Why would anyone look buy anything expensive with straight cash?

Reno89

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I'm fairly new to investing, so Maybe my math is off, but aren't these things true:

Instead of buying a $300,000 house cash, wouldn't investing that money instead generate enough interest to pay the mortgage every year without you having to do anything?

Instead of buying an $80,000 car cash, would you be able to invest the 80,000, and it generate enough interest to make the payments? would you ever have to pay for a luxury car ever again? You can actually sell the car once the payments are done, and just throw it on the investment.
 

Jay Kast

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Depends on what financial vehicle you're investing the money into (stocks, mutual funds, CD's etc)

Mutual funds (the good ones) average 8%-12% return on investment per year.

80k would return about 8k per year.

8k ÷ 12 months = 666.66 (u the devil bruh lol)

So if your 80k, financed vehicles' monthly payment is less than $666 (which I highly doubt) then it would work.

ALSO, any profit from certain investments are subject to capital gains tax if collected within a year.

300k invested x 10% = 30k a year
30k ÷ 12 = 2.5k per month

So as long as your mortgage is under $2500 (which is very likely depending on length of loan) yes, it will cover.

This is simplistic bare bones math which doesnt account for any fees, taxes, hidden charges etc which do account for a significant amount.

It's my plan as well.
 

OfTheCross

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Depends on what financial vehicle you're investing the money into (stocks, mutual funds, CD's etc)

Mutual funds (the good ones) average 8%-12% return on investment per year.

80k would return about 8k per year.

8k ÷ 12 months = 666.66 (u the devil bruh lol)

So if your 80k, financed vehicles' monthly payment is less than $666 (which I highly doubt) then it would work.

ALSO, any profit from certain investments are subject to capital gains tax if collected within a year.

300k invested x 10% = 30k a year
30k ÷ 12 = 2.5k per month

So as long as your mortgage is under $2500 (which is very likely depending on length of loan) yes, it will cover.

This is simplistic bare bones math which doesnt account for any fees, taxes, hidden charges etc which do account for a significant amount.

It's my plan as well.
Great idea, OP, and nice breakdown, Jay.

The hard part, truly is, coming up with the $500k to invest.

For 99% of people, it would take a lifetime.
 

Ish Gibor

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I'm fairly new to investing, so Maybe my math is off, but aren't these things true:

Instead of buying a $300,000 house cash, wouldn't investing that money instead generate enough interest to pay the mortgage every year without you having to do anything?

Instead of buying an $80,000 car cash, would you be able to invest the 80,000, and it generate enough interest to make the payments? would you ever have to pay for a luxury car ever again? You can actually sell the car once the payments are done, and just throw it on the investment.
Usually a car looses value, unless you purchase a “super classic model”, which I doubt you do. Perhaps leasing a car is an option?

A house will increase in value. Put more into your home and less into a car.
 
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CopiousX

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The answer is different for both cars and houses in an all-cash transaction.

For houses, you would typically put your money 100% cash for the sake of principle security and a higher return than a bond, CD, or money market account. It’s treated like a savings account. Outside of the freak event of 08-09; houses have been a safe spot to keep cash. Makes for good diversification also.



As for luxury cars, most nouveau-wealthy agree with you. luxury viehcles in that price point(lower end range rovers, 7-series bmw, jags, etc) are financed and not owned in the US. I recall reading somewhere that it was 70-75% of them. There is really no reason to buy a car cash because of that same depreciation (vs gains elsewhere) that you mentioned.


The only real utility for an all-cash 80k car purchase would be if your pockets were so deep that you didn’t notice. I’m sure this is a burden all our 6fig6cert ColiBrehs must bear.:mjlol:
 

Breh the HitMang

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I'm fairly new to investing, so Maybe my math is off, but aren't these things true:

Instead of buying a $300,000 house cash, wouldn't investing that money instead generate enough interest to pay the mortgage every year without you having to do anything?

Instead of buying an $80,000 car cash, would you be able to invest the 80,000, and it generate enough interest to make the payments? would you ever have to pay for a luxury car ever again? You can actually sell the car once the payments are done, and just throw it on the investment.
clowns just wanna stunt
 
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