)? 3. It appears you are using linear projects for the investment returns...a better approach is to use a Monte Carlo projection that takes into account sequence of returns risk. The results may be different. Also, the investment should be on a glide path towards more conservative as the investor gets older. The concept that new cars destroy wealth is spot on-thanks.
"Most people need a car to get to work" tell me you don't live in north America without telling me you live in north America
Ill stick with my 92000 mile 2007 rx350 i do all my own maintinence on. Not interested in a car payment ever. Bought this car outright with cash
Another banger video! Do you think “The Great Melt Up” from Clear Value Tax is real or is he incorrect? Would love to know!
It is one of several possible outcomes. Over long (10+ years) US stocks, real estate, and other assets tend to go up as long as population continues to grow and inflation stays positive. If hyperinflation occurs then it would be very likely scenario which we currently do not have. If mass amounts of people leave the US and immigration is significantly reduced with the birth rate below the replacement rate then there is not as much of a need for all the houses similar to Japan which led to lost decades in many asset classes. I will provide a review over the next week.
@@financial_freedom101 Copy that, thank you.
I hate to sound like Dave Ramsey, but in 95% of cases, if you have to finance it - you can't afford it. I know there are scenarios where there's no choice but if you have the option, buy in cash.
You don't have to finance it, but usually, it is better to finance than to buy in cash. Personally, I do it this way. I can afford to buy my car in cash, but it is leased, and I use my assets elsewhere, where they outperform inflation and leasing interest rates.
Buying used in cash is the way for most.
This seems like an oversimplification. One overlooked aspect is the longevity of the vehicle-new cars generally last longer, adding value. Additionally, newer models tend to have better fuel economy, saving money over time. Maintenance costs are also lower initially for new cars, and while total maintenance costs may balance out over a vehicle’s lifetime, the average cost favors the new car. However, insurance for a new car is significantly more expensive. I don’t know what the total value proposition would be, but I suspect that the average cost to the consumer would be closer than you’ve made it out to be.
Please do you do consultation advising on how to invest certain amount of funds we have available?
I talk with people on my discord channel after 8pm a few days a week. I do not charge anything to talk so if someone is trying to make you pay it is a scam:
Discord Link discord.gg/TpcxEGVrY3
exactly why I will continue to be on the bus regardless if i can afford a car or not, I will just buy a nice fleet of bikes eventually
They have electric bikes that go 25 miles per hour and 20 to 40 miles. Could save some time and money. Plus they are fun to ride. I suggested this for a friend that did not live next to mass transit.
@ yea going to save for one, also its healthier overall, lemme ask you, I am 27 live at home and will live at home until 30-31 while i am back in school and planning to go to med school. I basically had to start from scratch a few months ago, is it worth trading options for a lil extra side income while I am in school? or should i just put all mt savings into an hysa, money market funds, mutual funds, maybe some crypto here and there🫠, and the occasional stock picks under 5-10$?
800k at TD bank?
No. First off do not put more than $250,000 in a single account type at any one bank as that is the FDIC limit or $500,000 SIPC limit for investments and amounts above that can be lost if the bank/brokerage goes out of business. So spread larger amounts across multiple banks, institutions, brokerages to reduce the potential impact of a bankruptcy.
1.3 million in 40 years is not the same as 1.3 million now. Additionally, there are many risks involved over such a long period. If you're driving a cheap old car, you might be taking more risks because older cars are not as safe as new ones. I also don't think having a lot of money in 40 years is worth it if it means limiting yourself throughout all those years.
As you mentioned in the video, the average loan term is 68 months, so you won't have to pay $520/month after 5.5 years. Of course, you can sell this car and get another one, but it’s not as dramatic as it seems. You would be able to sell a car you bought for $26k five years ago for at least $11k (according to your depreciation data). This means you'd have an $11k down payment for a new car if you decide to get one.
It is when you consider a 7% growth rate, that factors in inflation and so it would technically be 1.8 million in buying power in the future. Most index funds offer 9-11% a year but you subtract 2% to get your inflation adjusted return.
1.3*
If the money grows at 10-11% the amount would be 4.7 million in 40 years. When factoring in inflation it could be closer to 7% which is worth 1.3-1.8 million in today's value. I know some people that buy new cars every 3 to 5 years and which is scenario 1 in the video and they do not save money and all it will take to ruin them financially is a single month of not working. This was just one example of a change in life decisions that could make someone a millionaire alone. I prefer to earn more income through learning new skills and investing. I prefer to have a really nice house and investments over a car. My family also values eating out more than a new car. Eating out can also keep someone broke if they do not increase their income.