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Old 4th April 2016, 17:52   #121
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Dear DMD,
There are two things which right away work in your favour. 1) Liquid cash 2) strong residual value of your Ritz.

At 32, you have more engergy,time and passion for more things than a few years later. For example I don't drive long trips like I used to earlier. Have taken to trains flights and uber ola in the recent times. If you want to have a bit of both world, trust me buy USED. Figure out what depreciates fast and buy that one. Not the ones which have good resale value like most maruti's. Once you learn the art of buying used, you'll never want to buy new. Unless you make that much more money or get Vijay mallya kind of loan.

And no sir, S cross cannot be a dream buy for any enthusiast. It's a premium car for mass buyers. If you have that thought then I guess you aren't well informed about the range and availability. Read through the forum, this is encyclopedia for Indian auto consumers.

Look for civic,Laura tsi,cruze If you like diesel,polo, ecoboost from ecosport or the tdci or just get the tjet. There is high probability of getting a car which your neighbours think is brand new. More importantly it will cost you = ritz + 3 - 4 lakhs.

Don't waste your spirited age of driving.it's numbered. indulge and indulge sensibly. When your investments return 2x times there are much better cars waiting for you. All the best.
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Old 5th April 2016, 12:10   #122
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

If you have heard the phrase quoted by Einstein, "Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it."

You are at an age (actually we are) where compounding can work wonders if you invest the amount you have in hand over long period of time. There are plenty of cars available in the market today under 10L budget that you could check it out. We have too many options today and I am sure you will find another car in lesser budget without settling for it. If it had any appreciation in value, I would not be talking like this but sadly automobile is a depreciating asset.

Take your time before you jump on decisions, consult with your spouse, set your priorities right. If you still feel that you deserve this car above all, please be happy to own it and take pride. But if there's even a little doubt in your mind, procrastinate the buying decision and invest in inflation beating instruments for long term.

It's your money, your priorities and your decision. My 2 cents.
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Old 5th April 2016, 12:13   #123
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by DMD View Post

I also have another form of savings in a govt. run chit fund (extremely safe). I would soon join a new chit fund savings next month where I need to pay 7500 INR monthly. If I am lucky enough in the 1st 40 months lucky draw, I would get 7.5 lacs, which I intend to use exclusively for my son's schooling. I had previously been lucky and had received 7.5 lacs last year, which I have
used completely to invest in the plot I purchased.
I am surprised to hear. How can one get a return of 7.5 Lacs by just investing 3 Lacs over a period of ~3.5 years. Can you throw some light on the kind of investment you have done? Whether its safe or not. It might help me to achieve my milestone.

Last edited by GTO : 6th April 2016 at 17:32. Reason: Typos
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Old 5th April 2016, 13:38   #124
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by blackbeast View Post
And no sir, S cross cannot be a dream buy for any enthusiast. It's a premium car for mass buyers. If you have that thought then I guess you aren't well informed about the range and availability. Read through the forum, this is encyclopedia for Indian auto consumers.

Look for civic,Laura tsi,cruze If you like diesel,polo, ecoboost from ecosport or the tdci or just get the tjet. There is high probability of getting a car which your neighbours think is brand new. More importantly it will cost you = ritz + 3 - 4 lakhs.

Don't waste your spirited age of driving.it's numbered. indulge and indulge sensibly. When your investments return 2x times there are much better cars waiting for you. All the best.
Been avoiding to post here, but have been perusing through this thread as there is a lot to learn.
Personally - a lot of comments such as buy on EMI (and invest the balance so you still maintain your liquidity without much interest loss), or buy a pre-owned example are very sensible options.

Re: the quoted post - This is dangerous territory my friend!
The S-Cross is one of the rare enthusiast-appealing Maruti's, especially in it's 1.6L avataar. In no way is it a mass market car - for that look at the S-Cross 1.3 / Creta.
Yes, the Laura TSi will be a hoot to drive, as will the Civic - but unless you spot a prime example of these discontinued cars - it won't match an S-Cross on reliability, maintenance, or FTD factor (owing to wear and tear).
However, I do agree with you on looking at pre-owned options - but the OP should limit himself to options that are reliable, still in production, with good sales and support available.
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Old 5th April 2016, 13:42   #125
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

I would suggest buy a flat using the 17Lacs as down payment and rent it out. After that the rent received will cover your EMI for the car as well as cover atleast a portion of your Housing loan EMI. Eventually you will end up buying your cherished car as well as buying an appreciating asset which will provide security to you and your family.
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Old 5th April 2016, 15:21   #126
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hi DMD,
Thanks for starting this thread. This for me is by far one of the best read in Team-Bhp. Lot of advises and lot of motivating stories. I am not adding anything extra to what others have suggested. Work out your abilities and take a good decision such that you will not regret later. Wishing you ha happy life ahead.



