Stunning cars and currently undervalued IMO.
Investing in a Car
- Thread starter Michael Myers
- Start date
Stunning cars and currently undervalued IMO.
This is a key point, the S2000 shouldn’t really throw up any massive bills. I recently picked up a Cayman and there’s quite a few things that have the potential to significantly increase the amount of money I have in it, thus reducing any ‘investment’ potential. But residuals are strong so I know I should always get a chunk of change for it.
Yep you also have to factor enjoyment, if you pay 14k for an S2000 today, own it for three years and put 20k miles on it and sell it for say 18k you not only made a profit but you had three years of fun.
Oh I agree, but the point I was trying to make is that some cars touted as future classics or whatever have the potential to throw up bills. The S2000 is pretty good in that regard - but it’s definitely a factor to be considered.
Yep! A lot of fun to be had in a S2000 for sure!
I think the question should be rephrased as “depreciation free motoring”.
Good call, in Gibbo's example above, paying 14k today and selling for 18k in three years gives you 4k profit, but you have to minus any expenses on the car during that time (ignoring fuel for arguments sake).
Tax alone chews up £1600 odd, then insurance if we say £300 a year, that's £2500 in costs already.
Now you have to pay those on any car so there's an argument to say those costs woudl be incurred whatever, but in this scenario we are talking about buying a second car specifically to be an investment/depreciation proof fun vehicle so I still say it's valid to include.
Then there's any servicing etc which if keeping as an investment to punt on later you have to keep on top of things to retain the value.
So for most things at this level I'd agree it's a case of getting things so that you at least break even after the term of ownership.
I disagree. road tax and insurance should be excluded. Depreciation and repairs fine to include to assess whether you can make money/break even
Its all a case of picking the right car that is going to increase in value. A few years ago my dream car was an Austion healey 3000. You could buy them for £30k to £40k but I thought that was too much for just a summer/weekend car. Roll on to today and they go for £60k to £80k. So If I had bought one, I could have enjoyed it fro several years and even with some repair costs to keep it on the road, i would have made a tidy profit.
Caporegime
- Joined
- 20 Oct 2002
- Posts
- 77,793
- Location
- Wish i was in a Ramen Shop Counter
Why would you exclude tax and insurance? Are you not planning to drive it at all and have it SORN?
No but any car you buy will have tax and insurance so its irrelevant (unless its a car with particularly excessive insurance or road tax)
So if you were getting a second weekend car anyway and its just a case of picking one which is going to cost you nothing or even make you money then may was exclude things which are going to be the same for all cars that you are looking at buying.
Plus if you buy the right s2000 then its only £260 a year road tax.
Why though? They are costs associated with the 'investment', if it was the only vehicle to be used then you could argue they would incur cost regardless, but as a second vehicle which for the purpose of this thread is for invesment they should be included.
As you say it's a case of picking the right car, for now at least the gains an S2000 would give are going to be roughly in line with the costs associated with owning it.
But in this case the car is being bought as a bit of fun/investment on the side so the 'any car will have those costs' I don't see applies here as he's partially buying this for the investment factor as well as fun.
Last edited:
Caporegime
- Joined
- 20 Oct 2002
- Posts
- 77,793
- Location
- Wish i was in a Ramen Shop Counter
£260 a year road tax over 10 years is £2600 + insurance, even say £40 a year to add on, you are still looking at £3k hit against your profit.
It is all the part of cost of ownership, you can't own it without paying it, unless you SORN it, which defeats one of the purpose of the OP, which is to enjoy the car. Sure, £3k hit if the value shoots up £100k is nothing, but £3k hit if it shoots up £10k then you need to factor in a 30% loss. It's not nothing.
Therefore you need to look at projected profit vs other forms of investment, i.e. historic stock market gains (7% annual) and yes I realise there may be a recession on the horizon but we are talking about historic and we are all talking about what if.
