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Old 31st March 2016, 23:08   #31
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Even though I myself am a go for it all, or keep saving it all(until you can go for it all ) kind of guy, I have realised that that approach can't be applied to all the situations.
You might wanna consider taking a middle path and going for the Delta variant of the S-Cross.

Last edited by AYP : 31st March 2016 at 23:26.
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Old 31st March 2016, 23:14   #32
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by Viju View Post
Mate, I was never good at economics. But believe me, you have worked hard and sacrificed enough to deserve a nice car! Get that S-Cross 1.6 and enjoy every moment of driving it.

I am a responsible husband and father too, but I have seen so many unexpected things happen in life and close ones passing overnight without a warning that you won't believe. Planning for the future is well and good, but today is all we have for certain! Live your life to the fullest. It is too short and precious to waste over something as pointless as money.

WOW!....very well said. I mean, not what you said about me but your outlook towards life.

Interestingly, 4 years ago, I was almost in a similar situation. I got a house built. I then had about 9L in my bank account left. I thought of bringing my parents to Europe and my friends advised against it. As per them one should have that kind of money left in the bank as an onsite returnee for security.

But I chose to bring my parents and my brother and went on a touring spree in Europe. Blew almost all of it. And I only had close to 2L when I went back As someone rightly said above, those 3 weeks were priceless and nor do I regret a moment of it.

Bottom line is, I now feel very confident going ahead with my decision. Thanks to all the wonderful people in this forum. By this I mean no disrespect who had thoughtfully laid out the positives and negatives. Your advises means a lot to me. Thank YOU
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Old 31st March 2016, 23:43   #33
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

I would never suggest you to put almost all your savings into buying any dream car. Use 25 to 30 % of your savings to buy the best car of your choice and no more.

A car is an asset that depreciates and also gets outdated within a span of about four to five years in our country these days.

The S Cross or whatever cross you are preferring will depreciate in 5 years, when its book value will be around Rs 6-8 L or maybe even less.

From the list of your savings, you have not listed Public Provident Fund as a savings instrument. I would suggest that you open an account in a designated bank with your son's name (first name) followed up by your name as the guardian. You can invest Rs 1.5 L per annum in this account (April 1- March 31 of the financial year) and earn 8.1 % tax free interest (present rates wef 1/4/2016). It qualifies for IT rebate u/s 80 C upto Rs 1.5 L (clubbed with Provident Fund , ELSS, NSC and so on). The rider is that deposits cannot be withdrawn till the sixth year after opening the account. And in case of a minor not until he attains the age of 18. So that's a very good reason for that money to get SAFELY BLOCKED, earning you tax free interest and multiplying. Details can be accessed on National Small Savings Schemes website.

So to be wise, invest in a car using only 25 to 30 % of your savings. A costlier car can be kept on your agenda and the agenda can be fulfilled when the savings reach that level.

Last edited by anjan_c2007 : 31st March 2016 at 23:47.
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Old 31st March 2016, 23:55   #34
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Just the other day a couple of close friends were making fun of me for being very conservative with my finances.

So please note that any suggestion I make will be biased towards it.

Couple of things will be helpful.

How many people in your family will use this car?
If its 90% only for the your wife, son and you, then the S Cross has no SPACE angle working for it.
If you do have another kid in a couple of years, you still don't need a big car.

Do you plan to drive some 1,000 kms a day for a holiday every six months or so?
If not, then the highway manners of a SUV'ish vehicle are not needed.

Do you live in a place with horrible road quality?
If not then the tall stance of a SUV'ish vehicle is not needed.

So my one question for you is,
Why do you want the S Cross?


My personal feeling towards cars is that they are usually bought without any need or requirement?
If that is the case, buy a nice simple car with max safety kit loaded in it.

Go and blow that money on a holiday or just dump it into a retirement plan and forget about it.
But buying a car you don't even need, IMHO makes no sense to me.

