When Can I Afford a Supercar? (Price to Net Worth Rule)

Рет қаралды 4,098

Күн бұрын

This question came from a viewer that sent me a DM on Instagram: he asked at what financial situation should he consider buying a supercar like the R8? This is a very good question and it's something that I wondered about early in my career.
For me personally, I always like to use net worth as a gauge for whether or not I can afford a car. A car is a depreciating asset, which means it loses its value of time. You don't want a depreciating asset to be a majority of your net worth. A new car on average loses 50% to depreciation over 3 years. Tack on taxes, insurance, maintenance, you're looking at about a 65% loss on the purchase price over 3 years of ownership.
There are 2 thresholds I suggest:
1. for real car enthusiasts (5% of people fall in this category), where their whole life centers around automobiles: if your net worth is at least 2x the purchase price of the vehicle, then you can afford it. This is a pretty aggressive number and means you'll have far less money to put towards investments, but the tradeoff is worth it if you LOVE cars.
2. for a general person, if your net worth is at least 4x the purchase price of the car, then you can afford it. This means after buying the car, you'll still have 75% of your net worth left to put towards investments. Sure, you could make more if you put the 25% towards investments instead, but you don't gain much more from investing an additional 25%.
Some people may say that you should have much more net worth before buying a supercar, but I disagree. Owning a supercar in your 20's or 30's is much different than owning one in your 50's or 60's. This net worth rule is a great balance between living your life to the fullest and saving towards the future. Let me know what you think!
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Пікірлер: 34

@nicholasmendez13 2 жыл бұрын

Really enjoyed this video! As a complete car enthusiast but also a college student. I hope to purchase a gt4 (my dream car) in the next couple years, would bring me a LOT of joy for sure! Worth the investment for me. Hopefully the adult me isn’t too upset 😝

@bouwah85 Жыл бұрын

2x or 4 x is too low. More like 10% of your networth ie net worth $1m your supercar should be $100k

@jamesshaw89 3 жыл бұрын

Thanks for sharing this it gives me something to think about on my next car.

@RogerCui 3 жыл бұрын

Btw thresholds I listed are for bachelors! I’d suggest a higher net worth threshold if you have a spouse and kids!

@GreenKnightTrading 3 жыл бұрын

I think your logic makes sense. I struggle with enjoying my life vs living like a peasant to save for my future. I think I need to treat myself more. Maybe not a supercar but some nice clothing at least.

@RogerCui 3 жыл бұрын

common problem for ambitious people haha

@tanmay_6363 Жыл бұрын

@@RogerCui Beautiful supercar❤💕💕👌🏻🐇 So, For Normal people 4M net worth for 1M car For Car Enthusiasts 2M net worth for 1M car 💰💸🙀

@Alikhan-yr1fo 2 жыл бұрын

I think the easiest way to determine is that you have to calculate ur free income every month. Which is calculated by gross pay minus rent minus expenses minus labilities and loans. So if ur car payment is going to be less than half the fee income then you are cool. These days these cars are NOT money pits. I was able to buy my 2018 R8 for 155 and now its worth around 180. Used cars are getting more expensive. I would recommend buy an intermediate car first which for me was Alfa Romeo Giulia Quadrifolgio which is just amazing. I didnt buy my first R8 until my total liquid net worth was about 8 times the price of the car. Now i have moved on to Huracan Evo but now my liquid worth is 22 times the price of the car. I have no loans as i paid off the student loans first and bought my properties cash (not a good move though) but that leaves debt to earning ratio as very low. I would recommend taking care of the business first but i do agree with him. its just more fun to buy these cars when ur young. Its ridiculous to see old bald men driving around in F8 tribute with a cupcake. I will never buy a super car once i start to look old. Im still in my mid thirties so im okay for now.

