Paging BH Gearheads: Reasonable Net Worth for Exotic

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BJJ nerd
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Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Fri Mar 16, 2018 9:53 pm

First off, this is a fantastic forum that I came across relatively recently. Really looking forward to picking up some wisdom on these pages!

First, a bit about me. 34yrs old, happily married with 2 awesome kids (2 & 4 yrs old). While I don't consider myself to be a materialistic person, I do have a huge soft spot for cars. Always have been into cars as long as I can remember. All this to say that my lust for sports cars / exotics is not correlated to the typical status symbol drivers.

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.

I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.

I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions. :sharebeer

ny_knicks
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ny_knicks » Fri Mar 16, 2018 10:00 pm

Where is my popcorn...

Here would be when I would feel comfortable spending that kind of money on a car.

If I never had to look at a bank statement again. The purchase would have to be so immaterial to my overal financial outlook that it wouldn't matter if I spent $200k or $500k.

If your pinching pennies and worrying about FIRE it's probably not a wise move.

Not to mention it looks rediculous if you drive that car and can't back it up with nice house/clothes/hobbies/travel.

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Sandtrap
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Sandtrap » Fri Mar 16, 2018 10:02 pm

1969 Camaro Z28 396 c.i.
Easily fixed by any mechanic, parts at local auto parts store, no computer.
Image
Comfortable to own and park in the garage.
Especially when backed up by a solid "Bogle" retirement portfolio and solid established financial position.

Actionably:
As far as reasonable Net Worth required.
Request a portfolio review:
Asking Portfolio Questions
https://www.bogleheads.org/forum/viewt ... =1&t=6212
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hicabob » Fri Mar 16, 2018 10:05 pm

livesoft's, paraphrased as "spend what your portfolio makes or loses in a good/bad day" algorithm works for me.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by travellight » Fri Mar 16, 2018 10:30 pm

I love cars but I would need to be well north of 10 million to spend 250-300k. I do hope to get there. I have spent for a Tesla which is in the 80k range.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by MiddleOfTheRoad » Fri Mar 16, 2018 10:31 pm

I wouldn’t mind spending 10% of liquid/investable assets. But the ongoing maintenance and insurance cost would really annoy me.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by timmy » Fri Mar 16, 2018 10:38 pm

travellight wrote:
Fri Mar 16, 2018 10:30 pm
I love cars but I would need to be well north of 10 million to spend 250-300k. I do hope to get there. I have spent for a Tesla which is in the 80k range.
+1

lazydavid
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by lazydavid » Fri Mar 16, 2018 10:58 pm

Even super-low mileage exotics depreciate at an unbelievable rate, so it might be worth looking at what a 2-5 year old one with <10k miles looks like. Might be able to find a sweet deal in the $100-150k range, without taking on too much incremental maintenance cost (relatively speaking). But as the poster below me points out, it's kind of nuts to spend your annual income (or 2 or 3x annual income) on a car.

If it's a Ferrari you're after, prices of low-mileage units should be crashing shortly, now that Ferrari corporate has been caught conspiring with dealers to roll back odometers in order to jack up the resale value.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by eye.surgeon » Fri Mar 16, 2018 10:59 pm

I'm impressed that at age 34 you have 10 times your income in an investment account. That's not easy to do. As for an exotic car, at your income, never. I'd consider it if you added another zero to your paycheck. I'm also a big gearhead and I've had lots of performance/luxury cars, albeit with a much higher income, but I've discovered that a true gearhead can be very happy with a budget performance car. A GTI, a Mustang, a Miata, a STI-- pick your flavor. As a perspective, Jeremy Clarkson's current daily is a Volkswagen GTI.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by gator15 » Fri Mar 16, 2018 11:06 pm

I’m not sure I would ever be comfortable owning a car that expensive. While you may hold the vehicle in high regard, the average person won’t. I would be overcome by the fear of someone else scratching or denting my car. Despite my best effort to meticulously maintain my sports cars in the past it’s happen to me twice. I wouldn’t put the fate of a quarter million dollar car in someone else’s hands.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Hyperborea » Fri Mar 16, 2018 11:13 pm

I'm going to agree with the previous posters and say don't do it. I like cars too (and motorbikes) and I could never get myself to spend anywhere near as much as you are talking about. I bought some entertaining cars over the years but all at a much more reasonable price level and I auto crossed and tracked some of them too. I would have been scared to do that with an expensive exotic.

