Value of a Car

For the past month, I've had the luxury of having the family car all to myself.

Driving it to work everyday, going to 'faraway places' to attend wedding dinners, etc...

And it makes me wonder, how much value would I place on a car?

To tell the truth, not much. I have no idea why some people place so much emphasis on having a car - to the point that they would pile on debts just to own one. 


1. How much does a car TRULY cost in Singapore? 

Many people underestimate this. Just look at this article for a good idea. 

I can safely say even if you take a cab to work everyday for the next 10 years, it'll still be cheaper than owning a car.


2.  What is the OPPORTUNITY cost of using the $ to buy the car, instead of compounding it?

A car is a depreciating asset that loses its value every year, until it reaches a big fat 0.

Let's estimate that value to be say, $200k. Do you know how much passive income you can get by investing that $200K?

If you use that same $200k to buy 100 lots of Frasers Centrepoint Trust, you can get about $12k a year, or $1000 EVERY MONTH.

Take a moment to let that sink in.

...

That means in 10 years, you will get back about $120k worth of dividends + original capital = $320k. And that's not even including capital gains.

If you use it on the car? You can get back, $0.  Big fat kosong.

WOW.

Now tell me why the hell you would want to buy that car.


3. Miscellaneous
 
Maybe it's just me, but here are my thoughts after exclusive usage of the car for the past month:

- Yes, it's convenient and much more comfortable, but it actually isn't that much faster. It probably shaves off like 10-15 mins during the morning rush hour. Finding parking lot is sometime a huge pain too.

- I can spend the 1 hour on train reading news, watching movies, etc... instead of getting stuck in the jam.

 - Owning a car comes with many 'additional responsibilities'. People expects you to "give them a lift", etc... Not that it's much of a deal, but it's something worth noting.

Overall, I just feel the cost simply isn't worth it for the little extra convenience and comfort. There's always a cab available ($20, which equals to a day's parking in the city).


Bottom Line

Unless you're in a role that really need that car to generate much more income for you (e.g. Sales), or, you are damn frigging rich, then I see no reason to buy the car.

I have no intention of getting one either in the foreseeable future. I rather have the money generate more money for me.

Once again, compound your $. Even investing in an extremely safe place (e.g STI) will double your $ every 20 years.