In Reply to: Paying cash for the car (for Larry and others) posted by Anders on October 06, 1999 at 01:35:13:
: I happen to know just enough about finance and investing to agree with most (only most) of what Larry said. His seems to be in the investment arena long enough to understand the risk involved and the expectation level for long term investing. But for most of the silicon valley techies who cannot start working in the morning without looking at their my.yahoo page and stock quotes, investment may mean chasing hot IPO, and internet startup and such. Having a 200% rate of return in one day of trading is not uncommon.
: Back to the original topic, and just to complicate this discussion further, there are pro and cons about financing vs paying cash. Paying cash helps you increase your cash flow on a monthly basis, reduce your debt ratio; the downsides are, you have less working capital to invest, unexpected emergency expenses, and perhaps catches on oppuntunity rides.
: As far as financing, you have more capital on hand, you are feel to invest and "grow" the money. But you are now on a bigger risk (laid off, market melt down, Alan Greenspan felt off the windows... =). The risk of baring an unnecessary loan has to be taken into account. Depends on your age, risk tolerence level, and liability condition, financing may be more suitable for younger adults then more experienced folks.
: So as a result, different strategy works on different circumstances.
: Having said that, can we move on to different topics now?
: - Anders