I REFER to the article “The single worst financial decision” which appeared at The Star Online on Feb 9 (bit.ly/star_invest). It is very true that cars are depreciating assets that will eventually be very low or negative in value after some time.
Many years ago, I bought a car and my father bought a single-storey house at about the same time. The car that I bought for RM7,200 was sold for RM1,500 after several years.
My father bought the house for RM14,800 and sold it for RM80,000 after 10 years.
The value of the house appreciated several folds and my car depreciated several folds.
If I had bought a second-hand car, which was about RM2,000 then and invested in a house, I would have enjoyed a big increase in my personal assets.
The house which my father bought is valued at around RM500,000 today because of its location.
Imagine that if I had bought the house and kept it until today, I would have an asset of RM500k which would be good for my golden years.
Therefore, young people should be prudent in their spending and try to buy a house as early as possible, as prices of properties appreciate in value in tandem with inflation.
Many young people make the mistake of buying new, expensive cars which leave them with little or no savings to buy property.
It is indeed very true that buying a new car is not a logical decision compared with investing in assets that appreciate, like unit trusts, shares, and properties.
Many years ago, my friend invested his money in a reputable bank and has reaped good dividends year after year, as the shares’ value has appreciated several folds.
Young people should buy a second-hand car if there is a need to avoid losing too much money on depreciation. Investing in good assets will enable them to reap their appreciation when they grow old.