07-12-2016, 10:15 PM | #23 |
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07-12-2016, 11:21 PM | #24 |
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Drives: M2, X2 M35i, X6,328i,230i
Join Date: Jun 2016
Location: Texas
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Garage List 2017 BMW 230i [0.00]
2022 BMW X2 M35i [0.00] 2015 BMW 328i [0.00] 2008 Jeep Commander ... [0.00] 2017 BMW M2 [0.00] 1997 BMW Z3 1.9 Roa ... [0.00] 2014 BMW X6 xDrive35i [0.00] |
Depends on your situation. Everyone that says to finance and invest your money are exactly right from a textbook standpoint. However, I plan on putting $20K down but there is still a part of me that says "just pay for it and be done with it." If you really just kind of fell into this money and aren't used to it then going into debt might not be a good idea. You need to have a solid financial plan or you may think you have a lot of money but wake up broke one day. Been there, done that. In fact, don't even buy the car if your current income can't easily afford it (unless this "circumstance" is really a lot of money.) Don't mean to preach to someone I know nothing about but, seriously, be smart.
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07-13-2016, 08:44 AM | #25 | |
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07-13-2016, 09:10 AM | #26 |
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I think he was referring to the compounded interest you would make from investing, not the interest paid for the loan.
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07-14-2016, 02:29 AM | #27 | |
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07-14-2016, 05:08 AM | #28 | |
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If you choose an index fund, it's passive. Index funds try to match the market or get really close. There's no need to become a day trader since you know you will get pretty solid returns since the whole goal of the fund is to match the market. So, it's a set it an forget it solution, which is why I originally suggested to not even look at it or touch it until 2021 (when most car loans are paid off, 5 years). Regardless of what you choose, talk to a financial professional, watch this video from John Oliver about retirement, and good luck! |
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07-14-2016, 11:53 AM | #29 | |
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I have one more point that I'm not clear on. The idea of putting 50% down and parking the remainder in another account to maintain some liquidity made perfect sense to me (vs. paying for the car outright). I could then just automate the monthly payments and forget about it (and gain that juicy .02% interest). So now if I decide to invest the remaining 50%, would I be able to pull funds from it on a monthly basis to make my payments? Also, would it even be worth doing this since the balance of the account would be (probably) dropping at rate higher than the accrual of the investment returns? Side question: Does anyone know if the mutual fund gains in my 401k would be impacted by the glut of fees referred to in the video, or is this just something I would need to investigate? |
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07-14-2016, 12:08 PM | #30 | |
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Auto Interest rates below 2 percent right now are insane- almost free money. |
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07-14-2016, 12:10 PM | #31 | ||
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07-14-2016, 01:59 PM | #32 | |
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Those fees he's talking about are in every investment account, including your 401k and Roth/Traditional IRA. There will be a breakdown of fees somewhere in your 401k. Some funds are higher than others. Generally, Vanguard has the lowest fees so they are the best to move your money into. If you don't have Vanguard options in your 401k, find another one with good returns and low fees. They say 1%, but even that is too high. Then again, you may not have a choice. All depends on your employer and what that plan offers. |
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07-14-2016, 10:38 PM | #33 | |
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Thanks again for all the input and suggestions, it's really been a big help! |
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07-15-2016, 02:00 PM | #34 | |
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Personally, I agree with the people saying to put $0 down. That's what I did. I financed the entire amount at 1.55%. The cost of the interest over the life of the loan is negligible. I'm now free to do whatever I want with the money. Don't discount the value of flexibility. You never know when you're gonna need access to funds, quickly and cheaply. |
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