Friday, July 9, 2010

Another Way To Buy A Car

Someone was telling me yesterday about how he bought his car. He put a $10,000 downpayment (a windfall) down on it and the payments were a little over $300 a month. He was telling me about how the extra $300 a month was more of a hardship for their family then he had anticipated.

Here's another way to buy that same car. Let's say you'd like to buy a new car that costs about $20,000. You've got an old car that works so either you use an unexpected windfall or you spend a few years saving up $20,000 to buy the car.

Instead of these traditional methods of buying a car you could do his instead: what if you would take the $20,000 and instead of buying the car outright you, put it into an alternative investment with a return of 30% per year that pays monthly. Thus, the investment income per year would be $6000 (or $500 per month) - more then enough for the car payment! This is how the wise and wealthy buy vehicles - they simply buy an investment whose return will pay for what they want.

The best thing about doing it this way is that at the end of the investment (usually 1, 2, or 5 years) you get your initial investment of $20,000 back! So you get a car plus your initial $20,000. Seems like a pretty good deal to me.

Of course to do this you need to be able to save up the initial amount/receive a windfall, find an alternative investment, and manage the risk of the investment. But such things are indeed possible for the average person. Jobina and I have this kind of investment (a 30% return for two years, paid monthly). If we can do it, anyone can!

4 comments:

Marc Vandersluys said...

A 30% return? Guaranteed? Sounds fishy to me...

Anonymous said...

If I were to make an alternative investment what would be a wise thing to invest in?

Steve B.

Mark said...

Marc: All investments are risky in some way; alternative investments are usually higher in risk then stocks or mutual funds (usually but not always) but have higher returns. They are not securities (like stocks, bonds, mutual funds) that are protected by law. So you have to do your homework. You wouldn't want to invest in a ponzi scheme or something like that. Also, your money is usually tied up for at least a year (sometimes more) so you don't have much liquidity. But yes, 30% is quite possible. Most large cities have a few places that sell such investments. The place we went to had different investments with returns from about 10% (low risk) to over 40% (highest risk).

Steve: If you are interested in such investments then perhaps we could chat sometime. That way I can fill you in on what I have learned about them and direct you to a person who can tell you more . . .

Anonymous said...

That sounds good. Any idea of when it would work?