Invest Your Car - ish
About 18 months ago I was spending around £660 per month on a lovely shiny new Audi S5 before I had even paid for petrol, insurance, tax or servicing. Whilst I enjoyed the thrill of the car at the beginning I eventually started to get a bit bored of doing Launch Controls and started to drive it like a normal car : It was at this point I realised I was wasting money. I am not saying I won't go back to having an 'exciting' car again but I certainly have noticed the difference in the spare cash I have left over to invest each month since I got rid of it.
I wonder how many of you know how much money leaves your account each month on direct debits? Just reading this do you have subscriptions like Netflix, Disney, Sky, Amazon Prime, Hello Fresh etc etc. Put on top of that the over the top cars, the holidays and the monthly spend starts to seriously rack up!
I noticed recently on a US finance website a discussion about wasting money and investing early. Now the definition of wasting money is different for everyone - for some it is cars, others it is food and for some holidays (holidays a waste, who are these people!). After reading and seeing the figures I wanted to see what would happen if you swap out your car. I based the below on the resale value of the below cars 2 years in the future on a like-for-like basis with an extra 24,000 miles on the clock.
The numbers are staggering!
Now obviously it doesn't have to be a Prius as opposed to an A5 but it really does demonstrate the point. The depreciation on the almost new car vs the 3 year old car coupled with the petrol savings are insane.
Now imagine putting that into a pension and getting a further uplift from the tax relief!
This is all great but what can I do to improve my finances?
Simply call a local independent financial adviser - most will happily have an informal chat with you and help guide you to useful resources and, importantly from your perspective, identify if there is a need for advice. You should not pay an independent financial adviser for a chat or a first meeting and the great news is that we have to be qualified to offer advice and most advisers are very good at their jobs!
If you don't know much about the advice process then we have created a 6-step guide here.
The contents of this article do not constitute financial advice. You should always speak to a regulated independent financial adviser prior to enacting anything discussed in this blog. Investments can go down as well as up and your capital is at risk. Inflation has not been factored into the calculations and therefore the future value of investments are likely to be worth considerably less in real terms. The figures used for the calculations assumed the quoted mpg per vehicle and the insurance premium was based on the cheapest quote for a 32 year old female. The depreciation was based on a like for like car bought and sold via list prices on Autotrader.com as at 23rd March 2021