Total Value of Fund - $ 846.72
I think the main thesis of the video is the investing part, take the normal car payment the average person pays, but instead of paying the finance company pay yourself the same payment in a mutual fund that gives you a return. Then, once the fund reaches 20K use only the return to buy your future car for 14k - 18k every five years, assuming market average return of 12 %.
Some Comments Others have made - "Can't Sell a Used Car for what you paid for it"
Regarding the used car, I think Dave also has a point – a cheap car loses VERY little in value compared to a newer car. I have been fortunate to make more than what I have paid in at least three cars –
- 2001 Sebring - paid $3,500 in 2004 got 6,000 in 2009: it was stolen & totaled
- 2006 RX-8 - paid $12K in 2009 got $14k in 2011: the market for used car in 2010 was bad and the prices were low, and I got KBB for it when I got rid of it.
- 1996 Town & Country Mini-Van - paid $200 in 2008 and sold it for $1k in 2015 - drove it for many happy years!
However, this is likely atypical. I believe on average that a car owner cannot get back 100% for what he/she paid. But, I believe the depreciation is so little, e.g. a few hundred dollars for a used car. So, Dave was correct, so call it approximately zero.
If you have a problem with the numbers, you can always change the math, say you paid $6K for a used car, you could likely sell it for $5K in one year.
The cool thing about the video is using the law of compound interest to pay for cars – that is the drive free part. Hopefully, I can document that in my little unheard of blog – to see how well I do.
Motivating videos -
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