helloeveryone wrote: ↑Sat Jun 06, 2020 2:36 pm
TomatoTomahto wrote: ↑Sat Jun 06, 2020 2:34 pm
hicabob wrote: ↑Sat Jun 06, 2020 2:10 pm
TomatoTomahto wrote: ↑Sat Jun 06, 2020 1:55 pm
investingdad wrote: ↑Sat Jun 06, 2020 1:44 pm
Isn't anybody going to inquire about the important milestones the OP referenced?
I was thinking about it. $25M makes sense, although I wouldn’t give him grief if he decided to celebrate getting into 8 digit net worth.
With livesoft's RBD car buying algorithm a measly $5M in equities works for 150-200 nowadays! .... algo is you can spend what you lose/make on a RBD/RGD
I used to use Livesoft's Rule to justify my Tesla Model X. As I became more circumspect about revealing what we have in our taxable account (our fixed income tax deferred accounts are owned up to, because that's how I can discuss our quasi-LMP plan), I stopped disclosing what Livesoft's rule would technically allow us. I think $150-$200k is silly with a $5M NW, unless you're single, older, no kids, pension, etc.
I think Livesoft's Rule needs re-calibration with the heightened volatility of today.
I don't know....I feel like if I have $5 million networth, and I pay cash for a $200,000 car. I still have a $4.8million networth. That's still sitting pretty comfortable.
But that's assuming there is no other lifestyle creep =)
For a one time thing that's how I'd look at it (theoretically at least). If the person comes along announcing a X few mil NW or X few mil minus $200k, who would think that's actually different? There's a strong implicit assumption among those questioning the 'affordability' that it is a general lifestyle creep. Or perhaps as car person putting yourself in those shoes, you get a high end 911 (the consensus choice), love it to death for some years, and are then bummed that your plans don't necessarily support buying another then another.
Though I've seen the 'rule' referred to, I independently got in the habit some years ago of quoting our portfolio ups and downs moves to my wife in terms of cars, delivered brand new for free, or we paid for but just went into the crusher brand new, uninsured. To look at it pseudo-mathematically based on a normal distribution (though we all know the 'tails are fat', especially on the downside of daily moves), 2 std dev one day move at today's S&P level and VIX is around 109 ticks, so assuming 25% cg tax (which I guess most would ignore since it's not serious anyway), around $7.8mil in stocks generates 2 std daily moves of ~$200k after tax. Only ~$3mil generated that move at mid-late March's VIX, at VXO/VIX avg of ~19.3 inception to yesterday, ~$10.8 mil. 3 std devs is more like RG/RB? then 2/3's as much.
Obviously one would not (I hope) literally set a car budget that way, but I think it's a reasonable insight that common fluctuation in value of portfolio might be more directly connected to what feels 'extravagant' in a one off purchase then some % pulled from the air or as result of detailed analysis of far future events with all kind of uncertain assumptions.
At later life stage than OP and those of similar age/means debating, I mildly regret not having gotten cooler, more expensive cars when I was that age and younger. But of course that partly depends on having realized non-disastrous portfolio returns in the meantime. The current mid-40's people don't know that (nor do I, but I have fewer years left, and much more in safe assets than I once did). I don't *deeply* regret it though. And like I said I may never buy a $150-200k car despite zero question of affordability, because I may just never feel like it. Although I like cars. I really like my current $60k car (which I might have mentioned