Comments on: Usefulness & Utility Trump Asset Value http://www.bargaineering.com/articles/usefulness-utility-trump-asset-value.html personal finance blog with anecdotes, advice and commentary. Sun, 08 Nov 2009 14:07:29 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: Lo. Price http://www.bargaineering.com/articles/usefulness-utility-trump-asset-value.html/comment-page-1#comment-244469 Lo. Price Wed, 04 Jun 2008 07:39:22 +0000 http://www.bargaineering.com/articles/?p=2767#comment-244469 Though I disagree that for nearly everyone, buying securities on margin is a good idea, I agree with Fred that there are many ways of looking at things. If I can finance a car for .9% APR, the depreciation of the car doesn't really matter- I'm probably going to come out ahead over paying cash (assuming the price is the same whether you pay in cash or finance, and it often is not), since inflation, in the form of my income going up to keep pace with other rising costs, will make it cheaper for me to still be paying for the car in 2-5 years. Though I disagree that for nearly everyone, buying securities on margin is a good idea, I agree with Fred that there are many ways of looking at things. If I can finance a car for .9% APR, the depreciation of the car doesn’t really matter- I’m probably going to come out ahead over paying cash (assuming the price is the same whether you pay in cash or finance, and it often is not), since inflation, in the form of my income going up to keep pace with other rising costs, will make it cheaper for me to still be paying for the car in 2-5 years.

]]> By: fred@opc http://www.bargaineering.com/articles/usefulness-utility-trump-asset-value.html/comment-page-1#comment-244327 fred@opc Wed, 04 Jun 2008 00:50:04 +0000 http://www.bargaineering.com/articles/?p=2767#comment-244327 There aren't many appreciating *hard* assets within the average Joe's reach; but there are plenty of appreciating assets - stocks, bonds, mutuals, cds, etc. These soft assets allow you to purchase hard assets via a financial instrument, and there are many cases in which borrowing to buy them makes sense, the same way buying a house on credit makes sense (at least fundamentally). There aren’t many appreciating *hard* assets within the average Joe’s reach; but there are plenty of appreciating assets – stocks, bonds, mutuals, cds, etc. These soft assets allow you to purchase hard assets via a financial instrument, and there are many cases in which borrowing to buy them makes sense, the same way buying a house on credit makes sense (at least fundamentally).

]]> By: No Debt Plan http://www.bargaineering.com/articles/usefulness-utility-trump-asset-value.html/comment-page-1#comment-244307 No Debt Plan Wed, 04 Jun 2008 00:15:05 +0000 http://www.bargaineering.com/articles/?p=2767#comment-244307 I agree to disagree to a point. I guess I should write another article called "Minimize buying depreciating assets on credit" A car is a depreciating asset. Fact. A $50,000 BMW not only costs more to finance, but depreciates faster, too. If you could find a $15,000 Toyota, or buy a used Honda for $8,000 in cash... that's better. The bottom line is, financing anything costs you money. If you can have someone else pay for your asset (leverage) that ends up being worth more in the future, you've done a good deal. If it ends up being worth less, you were better off paying cash. I agree to disagree to a point. I guess I should write another article called “Minimize buying depreciating assets on credit”

A car is a depreciating asset. Fact. A $50,000 BMW not only costs more to finance, but depreciates faster, too. If you could find a $15,000 Toyota, or buy a used Honda for $8,000 in cash… that’s better.

The bottom line is, financing anything costs you money. If you can have someone else pay for your asset (leverage) that ends up being worth more in the future, you’ve done a good deal. If it ends up being worth less, you were better off paying cash.

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