Why don't you get yourself something fun in a more reasonable range and then get a taste of the exotics by joining one of the exotic car rental clubs? In the Bay Area the one that I have gone on outings with before is Club Sportiva - https://www.clubsportiva.com Maybe there is something like that near you?
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BJJ nerd
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Fri Mar 16, 2018 11:38 pm

eye.surgeon wrote:
Fri Mar 16, 2018 10:59 pm
I'm impressed that at age 34 you have 10 times your income in an investment account. That's not easy to do. As for an exotic car, at your income, never. I'd consider it if you added another zero to your paycheck. I'm also a big gearhead and I've had lots of performance/luxury cars, albeit with a much higher income, but I've discovered that a true gearhead can be very happy with a budget performance car. A GTI, a Mustang, a Miata, a STI-- pick your flavor. As a perspective, Jeremy Clarkson's current daily is a Volkswagen GTI.
Good input. Sorry, should have worded it more carefully - 250-300k current income, saving +/- 50%. Having said that, I started with $0, and have been maxing out 401k/IRA accounts (while also investing on the side) since starting full time work at 22.

I'm definitely not there yet, just looking to put some goal posts (mostly investable / earning assets) around the range I would need to be to reasonably afford one.

I do have a race-prepped C6Z06 and a race bike that I track, but as mentioned, continue to last after the exotics.

Seems like 6-7m (investments) would be a no-brainer.. 4-5m would probably be more of question mark.

Btw, not looking to do the whole FIRE thing, I like what I do (banking) and enjoy variety in my life.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by StealthRabbit » Fri Mar 16, 2018 11:54 pm

34yrs old, happily married with 2 awesome kids (2 & 4 yrs old).

Priorities...

I set my fleet of racing MC and cars aside during the 18 yrs kids were @ home.

You just 're-calibrate' 'fun'... Kids (and spouse) are with you such a short time... invest in them (much cheaper than a divorce).

We chose to homeschool and live internationally with our kids from age 5 - age 12 (that also recalibrated my INCOME :annoyed and career... but... a few yrs and poof... and they are GONE!)

On another note... a good friend just took delivery of his 3rd generation GT-40, now he has all three versions! (All acquired (and enjoyed) AFTER kids left home / and after FIRE). While the time to enjoy them is now limited...nice thing is... they go FAST, :D
Last edited by StealthRabbit on Fri Mar 16, 2018 11:57 pm, edited 2 times in total.

StealthRabbit
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by StealthRabbit » Fri Mar 16, 2018 11:54 pm

..duplicate posting

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Hyperborea
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Hyperborea » Sat Mar 17, 2018 12:02 am

BJJ nerd wrote:
Fri Mar 16, 2018 11:38 pm
Btw, not looking to do the whole FIRE thing, I like what I do (banking) and enjoy variety in my life.
You're only 34 so I wouldn't close the door on FIRE just yet. Wait until you've been doing essentially the same thing with different wrappers or variations for 20-30 years. Even if you're really good at it and they give you really good money it still gets boring. I FIREd to get more variety in my life.
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by denovo » Sat Mar 17, 2018 4:49 am

BJJ nerd wrote:
Fri Mar 16, 2018 9:53 pm
First off, this is a fantastic forum that I came across relatively recently. Really looking forward to picking up some wisdom on these pages!

First, a bit about me. 34yrs old, happily married with 2 awesome kids (2 & 4 yrs old). While I don't consider myself to be a materialistic person, I do have a huge soft spot for cars. Always have been into cars as long as I can remember. All this to say that my lust for sports cars / exotics is not correlated to the typical status symbol drivers.

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.

I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.

I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions. :sharebeer
There's plenty of stuff in the 20-40k range you can go nuts with ( and you can afford to spend that much)
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by carguyny » Sat Mar 17, 2018 5:37 am

I have a car allocation that grows each year just like my investment allocation. You need to know how to play the car game and how to buy smart.

