Why is leasing a new 4runner bad? Is buying and financing better?

[1engineer]

You could also lose that money. There is no guarantee that the stock market will go up over the short term.

...or you could buy a vehicle and lose money. One way you have a chance, the other no chance at all.

 

[tH1e swiN1e]

that is completely unrealistic.

Its only unrealistic with that mind set.

You probably need to go back and take Accounting 101 again as you must have slept through it the first time.

As an engineer you should know that accounting isnt a focus in our curriculum. Paying cash for a house means I need to take accounting? Just because Im more conservative than most when it comes to finances does not make me wrong. Wealth isnt created by credit and loans.

Personal finance is just that... personal.

Enough focus on me boys.... Congrats to the OP on his purchase.

 

[Blue Seat Lyfe]

You could also lose that money. There is no guarantee that the stock market will go up over the short term.

If you buy an index fund like I said, then yes you can basically guarantee a 5-7% return per year over the life of the loan (4-5 years).

VFINX - vanguard's basic index fund has returned nearly 7% the past 12 months, and past 5 year is at 51% (10.2% per year)

 

[jwkilgore]

If this were true, not many would own a car or home.

... seriously? It's like people have never heard of the used car market. Is buying what you can afford really that much of a stretch for people?

If you buy an index fund like I said, then yes you can basically guarantee a 5-7% return per year over the life of the loan (4-5 years).

VFINX - vanguard's basic index fund has returned nearly 7% the past 12 months, and past 5 year is at 51% (10.2% per year)

I've agreed with most of what you've said so far, up until the bold statement above. That statement is blatantly false. Yeah, the stock market has been basically climbing for the past six years during the "Wall Street Recovery". But there are no guarantees in the stock market, and there are fairly recent 4-5 year periods where the index funds lost money.

 

[SilverRiver]

... seriously? It's like people have never heard of the used car market. Is buying what you can afford really that much of a stretch for people?

Yes. Yes, it is a difficult concept for people.

But they readily buy into the concept that they must go into debt "in order to build their credit", so that they can go further into debt.

When I looked at my FICO score and it told me that I should carry more debt in order to magically raise my FICO score, I knew it was a scam. Really?!? Having more debt makes me more credit worthy?!?! This is backwards.

 

[king noob]

Its only unrealistic with that mind set.
.

i'm going to ignore the implication here that you know the first thing about me, my mind set, my finances, etc.

reality is that most people work 20 or so years to save up 400K, some never get there. it would be stupid to put that all into a house.

 

[M1911]

If you buy an index fund like I said, then yes you can basically guarantee a 5-7% return per year over the life of the loan (4-5 years).

VFINX - vanguard's basic index fund has returned nearly 7% the past 12 months, and past 5 year is at 51% (10.2% per year)

I'm in index funds. So I'm well aware of them. And I disagree quite strongly.

Look at the S&P 500 index over time.

In March, 2000, it peaked at about 1500. It didn't regain that level until 2007, at which point it went down again and didn't return until 2012. In other words, from 2000 to 2012 an investment in the S&P 500 basically didn't make any money. One might argue that we've been in a bull market for quite some time and are due for a downturn, though personally I don't try to time the market.

Is an index fund like the S&P 500 a good place to be over time? It sure is, that is why I have quite a bit of money in that and similar index funds. But there is no guarantee and there is plenty of recent experience of significant downturns lasting a number of years.

Whether or not someone should pay cash or take a loan is a personal decision, based on their financial situation and their tolerance for risk.