Please note that if you answer YES to any of my points, then everything changes.

And for crying out loud* an S Cross does not deserve being called a dream vehicle.

*I am very sorry if someone feels otherwise. Just my honest opinion.

Last edited by bblost : 31st March 2016 at 23:59.
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Old 1st April 2016, 00:07   #35
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

A lot has been said already. Let me add my comments.
  • Since you are coming back only next year, it is too early to take any decision. Car prices will go up, more models will come out. Keep a watch out and maybe there will be a cheaper launch that catches your fancy. Or you even may be able to pick up a Pre-Owned SCross.

  • If the SCross still catches your fancy once you are back, personally do not see any harm in you going for it. I do not think you are doing a big mistake based on your financial status. When I read the first line, I thought you wanted to buy a BMW or a Merc.

  • You definitely need to convince your family. Friends are not really impacted in anyway by your decisions, but the family is. Today even an entry level car costs close to 5 Lakhs. 9-10L is kind of the norm for premium hatches and compact sedans. Once you take your family to see various options and do test drives, I feel they will appreciate the value of a good car. Or conversely you may feel good with something else.

  • A car never makes financial sense (Maybe a little bit if one is self employed and can claim the depreciation/expenses stuff-Which is not the case with you). It is a depreciating asset and loses value the moment you drive it out. You seem to have made some good financial decisions. No harm in going with the heart for one thing.


On a side note. Personally feel that it is not a good idea to lay out your financial status in such detail on a public forum. Never know who reads it and what connections get built out of it-Not now, maybe over a period of time.

All the best.

Last edited by Rajeevraj : 1st April 2016 at 00:09.
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Old 1st April 2016, 00:17   #36
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Rich Dad Poor Dad Funda:

If your present financial assets do earn you enough to repay your car loan EMI, then go for it.

If no go on investing till you reach a point where your investments cover your EMI and your car maintenance expenses.

Automotive Funda:

Go for a used car and save lots of cash on it. (Of-course I know you will not get a reasonable rate loan for a used car buy!)

Last edited by GTO : 1st April 2016 at 13:16. Reason: Typo
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Old 1st April 2016, 00:24   #37
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Totally agreed. But the question really is "How much is actually enough" I think no one knows for sure. Hence my predicament I guess.

I already have a house and a separate investment, though a minor one
The first question is too philosophical and the answer is apply the same philosophy on buying a car which is nothing but your current "love/lust/attraction" or call it whatever you want but more so a short term happiness. It will FADE away applying the same philosophy.

I see you have decided to get the car. My only advice is don't pay cash. Get a loan and keep the cash for a rainy day. Invest in something that can also yield something. Think of renting the car for a monthly SUM. Some think about rainy day with the details you provided. Many have surplus they can spend today to buy that temp dream.
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Old 1st April 2016, 10:11   #38
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Sorry to add, but after reading your post I thank myself that I didnt think this hard whenever I took any decision regarding buying either an appreciating or a depreciating asset!
Since you mention you have/had a desire to own a Safari, I had got one in 2008 (on loan of course!, hehe). It was the entry-level LX variant, and exchanged it with a Storme during mid last year (bigger loan amount availed, since it is the VX variant this time!), after losing more than half of its purchase value. And am still happy with my decision. To back it all, I do not have even 10% of what you have amassed as savings in your bank account. Hope this makes you feel much much better now, haha.
To sum it up, I feel there's nothing right or wrong with the thoughts that are creating a conflict in your mind. It is mostly about what makes you have a good night's sleep, every night (well, I had begun to lose sleep after Tata sent that email with the excahnge offer on the Varicor. Back to my snoring mode now, post the new acquisition, hehe)
Cheers!
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Old 1st April 2016, 11:28   #39
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Get a good equity/financial advisor

Invest wisely

Multiply the money

Get to a stage where you can buy a S-Class and not the S-Cross

Last edited by amoghchaphalkar : 1st April 2016 at 11:30.
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Old 1st April 2016, 11:49   #40
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

DMD,
This is an interesting topic. My views are;

1. You are only 32 and you seem to have already managed most of basic needs with God's grace.

2. This is the age to live your dreams and take some bold risks, even if you want to take a high end car by taking additional finance.