For example, I drove my 2016 GT3 RS for a year and made $50k when I sold it (I was offered $100k over at 6 months old). I have a 2018 GT2 RS coming that today is worth $100k to $200k more than sticker. Could change, sure, but unlikely I will eat any depreciation even if I own it 5 years plus. I have a friend that gets early Ferrari allocations, drives them for 6 to 12 months and hands them back to the dealer at full MSRP + tax. He basically drives rents his Ferraris for just registration and insurance.

I would start earning in with someone like a 2018 Porsche GT3, be a good customer, get your car serviced there, stop in regularly. Consider a Macan/Cayenne for the wife etc. Build your way up to a RS, enjoy very limited depreciation and if you're lucky it'll appreciate.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by FedGuy » Sat Mar 17, 2018 6:30 am

Am I the only one who opened this thread hoping for an answer to the question, "Exotic what?" (Yes, I saw the reference to "Gearheads" but expected a discussion about routers or something.)

bubbadog
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by bubbadog » Sat Mar 17, 2018 6:35 am

What about picking a car that is close to the bottom of the depreciation curve? Maybe something like a 997.1 Porsche 991 Turbo. You can scratch that itch without taking a huge hit on resale. Maybe join a local club and learn to to some basic maintenance to mitigate ownership costs as well.

Just a thought. :sharebeer

jehovasfitness
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by jehovasfitness » Sat Mar 17, 2018 6:39 am

As a car guy I would likely go by my income level and not net worth, but I also am no typical BH.

If I was making 400k/yr or greater is likely where I would feel comfortable. Assuming steady secure job.

investingdad
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by investingdad » Sat Mar 17, 2018 6:49 am

This is easy.

We are ok spending 1.2% of our net on a car, having done so last year.

So 20 million for me.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by sambb » Sat Mar 17, 2018 6:59 am

Have owned many high end brands and exotics.
My advice is the following:
Buy a ~100k preowned high end porsche 911, drive it for a year or two. See if you can stomach the issues with regards to parking, insurance, and maintenance. If you can, then consider an exotic for weekend fun. You wont lose much on the 911.
I would NOT go from a toyota to a lambo without an intermediate step for a few years.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Jack FFR1846 » Sat Mar 17, 2018 7:32 am

Owning an exotic does not need to be a money draining exercise. However, you need to do your homework. Depreciation is something you need to understand for the car you're looking at. Also understand that going forward, depreciation can come in for various reasons. Some random trivia:

88-91 BMW M3: Only 2500 were imported. This was a true "take a racecar and make it street legal" car. Of the M cars (save M1), it's the only one that's actually appreciated in value. Why? Rarity, yes. Far fewer than those 2500 still exist. A good number of them were used as either amateur racecars or full blown racecars. What happens to racecars? Lots become scrap metal. A 30k example could have been bought in 1995 for $17k. By 1997 at 51k miles, it was only worth $15k. Today, that 51k mile example is a $100k car. (I owned a 90 M3, purchased in 95 for $17k and sold in 97 for $15k)

Lotus Elise and Exige: Allowed to be imported for a very limited time. Very expensive new but depreciation curve is a hockey stick. Drop 40% in 3 years, then starts to rise. Since there was no replacement and this car was even more of a track day car than the E30 M3, they've been killed off. Add to that the fact that the front and rear body structures are single piece composite "clams". If damaged, Lotus directs that it must be replaced, not repaired because it's part of the crash structure. Back orders from England take longer than insurance companies allow for repair time so a large number of these have been totaled and given salvage titles. Find a clean, never damaged example and its value is slowly rising every year. This is another car I've owned. 07 Elise Touring, purchased in 2012 for $30k, sold in 2016 for $32k. New, this was a $50k car.

Cars to be careful of: Maserati (any). The dual clutch transmission used in all cars requires regular, expensive service. This isn't a DIY operation nor an independent mechanic operation as the clearances are all set by the dealer machine. To ignore that, it'll destroy the clutches in 100 miles. Depreciation of Maseratis is legendary. In 3 years, they drop to half. In another 3 years, they drop by half again. A $135k car in 10 years can easily be bought for $25k.

AMG: Not as bad as the Maserati, but close. They also fall farther. I've looked at 10 year old AMGs (not even C class) for $5k. Part of the reason is that repairs of a 10 year old car is as expensive as for a new car.