@lesliechik3766 2 жыл бұрын

Hi, For networth, Are you referring to primary residence or investment properties? thanks man

@RogerCui 2 жыл бұрын

yea just everything combined assets - liabilities

@brolylives 3 жыл бұрын

This is a good video thank you! I currently make about 100k a year and I've been wondering when I should get myself a Audi R8 V10 plus and from the sounds of it I got some more time to grow before I should get one.

@RogerCui 3 жыл бұрын

You’re welcome, glad it helped!

@ViPulaNz 3 жыл бұрын

100k income a year is not the same as net worrth. It maybe okay for you to go ahead and purchase one. I personally just purchased a used r8 v10 plus for 150k,. I only make 150k a year but have a 10-15x net worth of the car. cheers

@carspottereast Жыл бұрын

@@ViPulaNz is that in rental properties?

@Floridasky1977 2 жыл бұрын

so if my net worth is 3 million dollar. i shouldn’t buy supercar more than 700k ? that right ?

@RogerCui 2 жыл бұрын

yea exactly

@Floridasky1977 2 жыл бұрын

damn i should have buy 488 pista by now then !

@jordanc6249 2 жыл бұрын

This is liquid net worth right? And this doesn’t include house in net worth I’d guess?

@RogerCui 2 жыл бұрын

No this is total net worth including house. 99% of people cannot afford their cars if we use liquid net worth lol

@jordanc6249 2 жыл бұрын

@@RogerCui gotcha- and would you finance the car?

@RogerCui 2 жыл бұрын

@@jordanc6249 yea finance is fine

@johnparke7338 Жыл бұрын

Can you bend the rules if you are making way more money than your net worth indicates? Say a new promotion took you to 300k/year but only worth 100k

@AellaWW Жыл бұрын

It’s not right. Way too risky you might not make that money out of nowhere and have nothing under ur belt but car

@ufc786 2 жыл бұрын

I think 5% of your NETWORTH should only be tied up in depreciation assets like cars! And if you can buy it 10 times you can’t afford it. I would say NETWORTH of 30m and above you can buy and car worth up to 1m

@RogerCui 2 жыл бұрын

yea but then you’d be like so old to afford a nice car. 2m net worth to buy a 100k car? Nah I’ll enjoy my youth with a nice car

@FooFan-b3k Жыл бұрын

@@RogerCui I'm old and been through all this and pretty pleased with how it turned out using 5-10% as my rule. But, I have a friend who is 27 that has a net worth over $15 million and a very consistent 7 figure income.. He drives a used Prius because he doesn't think he has enough to just throw money away. In fact, I have a lot of friends with 8 figure net worths and only 1 of them has ever owned a super car; assuming a 2006 Turbo Porsche is a super car? It's been my experience having owned a few myself, Porsche GT3 at the moment, that I've known very few high net worth individuals with exotic cars. I'm not sure if it's because the cars prevent people from acquiring wealth or because wealthy people just don't want supercars. I've always thought that was kind of odd personally. Now $150,000 Range Rovers, Maybachs, S series Mercedes....Seems like I'm the only guy I know that doesn't have at least 1 of those..lol!

@yophilli 2 ай бұрын

@@FooFan-b3kcool story but not everyone wants to be in a nursing eventually being able to afford it. Not guaranteed to live to that age either

@FooFan-b3k 2 ай бұрын

@@yophilli That mindset is what will make sure you never build wealth.

@yophilli 2 ай бұрын

@@FooFan-b3k I’ve seen people build wealth either way and lose it all to a business etc. Not saying to spend every dime but there should be balance

@roflcopter4388 3 жыл бұрын

I have a dilemma. I bought my first car 5 years ago for $6000 - a used 2012 VW Golf. This baby just passed 300,000km. For the years I've owned it it's never given me any problems and helped me save a bunch of money. Now I'm in the market for something nicer, looking at a new A4 Allroad, but can't seem to leave my Golf. Guess I'll take this baby to 400,000km haha

@RogerCui 3 жыл бұрын

Awesome job buying used to save money. 5 years is a long time without problems 👍 maybe sell it while you’re ahead 😅