Anyone buy car and pay FULL CASH? Why? Clever or Stupid?

[Marquee]

You don't need to diversify into 100000 different stocks to diversify away most of the risks. A basket of 20-30 well chosen stocks will do.

 

There are simple funds such as ETFs (go check whats the average market return over any "longterm" time period) that small time investors can consider.

 

Another reason for taking out a larger loan(assuming you have to loan) is to protect yourself from sudden adverse changes such as job loss:

 

Say you buy a 100k car and you have 70k in cash. If you take a 30k loan and suddenly lose your job, you're screwed. Even if it is rather counterintuitive, it might be more prudent to take a 50-60k loan and keep the rest of the money to invest or just hold as a safeguard. If you suddenly lose your job, at least you have a buffer.

 

I am not sure if I can agree wif you. Realistically, $100k can't buy you 20-30 well chosen shares - well chosen is defined as blue chip, index shares. ETFs are good but still, the returns are just modest. Besides, for a novice investor, it is not something that one can stomach if the mindest is to "guarantee gradual growth". I am not avocating against investment, I only want to highlight the correct mindset and expectation.

 

If one doesn't not have the knowledge to invest or speculate, and do not want to earn the miserable 0.125% from bank, the striaght forward answer is just to pay off whatever loan leaving a comfortable buffer for rainy days. I shall leave individuals to quantify the buffer.

 

[Klinz]

true true! But in current situation short term investment is very scary and unpredictable, long term is lagi worse.. who know who will be next lehman bro...

Is there any guarantee good investment protecting the principle???

 

Yup, you are right bro...Imagine you invested before Oct 08, now you are sitting on huge paper losses...so apart from paying the interest + huge losses + retrenchment risk...so rule of thumb is reduced loan as much as possible = reduce risk...

[My_Motor]

some people can afford to pay full cash, but they cannot do that, maybe related to Income tax issue. Example, how many hawkers declared tax according to their earning ? If pay 100% for car..... they maybe questions or car dealer may have agreement with IRAS to inform who pay 100%

[Sabretan]

One of the reason why Spore car population is growing is that many people are buying cars when they should not. They stretch the loan to 10yrs, slog to pay and maintain their car, etc..etc... They do not have cash to pay upfront.

 

Govt should reinstate and improve the rule for downpayment of car to 30% (cash) so as to flush out those who are stretching their resources a bit too much. This is for their own good.

[Kiario04]

Ok so you take $50-60k loan, and invest the same amount.

 

$50-60k to buy 20-30 well chosen stocks? That's an allocation of $1600 to $3000 per counter. Which blue chips can you buy with that? Maybe one or two lots each of some low priced ones. What price and when do they break even? Ok, so you can't afford the blue chips so you go for mid cap or pennies. Also can, maybe you are a local Warren who can pick 10 bagger winners, but more likely you are not a Warren Buffett and may be staring at penny stock companies going bust.

 

The SPDR Gold ETF is US$91.45 per share. You want to buy what...20 shares? By the time you break even on your ETF investment (gold price rises), the USD would have gone down to SGD1.42-1.43 or lower, by the time you cash the cheque back into SGD you would have achieved nothing.

 

$50-60k is not serious investment money. At most, it is gong kia money when your contra trades turn sour and you either have to pick them up become long term investor or pay up the contra loss.

 

If only got $50-60k, go and pay up your car in full. If want to punt $50-60k in stocks, realistically you can only play 3 or 4 counters, because that's all the bullets you have. Not even enough to average down each counter if needed. Alternative, go star cruise or play on Ladbrokes. statistically speaking, you will stand a higher chance of making money.

 

bravo bro! u write like a true investor whom know the perils of investments

 

not many are enlightened on this aspect.

 

most are idealistic & too optimistic till the point of irrational exuberance ...

 

 

 

[Kiario04]

You don't need to diversify into 100000 different stocks to diversify away most of the risks. A basket of 20-30 well chosen stocks will do.

 

There are simple funds such as ETFs (go check whats the average market return over any "longterm" time period) that small time investors can consider.

 

Another reason for taking out a larger loan(assuming you have to loan) is to protect yourself from sudden adverse changes such as job loss:

 

Say you buy a 100k car and you have 70k in cash. If you take a 30k loan and suddenly lose your job, you're screwed. Even if it is rather counterintuitive, it might be more prudent to take a 50-60k loan and keep the rest of the money to invest or just hold as a safeguard. If you suddenly lose your job, at least you have a buffer.

 

bro, u mentioned taking a loan of 50K of 100k car, leaving a balance of 20k cash on hand to buffer in event of job loss, etc.

 

then when kena chopped by company, how are u going to service the car's loan? tht 20k can last u for how long?

 

furthermore, if u decided to sell the car after being jobless for say, 3-6months (it's normal now), then do u ever think how much do u need to PAY UP??

 

 

[GoodCar]

One of the reason why Spore car population is growing is that many people are buying cars when they should not. They stretch the loan to 10yrs, slog to pay and maintain their car, etc..etc... They do not have cash to pay upfront.

 

Govt should reinstate and improve the rule for downpayment of car to 30% (cash) so as to flush out those who are stretching their resources a bit too much. This is for their own good.

 

 

Totally agree, also reduce young reckless driver thinking they are born F1 racer

 

[Throttle2]

You don't need to diversify into 100000 different stocks to diversify away most of the risks. A basket of 20-30 well chosen stocks will do.

 

There are simple funds such as ETFs (go check whats the average market return over any "longterm" time period) that small time investors can consider.