Porsche: Yes....I know. Air cooled 911's have upped in value over the last 5 years. 8 years ago, I could have bought an 88 turbo with 25k miles on it from a dealer for $30k all day long. These days, that price will buy a nice example of an N/A car. Sure, GT-3's have sold for more than MSRP several years after purchase recently. How long will that continue? I have no idea.

Muscle cars: I love the looks and the fact that you can easily determine that a Camaro isn't a Charger isn't a Talladega. They're simple to work on. But they were not built to last. Remember that the odometers only went to 5 digits because nobody ever went over 100k back in the day. They get horrible gas mileage, are mostly built the same way as a modern pickup truck (body on frame, save a few like Mustang) and if not well restored (expensive), these things were all built to rust. Remember that insurance and storage cost money. Maybe that 66 289 Cobra will retain its value or maybe not.

In short (too late, right?), it's a crap shoot for a lot of cars. How will an Evora or 488 or Huracan hold their values in 10 years? I have no idea.
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BJJ nerd
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Sat Mar 17, 2018 7:59 am

carguyny wrote:
Sat Mar 17, 2018 5:37 am
I have a car allocation that grows each year just like my investment allocation. You need to know how to play the car game and how to buy smart.

For example, I drove my 2016 GT3 RS for a year and made $50k when I sold it (I was offered $100k over at 6 months old). I have a 2018 GT2 RS coming that today is worth $100k to $200k more than sticker. Could change, sure, but unlikely I will eat any depreciation even if I own it 5 years plus. I have a friend that gets early Ferrari allocations, drives them for 6 to 12 months and hands them back to the dealer at full MSRP + tax. He basically drives rents his Ferraris for just registration and insurance.

I would start earning in with someone like a 2018 Porsche GT3, be a good customer, get your car serviced there, stop in regularly. Consider a Macan/Cayenne for the wife etc. Build your way up to a RS, enjoy very limited depreciation and if you're lucky it'll appreciate.
Wow, huge congrats on the incoming GT2 RS! I hear those cars are monsters.

Seems like porsche GT cars are unique wrt appreciation curve (excluding high-end limited production cars).

I priced out a 991.2 GT3 at 160 (before market adjustment). Problem is, at 200-225 you've got some great used options from McLaren and Lambo. Not a huge fan of Ferrari.

How did you determine the appropeiate amount for car allocation / fund?

I'm torn between throwing everything I got into equities / investments (what I've been doing for some time) and starting to invest a bit less to get more enjoyment out of the few material items I do care for.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by oldcomputerguy » Sat Mar 17, 2018 8:05 am

I guess I just don’t get the allure. I cannot imagine myself ever plunking down that much for a car, especially one that I would be reluctant to drive.

Of course, my first new car was a 1977 zippo lighter Ford Pinto, so what do I know? :?
It’s taken me a lot of years, but I’ve come around to this: If you’re dumb, surround yourself with smart people. And if you’re smart, surround yourself with smart people who disagree with you.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Serie1926 » Sat Mar 17, 2018 8:16 am

Sounds like you’re a very responsible 34 year old. You’ve got plenty of money in the bank. If you and your wife are cool with buying an exotic and works in your budget, get on with it. Life is short.

As one of the other posters said, buy used. Extremely low mileage exotics are significantly less than new. Most, if not all, will already have film protection installed. Destination fees, less taxes, gas guzzler tax, etc.

Good luck!

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by ChinchillaWhiplash » Sat Mar 17, 2018 8:57 am

You might want to look at some under appreciated classics that are relatively cheap, but could go up in the future. One of my favorites is a Jensen Interceptor. Italian body style, built in the UK with American muscle under the hood. Early models had 383. Later 440. They also made a 3 carb 6 pack version and the 1st all wheel drive production car, the FF. You can get a top notch example of the saloon for under $40k and the uber rare convertible for under $100k. I wish I still had mine. Bought an original with low miles example in 1997 for $8500!

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Marketman » Sat Mar 17, 2018 9:34 am

I'm just being the devil's advocate here for the heck of it so don't stone me to death. I have a friend that has owned a number of exotics over the last 30+ years. In the recession in the early 90's the price of Ferrari F-40s crashed from $1,000K+ to about $250K. My friend picked one up, used it for several years, and then sold it for the same $250K (I got to drive it also!!!). In the meltdown of 2008, the price of fine collectables often went UP presumably because people lost faith in paper assets. I have tracked the F-40s for years because they are so cool. I think I remember that their price went up during the meltdown (or at least held steady). An acquaintance of mine owns a gun store which sells fine antique guns. The prices go up to $250K. He told me that sales of upper end antique firearms when up during the meltdown for the reason listed above.

