A younger friend asked me recently, should he buy a car or a property. I said, ‘You think I will tell you to buy a property instead of a car?’ He smiled and nodded. I said actually for you, you should buy a new car first. Seriously ladies and gentlemen, if the car you are driving now is a very old car, without much safety features and on and off it breaks down, please buy a new car before a new property. I term old car as cars above 12 years old but well maintained or 8 years old and not well maintained. Let me tell you a few reasons why I say so.
Safety. Older cars typically have a lot of issues, especially with regards to safety. The brakes may no longer be at it’s best condition. If the engine has stalled before, it may stall again when you are driving. I would recommend you to buy a new car with at least one airbag for the driver, ABS, Disc brakes etc. My brother who’s an engineer said, ‘disk brakes will brake even after you have continuously been pressing brakes many times when you come down Genting Highlands. However, drum brakes may fail if it was too severely tested by your driving ability’. Oh yeah, if you intend to be successful in future, staying alive till then is a pre-requisite.
Stable money management. If you bought a home and have just about enough for the mortgage every month, what if your car breaks down and needs a major overhaul? My friend’s Wira broke down, he overhauled the whole car and it broke down again 6 months later. My personal mechanic in Ipoh said, ‘if a car is old, there are a lot of things you cannot predict.’ Note, it does not mean a new car would not breakdown but it is comparatively much lower probability. With a new car, just make sure you service it on regular basis and you should be safe for at least first few years. This allows you to also serve your save money for your property or paying your mortgage payments without any hiccups.
Image. My friend is already a senior executive / assistant manager. Driving such an old car does not make sense. What if you need to send your client to the airport? What if you BIG BOSS from overseas needs you to fetch him from the airport? Seriously, I do not think anyone would complain the cheapest version of Saga SV because it is still spacious, cooling zircon and new. However, if the dashboard is torn here and there, the window does not really work, the air-con is not cooling enough and one of the doors can only be opened from the inside, what are you trying to do? Destroy your image?
Thus you see, there are still overwhelming reasons why you may just want to get a car first before property. However, majority of the time, I would definitely say property investment wins hands down versus buying car depreciation.
written on 16 march 2014
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