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Originally Posted by Jaeger View Post
I am surprised to hear. How can one get a return of 7.5 Lacs by just investing 3 Lacs over a period of ~3.5 years. Can you throw some light on the kind of investment you have done? Whether its safe or not. It might help me to achieve my milestone.
Hi there, I am not an expert, but I do have investment on this chit funds at KSFE (Kerala state owned). Let it be clear, its not for 40 months. The schemes are varying.

For instance I have a chit fund of total value 10Lakh. My monthly payment is 10K (approx) and I should pay for 100 months. Out of 100 months, initial 40 months will be lucky draw, the winner will get 7.5 Lakh which he can choose to
1.Deposit as FD in KSFE itself for rest of the period, and earn interest which will be paid to the EMI (it will be significant amount and your EMI will come down to small amount) at the end of 100 months you will get 7.5Lakh. By this you will be investing small % of EMI a month and get 7.5 Lakh . this option is good if you win the draw initially and you are not in a need for money.

2. Withdraw the money and invest in your own but continue paying EMI as each month (approx 10K) , advantage is you will get instant money at the start itself, Loss of 2.5 Lakh approx will be Less compared to interest on loan.

Another option , if you don't need money now, but in later stage (ie after 40 months) you can participate in an auction where who is willing to take lower amount will get paid.

Main advantage of chit fund is that its like a loan without heavy interest.
The difference in amount Paid to the winner, (ie. 10Lakh minus (7.5 Lakh during first 40 months or XX lakh paid after 40 months)) will be adjusted to every ones EMI after KSFE commission

If I did confuse you , Sorry , As I said I am not an expert

Last edited by GTO : 6th April 2016 at 17:32. Reason: Quoted post edited
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Old 5th April 2016, 15:32   #127
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hi DMD,
it seems you already have a good amount of advice. Still, my 2 cents -

My opinion is tilted towards not spending big money on cars (sounds quite boring, I know), buy an economical sub 10 lack car which should suffice your need in city like Bangalore. Also, check out if you have company lease option and you could gain some tax benefit on it.
Use car rental companies (such as zoomcar etc) to quench your thirst for better car from time to time. I use this option and rent out BMW/Merc regularly.

With your current take home salary and 1 kid, there will not be any saving when you live in India. Therefore, its always better to have surplus cushion for a rainy day. Real estate investment are not liquid, therefore its important for you to build an emergency fund of at least 8-12 months of expense.
A car will give you happiness for first 1-2 year max, after that you will feel bored of it, irrespective of what you buy.
Take a wise call and keep us posted
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Old 5th April 2016, 16:20   #128
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by Sheel View Post
Could any of you please create a sheet/chart where one can know as to which segment of car is safe enough to invest as per one's income.

10L annual income is good for a K10 and likes...

Thanks
no right answer to this but here is some anectodal information from the last 8 years of the Boss' i have had. i realised/pondered over this pattern only last year.

Instance 1: this gentleman was my boss' boss and head of the BU (level of VP+). annual salary must have been 80L if not more. he had a Laura L&K company lease. massive real estate estate investments (flats in Bombay, Gurgaon, and own house in Delhi).

Instance 2: was my direct boss. CEO of the company. had a 520i. the lease of which he somehow got paid/transferred from previous company. annual salary would probably have been 2Cr. two years into the role the BMW's lease was now paid out. he bought a Fortuner, again on company lease. the third car he had was a 6 year old Santro! a heavily invested and financial secure fellow.

Instance 3: takes the cake. Bought a preowned Honda City automatic. cash down for 7-8 lac. annual salary must be 80L or so. own house, invested in instruments over 18 years or so.

Notice a similarity in behaviour? very conservative spending pattern. from the above i think their vehicle purchase decisions must be 1/3 to 1/6th if not lower off their annual salary. i am not counting bonus' in the above numbers.

something to ponder.
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Old 6th April 2016, 11:50   #129
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hi
Humble suggestion. I'm earning around 5-6 lakhs per month and in IT. You think I can buy a 50 lakhs car? I own a humble MPV. Invest it. Buy a plot in the suburbs and buy a good car around 6 -8 lakhs. Nothing more that. When your car depreciates, your investment will appreciate. Please. Be wise. This car craze is a fad. This never ends. Never listen to "dream" words. Once you have a 16 lakhs car then after some time you long for a bigger SUV. Material desire is no good Gita says.

Mod Note:

Post edited. There were several spelling & grammatical errors in your posts. This negatively affects the forum experience for other readers.

Kindly ensure that you proof-read your posts prior to submission. Also, it would be a good idea to use a spell-checker.

Last edited by Aditya : 7th April 2016 at 07:45. Reason: Typos
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Old 6th April 2016, 14:09   #130
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Hi
Humble suggestion. I'm earning around 5-6 lakhs per month and in IT. you think I can buy a 50 lakhs car?
Well, never say never !

For those too lazy to click through, that's a thread that has over 300 posts all striving to answer the question "Can a regular IT Joe ever buy a BMW?"

Last edited by noopster : 6th April 2016 at 15:46.
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Old 6th April 2016, 14:55   #131
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

Hey DMD,

Just saw your post and agree that all the good well meaning advice given by many BHPians which is all valid in their own terms.