To some extent, an exotic car or any fine collectable might be a good hedge against bad deflation or inflation like gold or most hard assets. If the OP REALLY WANTS to get an exotic, maybe he could work it into his overall asset allocation?

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by sambb » Sat Mar 17, 2018 9:41 am

To me, one of the major risks is a minor accident
If someone hits you, then even if they pay, the car will have significant problems selling in the preowned market
My advice, if you do buy, is to use it for weekend fun.
A daily sports car is a 911.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by carguyny » Sat Mar 17, 2018 10:13 am

BJJ nerd wrote:
Sat Mar 17, 2018 7:59 am

Wow, huge congrats on the incoming GT2 RS! I hear those cars are monsters.

Seems like porsche GT cars are unique wrt appreciation curve (excluding high-end limited production cars).

I priced out a 991.2 GT3 at 160 (before market adjustment). Problem is, at 200-225 you've got some great used options from McLaren and Lambo. Not a huge fan of Ferrari.

How did you determine the appropeiate amount for car allocation / fund?

I'm torn between throwing everything I got into equities / investments (what I've been doing for some time) and starting to invest a bit less to get more enjoyment out of the few material items I do care for.
Thanks - it'll be a fun car to drive!

I've owned a couple of Mclarens, depreciation is tough except on the LTs in their first year or so, but a carbon tub is something special. I've never really looked at Lambos as they're tough on tall people (I'm 6'5") but the Performante looks like a great car.

I think of my car allocation as an amount of money I'm OK for it to go to $0. I never include it in networth calculations and contribute a small amount each year to increase it after I've hit my savings goals. I consider this contribution to be an expense. I had everything in order before I splurged down this path - I didn't own a car for many years and would bus/train/subway around (pre-Uber) to save money. I don't think there is a rule of thumb you can really apply, but I would try to avoid going much above 10%.

My biggest mistake was settling on some cheaper cars while waiting - it was just wasted deprecation/money so wait until you can buy what you really want. It will be cheaper in the longer term.

EDIT: Just to add, outside cars I'm a complete minimalist. I own 1 pair of jeans, 3 pairs of shoes, 5 pairs of underwear, 3 t-shirts etc. I only buy things when they need to be replaced. I also don't drink, don't like eating out etc so part of what I spend in cars comes from being very focused only on things that bring me pleasure. My wife has a $30 handbag and is on the same page.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Kenkat » Sat Mar 17, 2018 10:21 am

timmy wrote:
Fri Mar 16, 2018 10:38 pm
travellight wrote:
Fri Mar 16, 2018 10:30 pm
I love cars but I would need to be well north of 10 million to spend 250-300k. I do hope to get there. I have spent for a Tesla which is in the 80k range.
+1
10 million is the number that popped into my head as well.

The thing with exotics is where do you drive them? There are very few opportunities to drive them on public roads anywhere near their capabilities and do you really want to take a $300k car on the track? Maybe, but you can probably have just as much fun on the track with something far less expensive. So you are probably looking at a car you would drive to car shows or on public roads on rare occasions just to cruise.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by TomatoTomahto » Sat Mar 17, 2018 10:27 am

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.
Getting back to the original question, I’d be reluctant to spend $250+ on a car with your income or assets, especially with two young children.

I used Livesoft’s Rule to “allow” me to buy a $132k Tesla. That said, I still asked my wife (who earned the money) and my kids (whose inheritance I was spending), before I pulled the trigger. Our income and assets are an order of magnitude higher than yours and our kids are in various stages of launching (youngest is 20), but I wouldn’t indulge in an exotic. Perhaps our recent house purchase could be considered the equivalent in terms of indulgence, but I’m much more comfortable doing that.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Archimedes » Sat Mar 17, 2018 10:33 am

I always bought very economical cars. Until my net worth was quite high. Now I feel comfortable spending roughly one month's net salary on a very expensive car. So for you, you aren't going to make it to a supercar by my personal criteria. But if you want it, and you are willing to pay the price in terms of delayed financial security, it is your choice and you only live once. Good luck.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by michaeljc70 » Sat Mar 17, 2018 10:42 am

To spend 2x my annual income on a car I would have to be financially set for life in a lifestyle beyond what I was accustomed to. How will the price of the car compare to the price of your home?

