Imagine I come to you with “an investment.” I ask you for $20,000. A second after you sign on the dotted line, this investment will be worth $15,000; a year later $14000. Your investment value will continue to diminish each and every year. If you decide you want out, you can return the investment back to the man who sold it to you. The only catch is that he’ll only give you half of what it’s worth at that point.
Not interested? Maybe this will change your mind.
What you’ll get in return for you investment: confidence. You may not receive an interest payment, but people will respect you. People will think you’re successful. People will think you’ve made it and you have your shit together.
All it will cost you?
At this point it should be common knowledge that a car is one the worst investments one can make. It’s hard to deny this given the depreciation in car value. The problem I have is that I don’t view cars as an investment. According to Wiki, an investment is “putting your money into something with the expectation of gain.” Does this sound like car buying?
The argument could be made that an investment is anything you spend money on. Any time we delay consumption, we are investing. With this argument in mind, everything is an investment; so I can’t agree with this.
My goal for this post is not to defend car buying like I did previously in The Five Worst Investments. What I do want is to confront the double standard of vehicular ownership.
If someone pulls into your driveway in a 2011 Mercedes, what is the thought that comes to mind?
If someone pulls into your driveway in a 1990 Dodge Caravan, what is the thought that comes to mind?
Do you think of the Dodge driver as a brilliant investor? Do you congratulate him on his self-control?
Odds are no.
If you’re anything like me, you will view the Mercedes owner as a successful (wo)man; rather than someone who made an idiotic investment. It’s humorous and ironic to see how people (myself included) preach certain procedures of car-buying while their perceptions appear contradictory.
The Story That Brought This Up
I was speaking with a realtor that just purchased a new car. He landed on a Lexus, but the final decision was between the Lexus and Hyundai (2011 Genesis). I have never heard anything bad about a Lexus. I’ve also heard nothing but good things about the new Hyundai brand.
After test-driving both vehicles he actually liked the Hyundai better, so I had to ask, “Why didn’t you get the Hyundai?”
He explained to me that in his line of work, what he drives is extremely important. If he had come home with a Hyundai, people would think business is bad. If he had a Porsche, people would think he is too expensive. He found the Lexus as a happy medium.
Have you noticed a double standard in car buying?