Your Car Is Not An Investment – And Neither Are Some Of the Other Things You’re Pretending Are

In order to justify expensive purchases, many people, including plenty of otherwise very intelligent folks, like to refer to certain types of spending sprees as “investments.” Luckily for me, from the time I was about four years old, my father took any opportunity he could to tell me that anything that loses value after you buy it is not an investment. To pass along a bit of my father’s knowledge and help you be more honest with yourself about your own spending habits, here are some of the purchases I most commonly hear people lie to themselves about by calling them “investments.”

Cars: A car loses value the second you drive it off the lot, and a $50,000 new BMW

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20 Responses to Your Car Is Not An Investment – And Neither Are Some Of the Other Things You’re Pretending Are

  1. ben says:

    I’m going to have to disagree with the under graduate degree from a prestigious college. While the degree itself, as you argue, may not hold any extra weight, I think you failed to address a very important point. The people that you meet in college are off and your peers throughout life. The alumni Association and the people that you would meet at a prestigious undergraduate school can be extremely beneficial to your job prospects and income in the future. This should not be lightly discounted in my opinion.

  2. Joey says:

    Hmmm:
    68 Yenko Camaro, purchased for $3500, sold 15 years later for $80k. Invested $8k.
    70 FJ Cruiser, purchased for $1500, sold 5 years later for $12k. Invested $2k.

    Having a hard time going with the “cars as bad investments” theory. I totally understand brand spanking new cars, that is a no-brainer. But certainly not collector vehicles.

    As for college, definitely would have to agree with Ben. You just cant get the same quality of networking leads in a junior college.

  3. dan says:

    I would add time shares to that list. The biggest mistake I ever made.

  4. eden says:

    I will third the college statement. While it may be true for some professions (accounting, nursing, etc) there are many professions where the prestige of the school directly translates to the quality of the eductation you recieve – science and engineering to name two. These are also careers where what you learn in college is vitally important to your success on the job.

    Going to MIT to study German – complete waste of money (people do this!)
    Going to MIT to study computer science engineering – excellent investment

  5. Teri says:

    I have to disagree with the education comments. I grew up in the Silicon Valley and know plenty of very successful engineers with no fancy degrees. Networking seems to be key in an industry like engineering, but networking merely starts in college, it doesn’t end there.

    OF course I come from a family of successful professionals who went to community college and state (Some engineers too). I have never really gotten the lure of paying a large sum of money for education. In general I see it can maybe help the first job or 2 out of college, but at that point your experience and reputation is far more important to the rest of your career. I really don’t see why the prestige would be worthwhile outside of a really hig paying field like law or medicine.

    Always exceptions to the rule. But in general I have to agree education as an investment is often over-inflated. Like anything, the fact it costs more and has a “name brand” doesn’t always mean a lot. Case in point, there was a fairly recent article I read that showed colleges often charged more to increase enrollment, because when prices are lower the perception is that the college is not as good. These colleged tend to up tuiition and then up scolarships and aid since they didn’t really intend to charge so much, but had to do this to increase enrollment. Around here I See it with my peers. So many of them went to a fancy schools at the wish (& expense)of their parents for useless degrees and then ended up going to state for useful degrees or Masters. There is too much emphasis on a pricey education out there with little regard to the true practicality of an education.

  6. Nigel says:

    “Going to MIT to study computer science engineering – excellent investment”

    Funny that this commenter mentions science and engineering as fields where the prestige of the university matters. This may be the case for someone in academia (but the original article mentioned “undergraduate degrees” specifically). For those in the industry, this may have little or no relevance.

    Consider this: many, many successful scientists/engineers don’t even have undergraduate degrees from the US (Hint: they are from India or China)

  7. Amy F. says:

    Ben,
    I agree that by going to a prestigious school, you can fairly easily meet a lot of wealthy, successful, and powerful people who can help you along on that path should you choose it. But you can just as easily meet scholarship students who have no connections and go into low-paying, service-oriented fields after graduation. I think that at most schools and in most alumni associations you will encounter both types of people, regardless of the school’s price tag. But like I said, this issue is highly debatable and arguing the pros and cons could be (and probably is) the subject of an entire book. I suppose that, in the end, the important thing is that whoever is financing the education feels that it was money well-spent or debt worth dealing with.