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by tibbitts » Sat Mar 17, 2018 10:59 am

oldcomputerguy wrote:
Sat Mar 17, 2018 8:05 am
I guess I just don’t get the allure. I cannot imagine myself ever plunking down that much for a car, especially one that I would be reluctant to drive.

Of course, my first new car was a 1977 zippo lighter Ford Pinto, so what do I know? :?
I don't get the exotic car thing either but most people have something they'd like to splurge on if they could. Oldcomputerguy probably wrote that post just before driving his Pinto to the hangar and strapping himself into his P-51.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Sat Mar 17, 2018 11:35 am

sambb wrote:
Sat Mar 17, 2018 6:59 am
Have owned many high end brands and exotics.
My advice is the following:
Buy a ~100k preowned high end porsche 911, drive it for a year or two. See if you can stomach the issues with regards to parking, insurance, and maintenance. If you can, then consider an exotic for weekend fun. You wont lose much on the 911.
I would NOT go from a toyota to a lambo without an intermediate step for a few years.
Thanks, was initially thinking along the same lines. Current daily is a loaded 340i with full bolt-ons (~500hp). Looked at upgrading to a base 991.2 carerra and was a bit underwhelmed after an extended test drive.

Have always been enamored by GT3s, however, they truly shine as a track car, not a road car (low on torque, etc). It'll be a long while until I would be comfortable (financially) tracking a GT3.. seen my share of cars go into walls / being written off over the years.

Besides, I'm not looking to replace my Z06 which has been modded pretty extensively. I'm usually able to hang with cup cars, and pass 991.1 GT3s relatively easily.

This line of thinking got me onto exotics. I've spent some time in a Huracan (w/exhaust), and it was a hell of an experience.

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Kenkat
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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Kenkat » Sat Mar 17, 2018 12:01 pm

It’s going to be awfully hard to top a 340i and Z06 already in your garage. That’s a lot of car (x2) at any income level.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hicabob » Sat Mar 17, 2018 12:06 pm

tibbitts wrote:
Sat Mar 17, 2018 10:59 am
oldcomputerguy wrote:
Sat Mar 17, 2018 8:05 am
I guess I just don’t get the allure. I cannot imagine myself ever plunking down that much for a car, especially one that I would be reluctant to drive.

Of course, my first new car was a 1977 zippo lighter Ford Pinto, so what do I know? :?
I don't get the exotic car thing either but most people have something they'd like to splurge on if they could. Oldcomputerguy probably wrote that post just before driving his Pinto to the hangar and strapping himself into his P-51.
Shockingly enough Enzo Ferrari, the owner of the company, apparently preferred Peugot 404's then 504's as his daily driver.
http://driving.ca/auto-news/entertainme ... ve-to-work

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by HongKonger » Sat Mar 17, 2018 12:07 pm

Fascinating how ordinary cars like Porsche, Lotus, Lambo etc are considered exotic in the US.
I thought exotic would be like a Pagani.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Marketman » Sat Mar 17, 2018 12:09 pm

My friend I spoke about previously usually buys good used exotics, drives them for awhile (not as a daily driver), and then sells them for about what he buys them for. He has done well (not lost money) and had a ton of fun.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Leemiller » Sat Mar 17, 2018 12:24 pm

Maybe 7.5m with kids, 5m married without kids, and 2.5m single.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by golfCaddy » Sat Mar 17, 2018 12:33 pm

I don't quite get the appeal. You're married, so presumably you aren't buying the car for signaling purposes. It's not like there's an autobahn, with no speed limits, you can drive on in the US. With a true race car, you're not going to get the creature comforts of a Mercedes S-class. Down to dollars, I would recommend spending no more than 3% of your net worth on a car. So if you want a true exotic, I would want an 8-figure net worth.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Sat Mar 17, 2018 12:37 pm

michaeljc70 wrote:
Sat Mar 17, 2018 10:42 am
To spend 2x my annual income on a car I would have to be financially set for life in a lifestyle beyond what I was accustomed to. How will the price of the car compare to the price of your home?
My initial post referenced $ saved, not earned.

