Sen wise, Ringgit foolish

Property is an Asset, most of the time. A car is a liability, all the time. A friend bought a new Japanese car recently, a segment B car. 🙂   When asked why is he choosing that model. He said, ‘the agent said this one saves fuel a lot. Even more fuel savings than the previous model. The agent also said the second hand value very good. If sell after 3 years, you only lose 20% or less.’  This friend is an engineer in a MNC in Penang. Let’s look at what the agent said on both comments. One is fuel saving. How awesome. Let’s assume that at current prices, the price per km for this model is only 10 cent. Quite impossible to reach but does not matter. We assume it to be 10 cent. My current Persona gave me around 15.6 cent per km. Does not matter, let’s assume it to be 17 cents just to make the difference much greater.  So, we come to 7 cent per km. If you drive only 10,000km per year, you have a savings of RM700. If you drive 20,000km, you have savings of RM1,400. After ten years, you save between RM7,000 – RM14,000. Reminder, you have to drive 10 YEARS to save this. And the numbers are already exaggerated. The price paid for the model versus the current Persona with 2 Air Bags, 4 Disc Brakes, ABS, EBD is only about RM40,000 difference. Oh yeah, if you really do want fuel savings, I recommend VIVA.

Second comment is the ‘second hand value very good’. In Malaysia, if I remember correctly, the typical car ownership years are over 10 years. Thus, the question of selling after 3 years is really not likely. Let’s assume this friend is very rich and really changes car every 3 years. So, his car price of RM85,000 x 20%, he would only lose about RM17,000. Is he going to take MRT after selling his car? Of course not, but he can’t be buying same model right? Assuming he buys another Segment B model, he would have to start repaying RM85,000 or more all over again just to SAVE 20% losss after another 3 years. Makes a simply great Sense.

calculatorIf we look at the monthly payment, the total savings per month is close to RM700. With RM700, you can already nearly pay for a RM200,000 property and get good rental for it. Do not get me wrong, if this engineer friend of mine is a Director of Engineering, I would not say all these. However, as a young engineer, I think his planning is currently too  emotional based instead of planning for future. He wanted to tell all his peers that hey, I am driving a better car than you. Most of the time, we spend too much time trying to do things we do not need to show off to people we should not care about in the first place. Nevertheless, I did not argue with him. I just smiled and left the conversation. After all, I am considered a different class. I drive just a national marque. Oh yeah, last but not least, for me, if you want to show you have achieved a minimum standard I consider as successful, nothing less than a Segment D car (Teana / Camry / Accord / 508) is needed. Not even Segment C. (Civic / Altis / 408 / Preve)  In English, there’s a term called ‘Penny wise, Pound Foolish.’ I think in Malaysia, we need ‘sen wise, ringgit foolish’ too.

written on 3 Jan 2014

Next suggested article: Steps to start your property investment

Alternatively do read: Start as young as you can

19 thoughts on “Sen wise, Ringgit foolish

  1. Your analysis is correct. Car just a mobility to work. If working at office which do not meet up clients on sales, i will recommend to buy a local car such as your car is a good choice. Or else, get the car is just parking in the car park either at house or working place.

    I noticed that young generation, which born between 1988 to 1990++, they first started to work with salary between 2k – 2.5k, mostly of them will prefer Vios, City, or Civic. When talk about how about get a My V, definitely they will say no. I think the purpose they get the car is would like to tell other that they boleh, they able to get import car. I don’t think so. A person whether stable on financial and successful doesn’t proof by the car only. I notice that this generation of people is materialistic, want those branded, and enjoy luxury life.

    Haha, for this generation, car and branded is everything to them. For us, car just mobility and important is on how to create and accumulate wealth with those investment tool such as property 🙂

  2. Is it smart for two or smart for four? :p That’s expensive! Hahaha!

    Well, I am totally agree with this article. I just can’t understand they choose a tin milo nowadays, just because of the badge. For me, Preve will be tons better than vios / city etc due to the specification at the same price range.

    A friend of mine even regret getting new Vios. Comparing to Persona, handling and power is not on par. Well, we could not admit that Vios will create less problems and headache in the long run. But buying based on the arguments of saving fuel and better resale value is a complete bull shit for me. With saving of nearly RM30,000, I can pump petrol for decade.

    • Is smart forfour. Before bought this car, on consider choose either fortwo or forfour. After long consideration, fortwo only could fetch one person and inconvenience drive to outstation, end up i choose forfour. While my friend choose fortwo on that time we bought. Last year, he sold out his fortwo as get married and have baby, this car no suitable for him. Surprising me, he sold in 66k for 5 years car, which he purchased about 80k. While mine, no value for sell :'(

      There is rarely case for sell the car with little lose. I consider his case as special case. So, don’t focus on change car. This only will increase your liability when on loan, and depreciate your asset when free from loan because of car value drop.

