Buying a new car is every sane living men dreamt about once they know how to drive. But the price of cars nowadays isn't cheap for an average people to buy new ones. Not to mention the price of spares, road tax, fuel and maintenance needs depending on the car brand you choose for daily commute.
Cars is not anymore a luxury item it is a necessity but, owning them is not a good investment as the value deteriorates faster than any other investment. The fact is new cars loose 12% to 25% each year once it is drove out from the showroom. On average a new car will loose 60% of its total value over the first five years of its life. The depreciation value will be depending on the used cars brand and type demand in the local used cars market.
The rule of thumb in investing and saving is you do not invest something that can depreciate in value. Once you bought an investment it must me increase in value at least 10% to 20% annually in order to be Financially Independent People (FIP). The idea of only business people can be financially independent is not correct. People who are not doing business but managed their money wisely will also be financially independent.
If you have to invest for a car weather it is a new or a used you need to look into your yearly income. If the car payment including it running cost is more 25% from your total net income then the investment is not worth. Example if your net income is $60,000.00 per year or $5,000.00 per month, The cost for running and hiring a car in annual is $15,000.00 or $1,250.00 which includes hire purchase fuel and maintenance. This is the maximum value of your transportation cost in annual. The is only a suggestion because Financially Independent People focus on being debt free and increase the value of their investment.
Below is the link to check the depreciation value calculator to check the value of your car.
https://www.omnicalculator.com/finance/Car-depreciation
Cars is not anymore a luxury item it is a necessity but, owning them is not a good investment as the value deteriorates faster than any other investment. The fact is new cars loose 12% to 25% each year once it is drove out from the showroom. On average a new car will loose 60% of its total value over the first five years of its life. The depreciation value will be depending on the used cars brand and type demand in the local used cars market.
The rule of thumb in investing and saving is you do not invest something that can depreciate in value. Once you bought an investment it must me increase in value at least 10% to 20% annually in order to be Financially Independent People (FIP). The idea of only business people can be financially independent is not correct. People who are not doing business but managed their money wisely will also be financially independent.
If you have to invest for a car weather it is a new or a used you need to look into your yearly income. If the car payment including it running cost is more 25% from your total net income then the investment is not worth. Example if your net income is $60,000.00 per year or $5,000.00 per month, The cost for running and hiring a car in annual is $15,000.00 or $1,250.00 which includes hire purchase fuel and maintenance. This is the maximum value of your transportation cost in annual. The is only a suggestion because Financially Independent People focus on being debt free and increase the value of their investment.
Below is the link to check the depreciation value calculator to check the value of your car.
https://www.omnicalculator.com/finance/Car-depreciation
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