A car: Is it an investment, or not?

If its required for you to get back and forth to work, and there are no other lower cost viable transportation alternatives, then I would think it falls into the IS bucket.

We were a two-car family until a year ago, now we are a one-car family (by choice). I ride a bike (my favorite mode of transp), take the bus, and when I need to go to the other side of town (not practical on the bus or bike), I rent a car for the day. Savings: ~$300/month car payment, ~50/Month Insurance, ~$gas+maintenance. My rentals have probably totaled $500 for the year.

It would NOT be an investment for me to own a "good reliable" 2nd car.

He may also be using a brokers' definition of "investment." Then you are talking about semantics.

^ It's Dooka. If his old man is anything like him, he is definitely talking semantics, and neither of them will concede to the other point of view.

Pointless journal.

Its an asset, but not an investment. An investment is something that increases in value and reaches a price which is greater than original cost and all associated maintenance costs.

An asset is something that you utilize to generate income, but isn't income just on itself. In the event of a job, you don't necessarily need a car as an asset, because there are other forms of transportation available. You just need to choose the one that is of the least cost and provides you the greatest benefit, both direct and indirect.

what BDW said...

A car is an asset, not an investment (unless the car in question is something old and rare that you stole from Leno).

Asset: Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset.

Investment (finance definition): An investment is putting money into something with the expectation of gain, that upon thorough analysis, has a high degree of security of principle, as well as security of return, within an expected period of time.

Most automobiles, regardless of class, do not qualify as an investment. Even the most valuable cars (i.e. vintage vettes) are most likely a break-even or losing investment when considering the loan servicing costs, inflation, opportunity costs, maintenence costs, storage costs, insurance, broker's / auctioneers fees, etc. versus income from sale of the car.

A car is a depreciating liability that if owned outright can be termed an asset if used as collateral of some form.

End thread.

You all are against me, I know it. It's because of my large brain. You guys are threatened by it.

I'm convinced. Asset, not investment.

meepbox said it best in accounting terms, and from your perspective, that is how you should look at it.

Once again, listen to your old man, because he knows much more than you. Quit being a meeping punk and mow his lawn as penance.

I've seen a ~$5000 '40 Ford Coupe turn > $15000 in less than 6mos in a loggers spare time on weekends and a little evening work.

There are exceptions, and in this case, that would be an investment.

Paying cash for a reliable $4000 car, doing your own oil changes and buying just liability insurance (because you own it outright) costs about the same as riding the bus to work every day. (At least it did in the Washington DC suburbs when I last did the detailed analysis for myself, with a 9 mile commute into the center of the city). The two modes typically took within 10% of the same amount of time.

Of course, I got wet a lot less driving the car and no crazy bums flicked boogers at me when I was driving. I was statistically safer when riding the bus though, if you don't count Hep-C.

My conclusion: I bought a $1500 motorcycle and cut my commute to 1/3 of the driving time (HOV baby!), no parking costs. I still got wet and cold from time to time and rode the bus about 10% of the year, but it was cheap and fast. And I am still not sure how I did that for 3 years and still have all of my limbs...