3. Lot of IT companies also do offer Car scheme, which works a lot better than taking a loan from Bank as the EMI is excluded from your taxable income! You might want to explore that .

Live your dream mate..your family will sure join you in the fun
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Old 1st April 2016, 12:04   #41
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Keep 17.5L in a time deposit in a bank. Take a loan against this time deposit. So you will have cash in bank and car in hand. Mostly you will be paying 1% interest to the bank. But you will have peace of mind. For SBI, here is the infromation - https://www.sbi.co.in/portal/web/per...fixed-deposits

There is a thread on this - http://www.team-bhp.com/forum/indian...-deposits.html (Car Loan against Fixed Deposits)
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Old 1st April 2016, 12:07   #42
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Interesting insights share by many folks, and makes for very educational reading.

I know you've worked hard in onsite assignments and saved money, but the one thing not many people brought out was the fact that your Indian salary is around 60K, as mentioned in your original post.

Please don't get me wrong, but unless you have more upcoming overseas assignments lined up, your savings rate in the Indian salary will not be very high with a wife and growing son to take care of. Trust me, the corpus looks decent with savings from these work trips, but depletes pretty fast with growing expenses.

I know you've done very well to build up investments and your own home at a young age (I'm the same age as you are), my point is - if you don't have too many more trips coming your way, it would be more prudent to plan your near future lifestyle with the Indian salary you'll draw when you get back.

Cheers,
Parth
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Old 1st April 2016, 12:37   #43
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

There are many ways to buy your car and still have most of the corpus you have saved.

Option 1: You can invest the money in a Bank FD and then take a loan against the FD. The bank will give you upto 90% of the FD amount as loan. The rate of interest charged by the bank is 1% higher than the FD interest you earn. So what you end up doing is pay back into the loan account. This has a lot of flexibility w.r.t. repayment. If you are strapped for cash in a particular month, you dont pay back into the loan account. If you have extra cash, you pay back.

Option 2: Take a car loan from a reputed bank (interest rate can be negotiated a bit based on your CIBIL rating) Use your savings and invest in a high return NCD, currently some companies give NCD's at 16% interest. With the interest earned, you can pay back the EMI easily.

Do not put all your money into buying a car. Logic is that at your age your salary will keep going up and the payout (EMI) will keep reducing as a percentage of your future income. Say your EMI is 20,000 pm and your salary is 1,00,000/- At present your EMI payout is 20% of your income. In a few years, this will reduce significantly.

Hope this helps.
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Old 1st April 2016, 12:44   #44
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Firstly, think you can ask the Mods to put this question as a poll!!

Secondly, and most importantly, I would suggest that you save.
Its one thing to go with your heart. After all you once live once.
But looking at the logical point of view and with the inflation on the rise every year, saving the amount looks a better bet. If you are averse in the equity market, saving in even low return schemes and FD is a safer option anytime.

Car, after all is a depreciating asset.

Job scenarios are uncertain and companies lose their credibility overnight. Which means even jobs are highly insecure.

Hence, God Forbid, if any situation like this ever arises, the backup funds will always come in handy.
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Old 1st April 2016, 12:52   #45
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hello DMD, few points I can throw at your dilemma.

1) You don't need a premium (read costly) car to enjoy the drive. Even a M800 can give you driving pleasure if you are mentally happy at that time and is living your life.

2)Even a Ferrari is NOT going to give you driving pleasure when you are stressed or you have even a slightest fear of scrapping it somewhere and don't have enough money to repair it.

If you are sure that even after spending all your savings on a car, you can drive it with a happy mind, I will say go for it and buy one. If not, think again.
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