Agreed - I am making that assumption and I could be wrong. Statistically it's more likely that I will come out ahead but there definitely is a risk that I wont. I'm in a position where taking that kind of loss would be insignificant to me, so when I face these types of decisions, I always take the option with the higher expected return. I figure over the course of many decisions over a long period of time, on average I'll come out ahead...if I don't then so be it.I think you are just assuming the market will go up over the price of the loan, if the market goes sideways or down, then not only do you lose, but you lose twice, by paying a higher interest rate and also negative stock returns. So then the car actually costs the purchase price, the interest on the loan and the loss in the market. You could be easily paying 20-30 "interest" if you get unlucky.I could have easily paid for my car in cash last year. Instead I chose the longest loan possible (72 months) at 5.5% interest. The returns on the $65k I had invested in the s&p this year alone have been more than the interest I’d pay over the entire length of the loan.
Statistics: Posted by FireSekr — Wed Jun 26, 2024 7:05 am — Replies 50 — Views 2592