An Unavoidable Bad Investment

What if I tell you that I’ve $20,000 and I’m investing this amount in an asset that will lose 10% of the value immediately after buying the asset. Not only this, within 5 years of the investment, it will go down by more than 50% of its original value. Sounds like a great investment!

Sure, everyone does invest in this asset. You might be getting close to what I’m about to say. Yes, it’s an investment in a brand-new car. The purchase of the car makes it 10% less valuable immediately after buying it and within 5 years it is about half its value. Now things started making sense.

People stared to get on the move to gather the down payment for their dream car and willingly get in the burden of debt for next 5-7 years, just to have a convenient mode of transportation in to get your work done or simply because you want your dream car. And even if you have capacity of pay in full, it won’t be a financially wise decision. Don’t let your unnecessary wants come in the way of your financial independence.

Having a car is the need of the hour, and if you feel you really need to buy it then you could go ahead. But here’s a suggestion that will fulfill your need of a car and also make your bank account better off. Most people don’t consider the option of buying a second-hand car that suits their needs. If you buy a new car, it will not only cost more, but also you have to pay the road tax, loan processing fees and other legal fees, which in its counterpart you don’t really have to go through. Furthermore, you could invest those dollars that you would save if you buy a second-had car and increase your wealth.

Small steps like this not only helps us understand the things better, but also pave the way towards our financial independence. One more thing that could convince you to buy a second-hand car is that by doing so you will be doing a favor to the environment by preventing the damage, otherwise would have caused by production of a new car. Think about it.

Tell me in comments what do you think of this.

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Published by Vanshaj Bindlish

Writing about the stuff that I consider worth sharing with you.

30 thoughts on “An Unavoidable Bad Investment

  1. Article is very good as it describes the sound decisions you need to make considering your financial position as well but according to govt data and my personal opinion I have come to the conclusion that second hand cars cause more damage to environment than the new ones and add more cost as well like repairing, pollution check and all and this is where New Scrappage Policy of Govt. comes in place which will help you to minimize the cost if you already have a car by replacing it with new lower pollution causing ones by adjusting the cost…research a bit more on this scrappage policy as with your way of presentation you will be helping people in making a sound financial and environmental decision….otherwise this article helps a lot if you want to make healthy financial decision in short amount of words.👍

    Liked by 1 person

    1. 1. If a car goes to scrap and then manufactured again, there would be some degree of pollution, that otherwise won’t be in case of 2nd hand vehicles.

      2. The I’m not asking to choose from a car that is 8-10 years old or more. You could easily find a 1 year or less old car that would fulfill your needs and at the same time you won’t be causing enough pollution.

      India is a maket where there is 1.3 used car for every new car on the road. This shows the increasing demand of used car in India and also people are making good financial decisions.

      But if the car is really old and polluting more, than what you are saying is correct.

      Like

  2. Opportunity cost for a second hand car would be way more than a new one. Also, the manufactured guarantee that one gets outweigh the cost from financial perspective. Car pooling and use of public transport or cycles would go a long way in saving the environment. Also, different policy incentives for e-vehicles and developing the infrastructure for the same would be helpful from environment perspective.
    Nonetheless, a very beautiful and thought provoking article. Keep writing !!

    Liked by 1 person

  3. Opportunity cost for a second hand car (Searching for a perfect one in the absence of any regularised market structure) would be way more than a new one which may outweigh the cost from financial perspective. Car pooling and use of public transport/cycles would go a long way in saving the environment. Also, different policy initiatives such as FAME for e-vehicles and developing the infrastructure for the same would be helpful from environment perspective.
    Nonetheless, a very beautiful and thought provoking article. Keep writing !!

    Liked by 1 person

    1. Good thoughts on this.
      But platforms like Cars 24 provide you with all the information in a single space and it might take a little extra time but not that it will outweigh the financial cost that you would save. And this is more good when you are in your 20s, so that you don’t get in the burden of debt and you could start building you steps towards financial independence.

      Secondly, I’m focusing on choosing between a new car and a second hand car when someone really wants to have a car. But, of course, use of public transport and e-vehicles are on edge for environmental good.

      Like

  4. Bhai good info , nice thought and evn good suggestion also – but I personally don’t agree with the concept of buying second hand car – any wrong decision in buying second hand car will take you to the stage of mental stress and that is more harmful than not having the money in your pocket.

    Like

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