Outside of cars/bikes, my lifestyle is rather ordinary - read not lavish. Haven't really ever tracked spending (always just invested whatever is left after comfortably meeting our needs/desires), but I would guess we get by on less than 100k. House is 2900 sq ft worth ~450k. Don't care for mcmansions.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by HardHitter » Sat Mar 17, 2018 12:40 pm

It is crazy how many Bogleheads are car guys. I've seen 2-3 threads, including one of my own, the last week on purchasing "nice cars"

I am in the same situation. I currently own a 997 911 Turbo as my weekend cruiser and have been researching and looking into upgrading to a 991 911 Turbo, Mclaren 570s or the Audi R8 V10 Plus.

Each car has their own pros/cons and I only plan to own these cars for 2-3 years. In my head, I'm not looking at it as "I'm spending $150K for a car" but more so, "I'm spending $30-$50K on a super car" because that is likely going to be the cost of ownership (depreciation, maintenance, random problems) for those 2-3 years.

At the end of the day, I know that family/other priorities come first. My wife and I are expecting our first kid at the end of the year and we are saving up to buy another house. Buying a $150K car is most likely the stupidest decision to ever make, but as I said, when the time comes where we need to pay/invest in the kids college and/or buy another house and the $100K most likely I'll get from it is needed, the car is gone and I am OK with that. But time is valuable and if you wait, perhaps you may never get the chance later on in time.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hightower » Sat Mar 17, 2018 12:42 pm

I think I would stick to the rule of spending no more than 20% of your annual income on a car (I don't know who first proposed this rule, but I like it). If your investments bring in enough cash each year to justify 250k on a car using that rule, then you can afford it. FWIW to stick to this rule, assuming 4% SWR, you would need over 30 million in invest-able assets to justify this purchase. HOWEVER, with that being said...If you have a net worth over 10 million dollars and you want to make a one time purchase of a crazy expensive car because it's something you are passionate about...you can probablyget away with it and not harm your long term outlook too much. A 250k car is 2.5% of a 10 million dollar portfolio. So, it's a big deal. That's really taking a big chunk of your bottom line. I think it depends on how frugal you are and your overall spending rate outside of this one purchase.
But, at $3-4 million in total assets, and a $300k car you're talking about spending 10% of your total portfolio on a car. That's crazy behavior if you ask me.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by hightower » Sat Mar 17, 2018 12:55 pm

BJJ nerd wrote:
Fri Mar 16, 2018 9:53 pm
First off, this is a fantastic forum that I came across relatively recently. Really looking forward to picking up some wisdom on these pages!

First, a bit about me. 34yrs old, happily married with 2 awesome kids (2 & 4 yrs old). While I don't consider myself to be a materialistic person, I do have a huge soft spot for cars. Always have been into cars as long as I can remember. All this to say that my lust for sports cars / exotics is not correlated to the typical status symbol drivers.

Now to the question, for those of you that share this passion, what would seem like a reasonable level of investment assets / net worth to even entertain a purchase of an exotic (think $250-300k).

I do live below my means, and save about half of my annual income (~ $120-150k depending on bonus), however I don't think my current investments of 1.3m is even close to justify/support that level of spending.

I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.

I'm well aware that there is a huge number of factors that would be at play. Just wanted to get the discussion started and get your thoughts and opinions. :sharebeer
What line of work are you in? Maybe it's my profession (I'm a physician and see lot's of people with lives ruined due to car wrecks) or the fact I'm getting older (just turned 36), but I have ZERO desire to drive like a maniac. Maybe in my 20's I briefly thought it was fun to drive fast and turn corners like a race car driver, but now I see life as too precious to risk doing stuff like that. I mean, don't get me wrong, I appreciate the engineering and power of high end sports cars. But, I don't think I would ever want to spend that kind of cash on a car. I would however, love to get a fully restored (not hot rod, but actual restoration) late 1940's Cadillac convertible or Coupe DeVille however;) It would need to be under 50k for me to feel good about it though. Otherwise I'd be afraid to take it out of the garage, lol

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Rob1 » Sat Mar 17, 2018 1:06 pm

BJJ nerd wrote:
Fri Mar 16, 2018 9:53 pm
I don' think I would feel comfortable spending that kind of money until maybe the 3-4m mark.
Two perspectives:

First, my net is just north of that range, and at age 50 I'm currently agonizing over spending ~$50k on a new car.

