March 19, 2014

Why buying a car is a bad decision?

Cars are depreciating assets. In fact, if you buy them on a loan, as far as I am concerned they are a liability.

Suppose you want to buy a car today.
It will cost you approximately Rs. 5 lacs (assuming a small size medium range car)
5 years down the line value = Rs. 2 lacs (at best)

Instead, if you invest the same money in an asset (anything from FD or PPF to Gold or Bonds)
Investment today = Rs. 5 lacs
Assuming a 8% ROI & neglecting taxes,
5 years down the line, value = 7.34 lacs

Difference = Rs. 5.34 lacs that is you have a difference sufficient to buy a new car. (Not that you should)

Jewelry is a better expense than cars anyday, as it has some inherent value attached to it, but I still don't recommend jewelry as an investment.

So, if you have a good public transportation system, use it. You can save a lot of money by not buying a car.
& that is what I want anybody who is seeking my vote in the coming election, to do. Make a good, reliable, safe & hygienic public transportation system in Jaipur.

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