When I worked at the bank, I noticed something interesting. All of the officers had cars worth less than the regular employees. I knew that officers made more than non-officers. I always wondered why people who make less have cars worth more.
I figured it out one day. All of the officers had nice, reliable cars. They were not bad by any means, but they were not flashy and expensive. One of the guys made a comment about it. “Cars are depreciating assets.”
While the officers did not have cars that were flashy, they all had nicer homes and condos. The non-officers almost all rented. Real estate is an appreciating asset.
If you buy a car for $15,000, it is worth less every day. If you buy a home for $200,000, it will generally be worth more. Cars go down, homes go up.
When deciding what to do with your money, do not go put it in cars. I can’t make that as an umbrella statement. Do put your money in cars if you can afford cars that go up in value (like a McClaren F1, only $1 million). But for most of us, real estate or securities are a much better option.