Second, in hindsight, my current 2 seat roadster - although a joy to drive - hasn't moved the needle in terms of my happiness. Alternatively, my "freedom fund" has. Don't discount the FI part of FIRE.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by Afty » Sat Mar 17, 2018 1:09 pm

OP mentioned a race-prepped Z06 and a track bike. Are you planning to track the exotic? That would scare the bejeezus out of me, regardless of how rich I was. Imagine how you'd feel if you ran a $300k car into a wall. If you plan to daily drive it, I wonder if you would get sick of it quickly. It's going to be uncomfortable and obnoxious to drive in traffic.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by snackdog » Sat Mar 17, 2018 1:25 pm

Older exotics can be even more interesting and exotic than newer cars. And prices are completely variable. The real car guys buy used, not new. Think Wayne Carini vs an NBA back bencher. You can pick up some amazing exotics from the 50-70s for under $50K at a reputable auction. If you choose carefully they may not depreciate at all.

My rule of thumb on total invested in cars is less than 5% of net worth (for car freaks; 1-2% for non-car freaks). If you have a million dollars that gives you $50k to play with.

BTW, biggest recent daily market swing was close to 12% in 2008.

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Re: Paging BH Gearheads: Reasonable Net Worth for Exotic

Post by BJJ nerd » Sat Mar 17, 2018 1:28 pm

carguyny wrote:
Sat Mar 17, 2018 10:13 am
BJJ nerd wrote:
Sat Mar 17, 2018 7:59 am

Wow, huge congrats on the incoming GT2 RS! I hear those cars are monsters.

Seems like porsche GT cars are unique wrt appreciation curve (excluding high-end limited production cars).

I priced out a 991.2 GT3 at 160 (before market adjustment). Problem is, at 200-225 you've got some great used options from McLaren and Lambo. Not a huge fan of Ferrari.

How did you determine the appropeiate amount for car allocation / fund?

I'm torn between throwing everything I got into equities / investments (what I've been doing for some time) and starting to invest a bit less to get more enjoyment out of the few material items I do care for.
Thanks - it'll be a fun car to drive!

I've owned a couple of Mclarens, depreciation is tough except on the LTs in their first year or so, but a carbon tub is something special. I've never really looked at Lambos as they're tough on tall people (I'm 6'5") but the Performante looks like a great car.

I think of my car allocation as an amount of money I'm OK for it to go to $0. I never include it in networth calculations and contribute a small amount each year to increase it after I've hit my savings goals. I consider this contribution to be an expense. I had everything in order before I splurged down this path - I didn't own a car for many years and would bus/train/subway around (pre-Uber) to save money. I don't think there is a rule of thumb you can really apply, but I would try to avoid going much above 10%.

My biggest mistake was settling on some cheaper cars while waiting - it was just wasted deprecation/money so wait until you can buy what you really want. It will be cheaper in the longer term.

EDIT: Just to add, outside cars I'm a complete minimalist. I own 1 pair of jeans, 3 pairs of shoes, 5 pairs of underwear, 3 t-shirts etc. I only buy things when they need to be replaced. I also don't drink, don't like eating out etc so part of what I spend in cars comes from being very focused only on things that bring me pleasure. My wife has a $30 handbag and is on the same page.
+1. You and I have very similar approaches to spending. There are very few material things that interest me outside of cars. I'm very fortunate to have a wife that shares that mindset.

I tend to focus my energy on activities vs material possessions. Being an avid martial artist most of my life, my current goal is to earn a black belt in Brazilian Jiu Jitsu before I turn 40, and continue to compete in the masters division as I get older. My oldest is itching to start classes next year.

It's funny how insecure some people are to feel the need to 'live up' to a certain standard that would need to come with owning an exotic.

Agreed that 10% would be stretching it. I think I could get comfortable with 5% or 4-5m in earning assets. Don't think I'll pull the trigger until I get to that level. But I always like to plan things out so I have something to shoot for.

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