If investment is criteria 1 then you need to look at what earns you most, if enjoyment is No. 1 criteria then balls to the wall, buy whatever, but you still can't remove numbers like tax and insurance because that counts as it comes out of your pocket.
If some is truly buying for investment only I suspect the cars are SORN and just sit in a garage/warehouse for say 5 years and are re-visited when they have made solid gains, then taxed, driven and serviced etc ready for sale, if your buying and using its not really a true investment but more along the lines are depreciation free motoring as the insurance, tax, servicing and cost of upkeep will generally offset the appreciation.
Difference is the OP said he wants to drive it. If you are buying a car as an investment you put it in a heated garage for a few years. .
Lots of people buy "classic" cars as an investment combined with enjoying them by driving them as well. That is what the OP is after IMO. If he wants a car to lock up for the next 5 to 10 years purely as an investment then its a different list of cars.
To me the Op was looking at "splashing some cash" and hopefully will get all his money back and a bit more in 5 to 10 years time but will have had an enjoyable 10 years motoring.
To me the road tax and insurance are irrelevant. You can include it if you want. But to me those two things along with the fuel is what you are paying to enjoy the car for those 3,000 miles each year.
Picking the right car so your original "investment" of £15k goes up each year and you secure a "profit" in 10 years time is what the OP is after. Nowhere did he specify that it had to outperform the stock market!
Caporegime
- Joined
- 20 Oct 2002
- Posts
- 77,793
- Location
- Wish i was in a Ramen Shop Counter
Exactly, OP wanted to drive it, then the insurance and tax need to be included in the negative column.
But not if you were going to buy a car anyway to use as a weekend car!
Look at it this way.
You want to spend £15k on a fun weekend car.
option 1: Buy some non descript hot hatch. You pay road tax and insurance but it depreciates and is worth £3k in 10 years time
option 2: Buy an appreciating future classic. You still pay raod tax and insurance but it appreciates in value and is worth £18k to £20k (or more)
Hence why the road tax and insurance in irrelevant. You have those costs whatever type of car you go for.
Agreed they are relevant if you are comparing the car to investing in the stock market but we arent.
Caporegime
- Joined
- 20 Oct 2002
- Posts
- 77,793
- Location
- Wish i was in a Ramen Shop Counter
I just have to wholeheartedly disagree.
For one thing, if you were to report it to the taxman for any potential gains, I bet you are going to report all the costs on the car, including tax and insurance.
I had money sitting in a bank account so I bought and s2000 lol!
I don't expect it to increase in value more than the cost of running it(insurance, tax, fuel, servicing etc)
but what I am happy with is the fact that I can sell it for same money I paid for it or more already, that alone means I am literally just paying for the fun/experiance of owning one.
they're great cars and they are reliable so rarely will you get any eye watering bills, like @Gibbo said only alignment and rust is an issue but if you buy smart and stay on top of it, it'll be fine.
great cars too, mine is a weekend toy and while it can be daily driven without any issues, it does come with it's "cons" and I don't think I'd enjoy it as much if I daily drove mine.
I don't expect it to increase in value more than the cost of running it(insurance, tax, fuel, servicing etc)
but what I am happy with is the fact that I can sell it for same money I paid for it or more already, that alone means I am literally just paying for the fun/experiance of owning one.
they're great cars and they are reliable so rarely will you get any eye watering bills, like @Gibbo said only alignment and rust is an issue but if you buy smart and stay on top of it, it'll be fine.
great cars too, mine is a weekend toy and while it can be daily driven without any issues, it does come with it's "cons" and I don't think I'd enjoy it as much if I daily drove mine.
But you are missing the point if you were going to buy a car anyway the road tax and insurance are irrelevant
Caporegime
- Joined
- 20 Oct 2002
- Posts
- 77,793
- Location
- Wish i was in a Ramen Shop Counter
When "investment" is in the equation, every negative number counts.
Surely they vary between cars? For example, one of my classics costs £270 in tax a year, the other one is nil. I think that's important.