 

Another reason for taking out a larger loan(assuming you have to loan) is to protect yourself from sudden adverse changes such as job loss:

 

Say you buy a 100k car and you have 70k in cash. If you take a 30k loan and suddenly lose your job, you're screwed. Even if it is rather counterintuitive, it might be more prudent to take a 50-60k loan and keep the rest of the money to invest or just hold as a safeguard. If you suddenly lose your job, at least you have a buffer.

 

 

If we are simply talking about a regular situation and one only bloody has $70k in cash, he better not be thinking of any car more than $50k. then whether he pays full or not doesnt matter any more.

 

 

 

 

 

[Throttle2]

bro, u mentioned taking a loan of 50K of 100k car, leaving a balance of 20k cash on hand to buffer in event of job loss, etc.

 

then when kena chopped by company, how are u going to service the car's loan? tht 20k can last u for how long?

 

furthermore, if u decided to sell the car after being jobless for say, 3-6months (it's normal now), then do u ever think how much do u need to PAY UP??

 

 

exactly my sentiments.

 

 

[Sdf5725]

One of the reason why Spore car population is growing is that many people are buying cars when they should not. They stretch the loan to 10yrs, slog to pay and maintain their car, etc..etc... They do not have cash to pay upfront.

 

Govt should reinstate and improve the rule for downpayment of car to 30% (cash) so as to flush out those who are stretching their resources a bit too much. This is for their own good.

 

Shouldnt this always the reason no matter whether it is car or house? It also happen in other countries as well. Even the previous 30% and max 7 years loan, there are ppl stretching their limit.

There are always much much more ppl who dont have the cash to pay upfront when they buy thing. This is why banks are offering their loan of all kind.

 

[Throttle2]

some people can afford to pay full cash, but they cannot do that, maybe related to Income tax issue. Example, how many hawkers declared tax according to their earning ? If pay 100% for car..... they maybe questions or car dealer may have agreement with IRAS to inform who pay 100%

 

these people are the "cannot face light" type .....

 

triple thumbs down.

 

 

[Throttle2]

Shouldnt this always the reason no matter whether it is car or house? It also happen in other countries as well. Even the previous 30% and max 7 years loan, there are ppl stretching their limit.

There are always much much more ppl who dont have the cash to pay upfront when they buy thing. This is why banks are offering their loan of all kind.

 

 

Yes hopefully , in near future. buying house or car must require at least 30% cash downpayment.

that would ease a lot of the "congestion" problems we have in singapore.

 

anyway , it's all about balance.

 

 

[GoodCar]

Ok so you take $50-60k loan, and invest the same amount.

 

$50-60k to buy 20-30 well chosen stocks? That's an allocation of $1600 to $3000 per counter. Which blue chips can you buy with that? Maybe one or two lots each of some low priced ones. What price and when do they break even? Ok, so you can't afford the blue chips so you go for mid cap or pennies. Also can, maybe you are a local Warren who can pick 10 bagger winners, but more likely you are not a Warren Buffett and may be staring at penny stock companies going bust.

 

The SPDR Gold ETF is US$91.45 per share. You want to buy what...20 shares? By the time you break even on your ETF investment (gold price rises), the USD would have gone down to SGD1.42-1.43 or lower, by the time you cash the cheque back into SGD you would have achieved nothing.

 

$50-60k is not serious investment money. At most, it is gong kia money when your contra trades turn sour and you either have to pick them up become long term investor or pay up the contra loss.

 

If only got $50-60k, go and pay up your car in full. If want to punt $50-60k in stocks, realistically you can only play 3 or 4 counters, because that's all the bullets you have. Not even enough to average down each counter if needed. Alternative, go star cruise or play on Ladbrokes. statistically speaking, you will stand a higher chance of making money.

 

 

There is an instrument call CFD.......

 

[Goldpen]

how much does the average car cost, even an average luxury car? How well-diversified can your portfolio be, using the "opportunity cost" money? Your example applies only to private banking clients - $5m and above investible funds

 

 

Bro, opportunity cost of money doesn't necessarily means the other alternative is equity investment. I run businesses. I do projects. Pathetic to you maybe, but not to me. Applaud you for your personal take on portfolios and investment, but thats your point of view.

 

50-60 k might not be meaningful for you and is not deem to be serious investing (buy hold, not trading). But it might be a meaningful start for someone. Private banking clients with 5 mill worth of portfolio, for those who doesn't inherit those wealth, I am sure they start from somewhere. Maybe one of them started off by buying an ES8 with 7 years loan with 5k left in the bank account and a burning desire to make something out of his life.

 

Just sharing my views bro. Nothing more.

 

 

Cheers.

 

 

 

 

 

 

[Throttle2]

There is an instrument call CFD.......

 

 

CFD doesnt mean wont lose money.....

[Galantspeedz]

There is an instrument call CFD.......

 

 

and if you hold the buy overnight, you need to pay interest, if i rem correctly and if you have a margin call, you have to top up too.... dun forget........

[Beehive3783]

if you are investing in something and the returns can more than cover the the interest rate on the loan, then i think it should be ok to take loan so that you have more cash to move around your investments

[Kusje]

bro, u mentioned taking a loan of 50K of 100k car, leaving a balance of 20k cash on hand to buffer in event of job loss, etc.

 

then when kena chopped by company, how are u going to service the car's loan? tht 20k can last u for how long?

 

furthermore, if u decided to sell the car after being jobless for say, 3-6months (it's normal now), then do u ever think how much do u need to PAY UP??

 

 

Um, Longer than if you had 0 cash balance? Effectively, the additional cost to you is the interest on that 20k.