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Off TOPIC question
#1
Hi everyone! My DGI portfolio is kicking a$$ lately. Thanks for everyone's help and input.

I recently got a different Engineering job that pays a lot more than I was making and I feel it is time to upgrade my trusty 95' Jeep. Sad

If I were to sell all my stocks I could flat out buy the car I am looking at. Or I could make a decent lump sum payment with the money in my savings and finance the rest, while my portfolio keeps on growing...

I know this isn't probably the best place to ask, nor are you guys/gals my financial planners so don't feel obligated to answer.

If in my situation and with your experience knowledge, what would you do?

Sell stocks and not finance?
Finance and keep the divs rolling in?

Thank you

Twil
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#2
You didn't say anything about numbers you are working with, but if it was me I'd save some cash and buy something cheaper and leave your portfolio alone.

Don't finance it; if you can't buy it in cash you are buying too much car.

Just remember that no matter what you buy for a vehicle, it will be worth 50-90% less 10 years from now than what you are paying for it.

I'd rather spend $10k on something used and have it be worth $2k five years from now than spend $35K on something new and have it be worth $10k ten years from now.
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#3
Thank you for the input.
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#4
I second the idea of "if you can't buy it in cash you are buying too much car."
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#5
It is tough to answer questions at the intersection of investing and lifestyle. You need to enjoy your life, and to make the spending decisions that are consistent with that, while still honoring your financial goals.

If driving a new car is important to your happiness and well-being, then so be it. I agree with the others that you should accomplish it without touching your portfolio. You said it is kicking a$$, so why mess with it. A good DG portfolio needs years and years to do its thing; best not to establish a precedent of raiding it when a purchase comes up. That portfolio is the goose that will lay golden eggs for the rest of your life -- don't sell the goose for a new car that will only depreciate in value the moment you drive it off the lot. Buying more car than you need or can afford is voluntary handcuffs; buying more income-producing assets is freedom.

If it were me, I'd stick with the "trusty" jeep until it dies of natural causes. Then buy something reasonable. Maybe keep the Jeep and start a new car fund that you put a few hundred dollars into every month?

Edited to add: And if the decision is truly binary: sell stocks to buy the car or finance, then I vote finance. Even if the spreadsheet dictates otherwise. The portfolio, and the discipline of keeping it growing, is sacred.
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#6
I vote leave the portfolio alone, and take that variable out of the car buying equation. Then make your decision on a car based on your income and whether you're willing to take on debt. Debt is cheap right now, so it's not necessarily a bad idea. Debt is cheap enough that you have a reasonable chance of making a higher return on your portfolio than you will pay in interest on your debt.
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#7
Wow! How unique am I, I agree with keeping the Jeep and letting it die unless it needs expensive repairs. I dove a truck to 250K and the pathfinder I have has 150k and a lot more.
If you must purchase new wheel, you might be able to get great interest to no interest. Good luck. DON'T TOUCH YOUR COMPOUNDING MACHINE.
Jim
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#8
Thanks for the replys...
@kerim
I know it's not a binary choice, I was just thinking of it as a binary choice if I were to buy today. In reality, I will not be purchasing for another 3-6months at least.

@earthtodan
That's what I was thinking about having my portfolio have a greater return than the interest of debt.

@jimbo
The ole jeep has 248k right now. Just replaced O2 sensor, things are starting to fall apart Smile But, I'll have the car for another .5 probably. Need to save more.
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#9
I enjoy nice rides with heated leather seats! We keep for the long term and buy used when the time comes, usually off lease.

If I was flush with money I'd be buying a Mercedes : )


Oh, but I would never cash in any of my portfolio to buy a car, if the car loan is reasonable then what's the harm? We find a happy medium, a decent down payment with a modest loan on an above average vehicle. Our cars are 12 and 5 years old respectfully.
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#10
Well why did you start your DGI portfolio in the first place? For most people it's for the extra income, retirement planning etc. In that case, why on earth would you touch it for a new car?? Makes no sense.

I think it's pretty obvious to leave the portfolio untouched. Then the choice becomes.
a) Get a loan and buy the car now.
b) Save up $xxx per month on a separate account and use that to buy a new car later on.

And that really is up to you. Of course option B makes more financial sense but life isn't all about the $$$ and debt is cheap nowadays so if you feel like you want/need a new car right now then option A definitely isn't a bad way to go.
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