  8. savvy says:

    I have to disagree with clothes and glasses. I do think high quality interview and work apparel is worth the money in most professional environments. I have worked for bosses that place a lot of value on professional appearance and I’ve worked in environments where looking competent meant wearing name brand and stylish (even if classically stylish) clothing.

    Also, having owned both cheap and expensive glasses, I can say the expensive ones are well, well worth the extra couple hundred dollars. I can still tell the difference between my cheap and expensive pair, and despite my expensive pair prescription being out of date, they fit my face and match my vision much better, due to better measuring and higher quality frames. I wear the expensive pair all the time, I rarely reach for my new pair because they give me headaches.

  9. Jim says:

    “Having a hard time going with the “cars as bad investments

  10. Joey says:

    Nice try Jim. What I am illustrating is that cars ARE a good investment if you know what you are doing and you have a little bit of intelligence. I purchased both vehicles after carefully considering that both of these vehicles would be my daily drivers. Neither of them were really collectibles at the time although they definitely were as the rolls rolled on. I did well…ok I did very well. I’m not going to feel sorry about that. If you pick the right used vehicle, it will work out very well for you. In fact you can find the right vehicle that will pay for itself and then some. If you are purchasing a Chevy Malibu and expecting some resale from it, good luck. But if you have a brain on your shoulders and look for a vehicle that will hold its value you will do fine. I am only showing that it can be done.

  11. Fern says:

    Great article with some solid points, but i too must strongly disagree about where you go to school.

    It’s not a choice between going to a relatively unknown school and coming out with reasonable debt load vs. an expensive well-known school. In fact, it is those top tier schools that often have the best endowments from generous alum, meaning they can offer more liberal scholarships and grants to students of modest means.

    That was my experience as a middle-class student from NJ attending a private women’s college in Massachusetts. Althought my parents were able to contribute very little toward my education, a combination of scholarships based on academic merit, grants (that didn’t need to be paid back), 3% NDSL loans and working part-time all 4 years helped me get that degree.

    In addition, the name of the school where you receive your degree DOES make a difference on your resume, and someone graduating from a no-name school with a degree in whatever basically has something akin to a continuation of high school, not much value there.

    You only go round once in life, and schooling is the foundation for everything that follows.

  12. Henry Bemis says:

    It’s not the degree it’s the motivation, persistence and quality of the person with the degree. The biggest dummies I know went to Ivy league schools. With puffed up heads, shoulders and debt they have actually done less then those who went to state. IF you are motivated, active, and resourcesful you will succeed. Ivy league education is a myth.

  13. Fern says:

    well of course broad generalizations are not very helpful or accurate.

    However, in general, i maintain that graduation from a school that is well-known for the quality of its education is more valuable than attendance at a no-name school.

  14. scfr says:

    Very good article.

    To add to the “prestigious university” debate, all posters who stated that going to a prestigious university is an investment assume that you are going to go work FOR someone.

    If you own the company, it matters not a whit where you went to school!

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  18. Zeke says:

    The issue many of you are missing is that yes, you may make some money back on something like a collectible car.

    The thing is, in most cases, if you’d socked that same money into a mutual fund or even a CD, you’d come out with more money than when you sold it.

  19. blogger says:

    Uh, what camaro has ever sold for $80,000? I have collected cars for years, never seen one sell higher than $35,000.00 at auction, that was 30 years old. In the end, you have a 30 year old American hunk of junk.

  20. blogger says:

    I take that back, they have sold at auction for over $35,000.00 – after buyer’s commission, after $65,000.00 was invested into them, years of insurance, private storage – then they sell for $110,000. Net take, $10-$20k.

    Camaro’s do not appreciate much in 15 years. 1969 Camaro’s, completely restored, bring that kind of money. That is 42 years!

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