Sheer driving pleasure. – BMW slogan
The automakers at BMW has been using this slogan since 1973 and it is featured on all advertising for BMW automobiles and motorcycles.
Their tagline explicitly uses the word pleasure to describe driving. And if you want that pleasure its’s going to cost you, at a premium.
New cars are now averaging $700 per month.
The University of Maryland College Park (UMD) has an annual Room and Board that is about this cost of $700 per month for that new car: Room (Standard 2-person w/AC, includes Telecom fee) $8,860.
For some perspective, keep in mind that $700 times 12 months = $8,400.
A mere $260 more will keep you housed and fed on a university campus at the UMD, which is considered a Public Ivy, for an entire year.
Penn State and other public and private colleges are even higher.
When looking at these new car prices, you may see why some Facebook engineers chose to live in their cars rather than pay $3,000 rent on top of that car payment.
Most folks just do not have $3,000 per month to shell out on just rent and car payments, let alone $3,700.
I spill all the tea on my new car story here.
Therefore, before you decide to start writing that check out for $700 every month, I want you to stop and consider this. Gas prices are topping $3 per gallon. Insurance keeps on moving on up like The Jefferson’s!
Expenses for the average joe in the middles class keeps on going higher and seems never ending.
Instead of paying $8,400 a year to floss in a new BMW, you can invest that money instead.
Let’s say the car payment will last you seven years. During that time if you put that money into stocks you could have a nice head start on your retirement savings. That sounds real good considering the average portfolio is worth about $30,000 for folks under 30.
Please also take note that I said to invest in stocks and not cryptocurrency. No Dogecoin, Bitcoin, Ethereum, Tether or Binance USD. After the FTX bankruptcy, no one can call these investments safe.
A great story on the FTX fallout was written on White Coat Investor and can be read at this link. Sam Bankman-Fried’s (SBF) net worth peaked at $26 billion and then sank to $100,000. This fallout was one of the worst destroyers of wealth in all of human history.
Nevertheless, I digress.
Going back to the new car payment being invested instead, over a seven-year period with a rate of return (ROI) of 10%, you could have $87,661 in your 401(k).
Please note that the ROI of 10% is doable as that is what the stock market has averaged. The historical average yearly return of the S&P 500 is 10.356% over the last 100 years, as of end of November 2022. This assumes dividends are reinvested.
If you decide not to invest another penny, over 26 years, you would have 1,044,764. Not buying a new car can literally make you a millionaire.
Maybe that is why Jim Cramer decided to keep investing in stocks even though he couldn’t afford rent and had to live in his car. He knew what it could mean for his future. By the age of 45, he had amassed a $1.5 million dollar nest egg in his brokerage accounts.
Remember those people on Pimp my ride from the MTV show. Wonder if they still even have those cars from back in 2008.
With all the money they spent on custom rims and tricked out this and that, if even one car was repossessed, it was all for naught! #*k cars!!
Buy the product. Own the business. Get the stock. Let those dividends pay for your future car with cold hard cash.
Take a lesson straight out of South Park’s playbook.
However, instead of foreign stocks, I prefer to just stick with domestic, as most companies are international and provide you with global exposure.
You just have to decide which one you want more: a new car or financial freedom sooner rather than later.
