Re: Financial question (interest accumulation)

[Stephen Lafredo <slafredo@xxxxxxxxxxxx>]

:I disagree with you that paying interest on a car is not a good and sound
:financial decision. If you have the cash to spend on purchasing a car,
:shouldn't you keep that cash and finance the car as long as the car loan
:has an interest rate lower than your return on investment.

Your 100% right on this!

I did this for a retired family member. They wanted a new MB. The car was
slightly under $35,000, tax, tags, etc. I took $30,000 and put it in a
simple Index 500 fund, which has been averaging ~20%, probably will not
continue. The loan was for 7.5% and I selected the longer 5 year loan.

It has been two years now. The Index 500 fund is worth somewhere around
$36,000 and two years worth of car payments have been made!

When I originally started this, I was ONLY hoping to make enough interest
so that the last payment for the car would be the last dollars in the fund
and hopefully only owe a few buck more. Instead, if thing keep going the
way they are there will probably be a surplus of cash in the fund.

So ANY time you can earn more on your money than you are PAYING to use
it the deal is good. 
- --------------------------------oOo--------------------------------   
 Stephen Lafredo - 3.2 M3             email: slafredo@domain.elided

 Delaware Valley Chapter
 New Jersey Chapter
 National Capital Chapter

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