This is so much fun to watch.

 

 

Yes, this. My financial advisor will work out the best tax strategy that works for me. Let take a hypothetical example and say the market adjustment takes $200K of out of my portfolio. Well, that is basically the cost of the car and money I allocated for the car. If the money does not exist than no car. I don't have an endless supply of money and have no desire to take a loan for something that is totally not necessary. It is bad enough I will have to pay insurance and other fees annually. I don't want any other additional debt. I have to believe other people are in the similar boat regardless of how much money / assets they have as part of their portfolio. This is a luxury purchase and a way to treat myself based on smart investing in the past. In this case I have around 6 months for the market to recover and will keep my fingers crossed.

 

Couldn't you drive it for a bit then sell it at a profit. Almost like giving yourself a little bridge loan and a real nice temporary gt car.

 

Folks gotta do their thing. But paying capital gains and forsaking future appreciation in order to avoid a 2% loan for the pride of being debt free is not an objective position to the raw cost of the transactions. As for paying back the loan, he has the car as an asset to sell. They’re transacting for $50k over. That would cover the entire interest cost and taxes and leave some serious profit.

 

until the adm dries up....

 

Just thinking...If the recent market adjustment reduces your portfolio by $200K, you probably have a sizable portfolio which will likely go back up again over time. I have seen these fluctuations over the last twenty years and with a long enough horizon and a balanced portfolio a little leverage can work in your favor. Instead of pulling money out, borrow it at a low interest; a recovering portfolio will make up for the low cost of the loan. As another example, if I had $200K sitting around in cash ear marked in my portfolio for a car right now and I had the opportunity to buy that $200K car, I would not spend the cash, but rather borrow the money for the still very low interest rates (1.9% +/-). My $200K in cash would be ready to pick up a few undervalued shares in the near future in anticipation of recovery and likely make up more than the 1.9% it costs me. Or, if the feds raise interest, you can pick a nice AAA Muni bond at 3-4% tax free, covering the cost protecting the principal and even making you a little money...Is that a bad thought? I'm sure there are smarter, real and actual finance guys to chime in...

 

Forget about the stock market correcting, you have a another big elephant in the room and that is the FED. Interest rates are going up this year, just look at the 10 year treasury and how it has climbed over the past few weeks. if rates push higher then you get less bang for your buck and therefore that nice sports cars starts to look really expensive. Lets not forget what higher rates did to the housing market in 2008. Who knows what it will do to crypto and tech stocks, let alone the car market.

 

Ditto - Also, a really good advisor would trigger a tax loss sale of your $200,000 portfolio and buy back those same stocks after 30 days so that you can realize the loss on paper and offset any future capital gains. Not only do you get a $3,000 deduction for the current year but you also carry forward excess losses into future years to offset any capital gains. This worked like magic in 2008

 

so dont buy cars now?

ok... ill sell them.

 

Poster didn’t say anything about adm. that could be a real problem. But imagining he has an allocation for June near msrp, giving it up instead of selling it is madness. At these interest rates, I’d take the loan as a hedge and the car. Worst case, he sells the car, probably at a profit. Best case, he keeps the car and pays off the loan early when his investments bounce back. A 72 month loan at 3% for 200,000 would $19,000 total interest. (200k is over most limits so you’d need a little down but this is an example)

i really can’t imagine being able to afford this car but then walking away over $19k that I might not even have to pay if the market recovers next year …

 

I guess everyone has different priorities, but my GT3 cash is sitting in cash fund earning ~5%, no ways I would risk my car money in the markets, I have other money working away at that. And yes, the car will be a cash purchase, that’s the deal I made with myself a few years ago.

 

What cash fund earns 5%?

 

Its an offset mortgage account, so technically the money is saving interest rather then earning interest, but it’s still doing work for me. I don’t live in the states, there are much higher interest rates here. But, the point is, I wouldn’t risk my car fund on an investment.