“I will tell you how to become rich. Close the doors. Be fearful when others are greedy and be greedy when others are fearful.” –Warren Buffet
Now that you have graduated from college, you have your whole life ahead of you. With this in mind, you have quite a lot of plans as to what you should do with your life.
So right off the bat, you have landed a good and stable job that pays you quite well every month. In this regard, you have saved quite enough and think you are ready for your first investment. Considering that you have been saving some money for quite a while, you think you have sufficient money for your first significant investment which can only be one of two things: A car or a home. Most individuals in their early or mid-twenties would probably invest in a car seeing as majority of them still live with their parents. Moreover, having your own car gives you certain bragging rights by showing it off wherever you go—which is what young individuals aare aiming for: temporary satisfaction.
However, there are also some individuals who wish to become a homeowner and live a life separate from their parents. By now, they have probably scoured every possible property they can afford—from the units of Avida Towers Centera to the ones in Avida Asten. However, where should your money go? To a new house or a new car? Well, this is no easy question to answer and it all really boils down to what sort of pecuniary circumstance you are in as well as what your needs are.
There is no doubt that quite a lot of people would advise you to invest in a home first seeing as it would only appreciate over time whereas a car would not. While this sentiment is credible and would hold true in the long term, most working professionals would end up buying both a home and a car. So, what is the real difference if you simply bought one now as in the end, you will probably have enough money for both? In this regard, we can say that it is not really a question of which is best for long term investment but rather which should be purchased first. If you are on the hedge, the questions below might help you arrive at a decision:
How long will your current car last?
If you decision to buy a new car is solely based on your current car’s life expectancy then have a competitive mechanic take a look at it and give you a rough estimate. If it does not last you for more than five years, ask if there are any cheap repairs you can do to increase it. Moreover, are these repairs worth the money based on the car’s overall worth?
Will your overall living expenses be cheaper before or after you purchase a house?
If you wish to live independently, pay your own bills and have a life away from your familial home then no doubt, you should purchase your own flat. However, if you had been renting prior to this purchase, weigh your options first. Will the overall cost be significantly cheaper? Remember, you may effectively be getting rid of paying rent but in its place you would have to pay insurance, mortgage, utilities as well as homeowner’s taxes.
If you bought a house now, how long would it take you to save enough cash to purchase a car? (Vice Versa)
Both the car and the home are inevitable purchases in life. What you need to do is ask yourself how much money you can comfortably afford to set aside each month in order to buy one of the two.