I Invested For My Car And This Happened

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In this video, I'll go through the car buying strategy I started about 4 years ago. I'll walk you through the numbers of how it all works, how it's been going so far, and the adjustments I've had to make to my car investing strategy going forward.
**CORRECTION** At one point in the video I misspoke by mentioning I've been doing this car investing strategy for 7 years. I've only been doing it for a little under 4 years so I have 3 more years until I need to purchase my next car.
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The whole car buying market has been crazy over the past couple of years due to a few different reasons. Supply chain disruptions: The sickness has disrupted global supply chains, leading to shortages of key components like semiconductors, which are used in a variety of car systems. This has caused production delays and reduced the number of new cars available for sale. Increased demand for used cars: With fewer new cars available and a growing preference for personal vehicles over public transportation, the demand for used cars has increased. This has driven up prices for used cars in many markets. Changing consumer preferences: Consumer preferences for cars are also shifting, with many buyers placing a greater emphasis on features like connectivity, safety, and sustainability. This is leading automakers to invest in new technologies and features to differentiate their products and meet changing customer needs. Interest rates: higher interest on car loans have caused consumers to have to spend more on the car they buy.
About 4 years ago I started investing for my future cars through the stock market. The goal was to be able to purchase a new car every 7 years based on certain assumptions. The initial assumtopns were to invest $225 every month, expect a 7% average annual return, 2% car inflation, and purchase a $9,000 type car (adjusted for inflation every 7 years). Since then the assumptions needed to be updated due to changes in the general car market. Based on my current projections with the old numbers I wouldn't have had enough so I'll show you the updates I've made.
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Disclaimer: This video is for entertainment purposes only. Everyone's situation is different so do your own research before making any decisions with your money. If you need help then contact a Certified Financial Fiduciary before trying anything that is mentioned in this video. I prefer a Fiduciary financial advisor that charges an hourly fee as opposed to an ongoing fee based on a % of your portfolio.

[@JarradMorrow]

Go to my sponsor aura.com/jarrad to get a 14 day free trial and see if your personal information has been leaked online. ***CORRECTION*** At one point in the video I misspoke by mentioning I've been doing this car investing strategy for 7 years. I've only been doing it for a little under 4 years so I have 3 more years until I need to purchase my next car.

[@joeylargejoeyfrescobar9174]

I have been watching a lot of your videos and love them. I invest in vanguard through my employment and my question is my portfolio I have invested in these are the percentages good or should have them differently. 30% VSMAX 30%VIGAX 15%VSGAX 15%VBIAX 10%VVIAX I'm just an ordinary guy whose 41 going on 42 looking to retire at ease and not have to worry. Is this good or should redistribute these

[@geovannyl.2801]

Paid $7k cash for my 50,000 mile 2012 Mazda 3 back in 2017. Now, it’s at 110,000 miles and nothing but oil changes and a new set of tires and brakes. ;)

[@geovannyl.2801]

My closest friends on the other hand bought cars from the dealership and are paying $390 for the car and $250 for insurance. I’m just paying $80 for my Mazda. :)

[@skymuffn]

…ain’t that the truth! Got my 2010 Mazda 3 S Hatchback from my elderly next door neighbor for 1/4 of its value back in 2011. It was parked in their side garden after they got him a BMW 535.

[@toddhallam9598]

Still loving my 2008 Pontiac with 88k miles. Since I work from home, it should last several more years. My wife's car is a 2014 Cadillac. It is also paid for and she also works from home. Living the dream!

[@shaereub4450]

I went from a regular mountain bike, to an electric bike with a battery powered peddle assist (so I still need to pedal, I just get a boost every once in a while). It's great for getting up my nile long hill.

[@DanyoBro]

Great stuff. “Real life does not care about your spreadsheet” but having a budget and investing also involves math. Helpful insights here for buyers. Thanks.

[@BadPhD777]

Ally No Penalty CD is currently 4.75%! If you don't want risk, put your money in something like this.

[@Dagzfromearth]

I have a 2006 for escape with 200k miles on it. I’m going to buy a different car soon. There is a place near me that has salvage titles, so many are only hail damage, but about 40-60% cheaper. I don’t care about the looks, only if it gets me to work and back everyday. I drive them for a long time.

[@noreenn6976]

Will you be able to get collision insurance on a salvaged vehicle?

[@Garabins1]

Sold my $40k car 5 years ago. Used $10k of equity I had in it and bought a used Honda Civic. Saved over $40k since then and still driving my little reliable civic. Best decision I made. I can’t imagine having a $500+ car payment these days.

[@Chris-nb1rt]

I to this day don’t understand why people make such a big case of S&P vs a total US index. They both are market cap weighted, meaning they will perform almost identical. The “20%” you get in mid/small cap within a fund like VTI is so minuscule, the percentages to those companies are so small, IMO they barely make a difference. The “diversification” factor leaves me scratching my head… the heavier weighted companies historically have carried the market, some prefer a self cleansing fund, I believe that to be something like the S&P. NFA, just my two cents.