However I would like to quote one of the greatest BHPians of our times Sam Kapasi below. Apologies if this has been quoted before in this thread and for the long quote below but so be it as every word is worth its weight in gold-

Tribute to and quoting from - http://www.team-bhp.com/forum/travel...tml#post804559 (A YetiHoliday® - TheOne® visits India for the first time.)

Quote:
And now here's a message from our sponsors about what the YetiLife® is all about.
  • Love your partners and enjoy life with them.
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  • Nobody really has time to think about what you did. Those who do think about it, will forget in a few days. You will be left with the experience of a lifetime. Go on, do it.
  • Think of the craziest thing you wanted to do. No matter how crazy. Alone, or with a loved one. DO IT! PM me if you want advice or help, I will help you any way I can.
  • Take time out to be with your family. We all need money to live and jobs and tensions and we all have dreams. Put them all aside and go and live with your partner and family.
  • Nothing happens. Your office doesn't stop functioning, if you're really good at what you do, you won't get fired, if you get fired and you're really good at what you do, you'll get a new job, - your business may suffer for a few days, you may lose a few rupees, it doesn't matter.
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  • Arrey, someday you'll die and STILL nothing will happen, the world will function wonderfully without you. A few people will remember you, then forget you. Your partner will remember you often - at least GIVE him/her something fun to remember you by!!
Let the world function for a few days without you NOW, while you're still living!!! Go and live, enjoy, take as many holidays as you can with your partner/wife/gf/kids, before some unforeseen circumstances don't permit you to enjoy life anymore. It has happened and will happen to the best amongst us. Dying is not in your hands, but at least living is!
Hey, at least you'll know you LIVED before you died.
Those who have not heard of this Yeti, lookup into his handle and read up all those threads he started. It will give a new perspective to living.

And my small advice to you is go ahead and live your dreams if you have everything else taken care of, the same I did when I bought my dream machine!

Last edited by Rehaan : 7th April 2016 at 17:10. Reason: Fixing typos as requested...
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Old 6th April 2016, 15:11   #132
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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I also have a son who will turn 3 years in a few months and my wife is a home maker.
1. Do you have life insurance that would enable your dependent family to sustain over the next 10 years (minimum) without a downward shift in lifestyle?
2. Do you have active health / medical insurance cover for yourself and dependent family?

All your existing investments (house & land in hometown) are in fixed assets which may not be freely marketable at a fair market price in dire need of funds. You only live once, and so does every member of your family and nobody deserves an extra share of suffering for your personal indulgence. However, do not use this as an excuse to cut down on your relatively smaller daily indulgences in order to maximize your savings, that is certainly not the right way to do it.

IMHO, once you have both of the above questions converted to positive it would be fair of you to indulge in expensive hobbies / lifestyle products, until then just wait it out for a few more years with a car that meets your minimum acceptance criteria.

Last edited by manson : 6th April 2016 at 15:28.
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Old 6th April 2016, 17:37   #133
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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Originally Posted by sgmuser View Post
When your car depreciates your investment will appreciate. Please. Be wise. These car craziness are fad. This never ends. Never listen to "dream" words. Once you have 16 lakhs car then after some time you long for a bigger suv. Material desire is no good Gita says.
I don't agree with your post. Even food depreciates, so do clothes, watches & nice holidays. That doesn't stop us from fine dining, dressing up or touring, does it?

As long as it's within your budget (read = sensible planning), there is nothing wrong in getting a nice car that you'll get so much pleasure out of!

But the key is the % of income you spend on your car. 10% or less is the golden rule.
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Old 6th April 2016, 20:28   #134
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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But the key is the % of income you spend on your car. 10% or less is the golden rule.
hi GTO - please share what is 10% rule means. If I take home 80K per month salary, does it mean that I should pay no more than 8K per month EMI ?

Sorry did not understand the logical calculation.
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Old 7th April 2016, 17:33   #135
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Default Re: 17.5 lakhs liquid cash: Save or spend on new car?

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From my point of view, the liquid cash in your account is an opportunity for investment. You should easily get a 7 year loan as your creditworthiness is excellent.

If you can invest your own money for the long term without any immediate need, you should. Be it /stocks/mutual funds/corporate bonds/real estate/business.


There's no reason to not take a bank loan if you're eligible and can pay the emi.

The EMI affordability is my benchmark for financial prudence.

Look up the EMI for the 7 year loan. And if it's less than 15‰ of your monthly income, it should be very comfortable. The cash in your account can be used as a down payment for a real estate property too and take a 25 year housing loan.
I don't think buying the car with loan is financially sound when you have liquid money. What ever EMI comes for the loan you can invest in SIP and it would be giving much better returns. Just do the math, I had the same dilemma and asked by financial consultant, they clearly worked out both cases and the case with buying with liquid cash came on top against buying with loan.

Last edited by joe_antony : 7th April 2016 at 17:34. Reason: spelling mistake
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