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sounds like a story I've told MY wife, too........ (archive)

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Posted by David on April 23, 2000 at 11:58:31:

In Reply to: 00' M Coupe posted by SteveM on April 22, 2000 at 23:37:25:

"Let's buy it - it won't lose value, so we'll really be making money on it." If you accurately calculate the cost to you of almost any car over time, you'll get a surprise. There's a technique called "net present value" determination that's based on the current value of future dollars spent. A dollar you will have in 2010 is really 38 cents today invested at 10% per year. If you spend $40k on a car today and it's worth $40k in 10 years, your cost is NOT zero. The future value of the car equals an investment of $15,200 today with a 10% annual return. But you've also LOST the return on the $40k you "invested" in the car, which would be $63,750 at 10% per year - and that's just the interest. So you make $25k on your $15k investment (i.e. the future value) but it costs you $25k in opportunity cost (the net present value today of the return at 10% on that $40k over 10 years) to buy the car in the first place. This gives your purchase a net present value of ZERO. And that's without figuring in the costs of storage, insurance, maintenance, repair, financing or leasing etc. Also, that $600 you just spent on a stainless muffler would have been $1600 if you'd invested it at 10% for 10 years. AND - you can't use the car regularly and enjoy it if you're trying to preserve it for posterity.

Add in the uncertainty over development of collector interest and the need to maintain the vehicle in bone stock condition to have collector appeal, and you really can't justify buying an M coupe (or almost any new car) as an investment. I say buy what you like and can afford, and enjoy it. A new car is nothing but a depreciating asset to a bean counter.

Prioritize. Decide how much you want to invest and how much you want to spend on a car. Separate the two and you'll do better in the long run. If you luck out and a cult decides to deify your particular vehicle, take the money and run (if the money means more to you than your car). The difference between a 3.2 M and a 3.4 M just isn't significant enough to me to influence a buying decision. But if it is to you, invest the money you would have spent on a 3.2 today and you'll have a year's return. Then you can decide between that leftover or slightly used 3.2 and a new 3.4 next to it at a higher price next year.

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