      I did my company UBS account, when do closing for account for year 2012, auditor said asset for car must reduce 20% on car value. When the total loan amount is reduced, at the same time, car value is dropping. Don’t know how many % will reduce for year 2013 car value:( . Haha, i haven’t finalise the year 2013 account yet 😛

      I agree with you Preve is good consideration. I had friends bought Vios and Preve at the same month. Preve friend feedback with 70K paid, could get import car 100k ingredient. While Vios friend feedback less ingredient compare with Preve friend.

      Majority people when want buy 70k car, definitely will consider Vios, especially this happened on younger generation which age between 18 – 25. I conclude that, what they priorities is the brand, outlook, not the internal, and no consideration for long term.

      For my opinion, since car value is dropping every year, get the car with on use on it. I had a friend, age 21 consult my opinion whether buy Civic or City or Vios. After analysis, his income comfortable for 40-50k car. However, he insist to buy Civic. End up, now unhappy working with this company, but unable change job because of afraid unable get such income on new job. His basic income is fully use for car installment. His income about 50% from basic salary, 50% – 70% from commission on sales. During analysis, at first i advice him not to buy car. His house beside the company just walk in 5 minute, during off day he go far away from his house just call cab. Mostly he seldom call cab as his house nearby big shopping mall. I seen that he no use much on car, just buy the car for parking at home only. End up, his car sometime drive during off day, which mean a month drive maximum 8 time, minimum 2-3 time. End up only i realized that buy car is because of “face”. Oh my god!!!

  3. Is it smart for two or smart for four? :p That’s expensive! Hahaha!

    Well, I am totally agree with this article. I just can’t understand they choose a tin milo nowadays, just because of the badge. For me, Preve will be tons better than vios / city etc due to the specification at the same price range.

    A friend of mine even regret getting new Vios. Comparing to Persona, handling and power is not on par. Well, we could not admit that Vios will create less problems and headache in the long run. But buying based on the arguments of saving fuel and better resale value is a complete bull shit for me. With saving of nearly RM30,000, I can pump petrol for decade.

  4. Some ppl who’ve worked 5-10years in working market feel the urge to spend to get a minimum decent foreign car….rather than work and save his whole decade and die off way, at least get to ‘enjoy’ his well earned money phase by phase- listen to the song ironic by alanis morisette
    That said, I do not specifically against the buy of certain car IF it IS his passion is car, just like some ppl passion is buying and collecting good watches ,which the later is a more expensive hobby though…just saying some ppl r born car enthusiast…
    Some ppl go to the extreme of accumulating a few properties with only a pay of under 5k brunei dollar, impressive…surviving on maggi mee and buns rather frequently…dpds on which outlook of life you are….
    that is perception of life. some ppl attitude also different….
    drive a better car to boost his image for better sales/income though little case like this really work, mostly mere excuse OR boost his own motivation so he can earn more/find more money…there’s a saying in chinese that, “ppl know how to spend money, know how to find money”, sumfin’ like that…it again, dpds on which type of person you are and how well you know yourself…I’m of the belief that, you have to work hard and smart to become rich than to save to become rich….how much can you save?? eat maggi mee to your way to accumulate properties?? or work smart to your way to accumulate your property and enjoy life ,reasonably, at the same time…ie. myb reward yourself a little lv bag, that japan/europe trip u always yearn, that watch you always crave, that shiny little fast car…
    It is good to strike a balance, buy some properties, decent stuffs that u can proud of OR which every mrng you wake up and smile to as you see it is sthg to motivate you to find more money…
    myb i’m a little naive though but this just my opinion. no point save everything for your children. im not married yet btw…

    • True vin. I do not believe giving all to my kids. I m married and have a baby. I would rather go travelling with my wife instead. However will give sufficient so that my kids would graduate. The rest up to them.

      • yes you are right. if you dont spend, travelling, buy some nice decent car, some nice little appreciation for yourself to motivate yourself…not asking you to splurge but spend within means. Because no one can be certain of their time and death…to some ppl, spending means they must find more money. not everyone is like that though so you have to know thyself. wat would you choose
        1) 10properties, survive on human most basic economy, stay in flat or rent, eat maggi mee n buns. but new clothes only when the current one is torn
        2) 7 properties, live a frugal life, no enjoyment of finer things in life, no reward because you lead a strict save for property regime rule of life
        3) 6 properties, drive a decent , dine a decent , use a decent , live in a decent, travels..
        4) 2 property, drives a bmw, dine/use/live expensively
        Assumption #1 you dont know when is your time and death
        Assumption #2 one man’s poison is another man’s treasure/to each his own.

    • TJ, as long as the car you are driving does not break down every few weeks or it is impossible to drive at 110km per hour in highways, I think the car is sufficient. 🙂 Never settle if you have to use a lot of time to fix the car or you feel the car is not safe etc. get a good car, not buy a perceived brand value which is nothing but emotion.

Leave a Reply