[@delliott777]

If you’ve saved 90% of your goal, and the engine blows up and you gotta buy a new car Now… a 90% down payment is pretty darn good. Just another way to look at it.

[@astrahl]

I need to start a car fund for sure. Considering even doing like a 4% interest high yielded savings account. But love the idea of being thoughtful about this. Need that spreadsheet!

[@crusader0657]

I'm going to go ahead and assume the recent inflationary trends will stay. Companies have not found our upper limit on spending because we keep spending, so they will keep padding their profits until someone screams.

[@vincentpetro7225]

2013 Chevy Cruze still chuggin along just fine right now, 150k miles :) Only ever had 1 part go bad, don't remember exactly what it was ~ 2 years ago, replaced it for like $1000 and no issues since.

[@NF-121]

Why do you wish you invested in VTI rather than VOO?

[@JimMurray2]

Had my 2007 Mazda 6 for 11 years, 275k miles. Hoping for the same with my current 2017 Mazda CX-5.

[@marcielynn4886]

Still have my 92 Landcruiser.

[@skymuffn]

…I can’t fathom how ridiculously priced cars have become. I have only purchased 3 cars in my 53 years. None of them were brand new yet I still have all 3.

[@TheMillennialMint]

Thank you for making this video. I appreciate your honesty and you showing how you had to make adjustments to your plan. I remember watching a couple of your past car investment videos a month ago and having a ton of issues with it. But this is refreshing to see. I’m trying to do something similar, but for my kids’ college fund.

[@JarradMorrow]

👍🏻

[@feliciafelicia6965]

Came in with a tactic that old folks been using since the 70s

[@offthetrail5675]

I love this strategy!

[@azaminediva3618]

Hi, Jarrad. I've been enjoying your videos and I was wondering how this plan meshes with your advice not to invest money you'll need within the next 5 years. Your first 2 years of contributions are outside that gap if you're buying a car every 7 years, but for the last 5 years even 1 year before you intend to make the purchase, you aren't putting the funds in a high yield savings account but still investing. Why do you keep investing the $275 per month closer to the goal line instead of starting putting some of it in a cash-only account? Do you have a certain percentage kept as cash already? I think you're right about car loans, especially when most places you can't even get the option to pay it off early and save that interest like you can with mortgages. I bought my Subaru fully and have had it for 10 years now with 60k miles and intend to keep it as long as I can. I think dings and rust and things building up don't guarantee I can make it another 10 years just because that's close to the 100,000 mileage, but it doesn't need repairs too often yet.

[@SwoffBass]

Thumbs up for the Dumb and Dumber reference. 😂 We’re paying cash for our next car…as painful as that may be, lol.

[@lacrosse8011]

Nice video, want to give it a shot! Could you go into your experience buying car cash from a dealership? In my little experience in buying cars, it seems they heavily pressure you into financing. Hear some people say just finance a portion of it then pay off the loan a week or two later, assuming there is no early payoff penalty. Side note, did not realize BMW would be so high on the list!

[@ShaharHarshuv]

0:23 wait what? How come people spend on transportation more than food? I'm from NYC and I think I probably spend about 10 times more on food than on transportation

[@mariacamilamoreno2621]

Did you read my mind? I was thinking it might be time to get a new car vs keeping my Honda Fit 2009 that has under 90k miles (has been making a noise when turning in and struggles to warm up the cold weather so it turns off sometimes if I drive it before the cool engine light goes off)

[@GypsyMoth511]

Great video. Any suggestions on savings accounts or other alternatives? I'm looking for a safer option for a 2-3 year plan.

[@JarradMorrow]

Nothing other than just a regular high yield savings account. I personally use Wealthfront who is giving me something like 5%, but most of them should be around that amount at this point.

[@GypsyMoth511]

@@JarradMorrow Great, thanks! Love the videos.

[@ShaharHarshuv]

Is 7 years long enough to invest in S&P 500?

[@JarradMorrow]

In my opinion, anything less than 10 isn't "long enough" to allow your investments to fully play out. I would consider it to be on the lowest end of "long enough". Therefore, investing for any amount of time less than that and you're introducing a certain level of risk. Yes it could work out in your favor due to random timing/luck, but don't be surprised if it doesn't... and don't pat yourself on the back like you're a "good/smart investor" if it does work out in your favor. In the video I call out that I understand and accept the risks associated with the 7 year window. One of the main reasons I can afford to do that at this point in time is because I'm financially secure enough. If my finances happen to change to less financially secure in the future then I'm willing to abandon this strategy.

[@ShaharHarshuv]

@@JarradMorrow So you're saying that since you're able to deal with the possible negative outcome, you're still willing to take the risk since you think there is a higher chance that this will work out? (I.e. the expect value is a positive return?)

[@omalashevich]

public transportation is the solution

[@shaereub4450]

Bike & Bus

[@AdventurerPrimefire]

2 miles and 525 ft of elevation to get to the nearest bus stop, but thats a massive shortcut that takes me away from town. I have to drive to a transit center but then it makes sense to bus.