Personal Finance

Buying a car or doing investment

  • Last Updated:
  • Nov 10th, 2013 9:59 pm
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[OP]
Deal Addict
Feb 7, 2008
1519 posts
122 upvotes
Toronto

Buying a car or doing investment

My family buy me a condo and I don't have mortgage or student loan.
Right now, I don't have a car, and I am working at downtown currently, and I am moving to a new office in a month, and it's very close to where my new home is (like 10-15mins walk).

I've worked for couple years, and I saved around 45-50k. I don't have any $ at RSP yet because my income is not high enough to justify RSP contribution now.

I am interested of doing investment at stock market, but I am very new there...and I am only familiar with high tech company which is a very risky sector.
I am also interested of getting a new car, but I probably would only drive on weekend.
I want to do something with my saving asap because they are sitting at saving accounts with only 1.4% interest. :(
16 replies
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Nov 28, 2010
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If you're not really familiar with stock market, just buy a car. Car would only worth it if you don't live around downtown area.
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Dec 14, 2010
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oajlu wrote:
Nov 7th, 2013 8:28 am
I am interested of doing investment at stock market, but I am very new there...and I am only familiar with high tech company which is a very risky sector.
I am also interested of getting a new car, but I probably would only drive on weekend.
I want to do something with my saving asap because they are sitting at saving accounts with only 1.4% interest. :(
I was in your situation some years ago. For investing, start reading on http://canadiancouchpotato.com and once you get a good grasp, move to financial books like the ones that teaches value investing - like books from Peter Lynch and Benjamin Graham.

For the car, I recommend doing the same thing that I did. Do not buy a car if you don't need (and sounds like you don't). I used to rent cars every weekend (I used to live in downtown). It's cheaper than owning a car, if you drive on weekends only. Enroll into Avis and Hertz membership (it's free), the more you rent, the more free rents / upgrades you get. Keep checking for coupons, they always have promotions too. Try also getting a credit card that covers you for insurance on rental cars, to make it cheaper.

Rod
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Mar 24, 2008
5585 posts
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Toronto
If you live only a few minutes (walk) from your work then investing will be a logical choice. If you're looking for positive returns, then investing is the only choice as a car is a depreciating asset.
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Sep 30, 2003
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oajlu wrote:
Nov 7th, 2013 8:28 am
...

I've worked for couple years, and I saved around 45-50k. I don't have any $ at RSP yet because my income is not high enough to justify RSP contribution now.
... :(
I highlighted this because a lot of people have this misconception. You CAN put money into your RRSP and not claim the deduction. This way, you have the money growing tax free and can use the deduction later.
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Deal Addict
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Aug 17, 2008
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Buy the car if cars are your hobby. Then when you spend the next 5+ years investing you won't be sitting at home bored.
Deal Expert
Mar 25, 2005
21252 posts
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Do you need a car? There are several car sharing options around. I would not invest but I also would not purchase a car if you do not need it. Look more into investing and then do so.
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May 28, 2012
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Saskatoon
Sounds like you are in good shape financially...you might want to give back some of the money that was gifted to you when you got the condo. ;) Only buy the car if you really want one since it will rarely be used, and there are other costs associated with car ownership.

If you aren't confident about investing in equities, read up on it...lots of info on the 'net and in books. Reconsider the RRSP, or open up a Tax Free Savings Account if you haven't already done so. Depending on your age and risk tolerance, there are investment products ie Mutual funds, etc, that will suit your needs (other than the low interest, fixed income you have already).
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Feb 15, 2008
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Calgary
Go read up on index funds and the couch potato portfolio as others have suggested. Assuming $50k, and an implied market return of 10-12% over the long term, an extra $5-$6k/year in your pocket, over time, can really add up to a lot more consumptive power in cars if that's your fancy.
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Oct 16th, 2012 9:06 pm
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Mar 24, 2004
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Wha? One's an expense, the other is an investment. Aren't those opposites?

Anyway, you should always be saving for the future :) definitely read: www.canadiancouchpotato.com
[OP]
Deal Addict
Feb 7, 2008
1519 posts
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Toronto
Personally, I don't like to drive, even though I have G license for years.
My parents, siblings, and friends always drive me around towns.
However, Im seeing someone now who wants me to get a car... :(
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Aug 17, 2008
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oajlu wrote:
Nov 7th, 2013 9:53 pm
Personally, I don't like to drive, even though I have G license for years.
My parents, siblings, and friends always drive me around towns.
However, Im seeing someone now who wants me to get a car... :(
Well, in that case, forget the car...
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Jan 6, 2011
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You should have mobility, but be reasonable about what car you are getting....

Your current life stage is too volatile anyways, no need to predict. Just get a reasonable car and invest and you will still come out ahead.

This isn't one of those threads the OP had no money no job.
Member
Jun 17, 2009
490 posts
31 upvotes
Vancouver
Buy a $5000-$10,000 car, nothing more, no need to buy something fancy to satisfy your companion. One time payment, you're done. Make sure to buy something that is reliable and in good shape.

Invest the rest in stocks. Not hard to pick good quality stocks that pays dividends. Just build your portfolio from there... you got a sizable amount to play with. Access your risk tolerance. If you can't stand watching your invested money go down by a few hundred each day, then go buy ETFs or Index funds. They don't fluctuate as much but they won't reward you as much.
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Jan 6, 2011
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The car is not to satisfy your current companion IMO, but it makes dating other people easier too.

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