My Secret Car Investing Strategy For Financial Independence

[@JarradMorrow]

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[@Tigerkem]

Great stuff, I wish more people realize how much more money they waste financing a car. I personally drive an unsexy early 2000's Taurus that was bought for less than $5k in 2013. It currently has over 225k miles and ironically enough I just picked it up from the mechanic for a $200 repair, which I usually get once or twice a year at worse. The repair cost for my nearly 20 year old car is a lot cheaper than most monthly car payments and my repairs has averaged about 1.5 a year. Not to mention the less I have to pay for insurance too. Some of my coworkers scoff at my car but I take pride in the money I'm saving and the less stress I feel compared to my peers who are worried they might not be able to keep up with car payments, especially with this hectic year. The sooner we all stop trying to keep up with Joneses the sooner we can reach financial freedom.

[@JarradMorrow]

I know, right? Financing a car is one of the many reasons people have less money in their pocket.

[@rereAL205]

I found your first video on this last year, and I started doing this. I cannot thank you enough for this great idea!!!!

[@JarradMorrow]

Glad it was helpful!

[@inea-fijourney22]

Ohh I love this strategy and Im 30! I might start a car investment account in 2021 so my third car and forward are free!

[@JarradMorrow]

Heck yea!

[@faezahlatif8369]

What a genius idea Uncle Jarrod! I will apply this car hacking starting now for the next 5-6 years when I return home and actually need a car. Currently I live in Tokyo which I can get by using a bicycle or the train. We should always question the status quo and do things differently to achieve greater results! Thank you so much for sharing!

[@davidbrooks8809]

Great Information

[@JarradMorrow]

👍🏻

[@fredkull5383]

As a former mechanic the whole 100k trade in car is done for thing is total BS today. Jarrad you are spot on with these things. I've always bought used and will continue too. My truck has 250k miles on it and my fiance's car has 152k we are continuing to drive them until they die. Well since we are going to increase our family size we are looking at getting her a newer SUV but will drive our vehicles until they die more so than get a newer vehicle in 8 yrs.

[@ceciliaruns72]

My dad just quit driving at age 86. Facinating topic! I have a car fund with VTI.

[@JarradMorrow]

Glad it was helpful!

[@srikiranat]

Loved the video. Look forward to learning more through your channel. Subbed. Appreciate your effort!

[@JarradMorrow]

Awesome, thank you!

[@aknorth1053]

If your still driving at 86 your doing pretty good

[@JarradMorrow]

😂 I know, right. By that time I think we’ll all be in self driving cars. Hopefully my car fund can afford one of those cars haha

[@Sully365]

good video.finance yoru car yourself, buy used, and save. That said, it's hilarious looking at this video in 2022 when the Volt i bought for $15,000 now gets a carvana 'buyback' price of 23000... i don't think anyone expected the car and housing market to jump THIS much this fast...

[@JarradMorrow]

😂 I know, right? This video didn't age very well from an inflation and car price perspective.

[@PartTimeBetting]

Jarrad I remember watching your other video about this subject a couple of years ago and it's been awhile since I have checked out your channel. But man you have gotten jacked since that last car video! I know you talk about the importance of taking care of your health on your videos. It looks like you are practicing what you are preaching! All the best. I enjoy the videos you create. Continued success!

[@melodiev9253]

This is pretty slick! My car is actually 10 years old now so I may have to do this after the next car.

[@JarradMorrow]

I like your forward thinking. So smart.

[@aparentfamily1]

Great advice as we are heading to retirement, will definitely consider doing! Thanks!

[@JarradMorrow]

Absolutely! Glad it helped!

[@1amG1G1]

Have a Jeep Wrangler 99. If I can, I'll have it for life. It's pretty reliable ... and sturdy. This topic is so alien to me. I feel like I should care more, but I don't.

[@1amG1G1]

I should though which is why I'm here.

[@JarradMorrow]

That's awesome!

[@1amG1G1]

@@JarradMorrow love your content btw. Thank you ❤️

[@JarradMorrow]

Thanks!:

[@annmarie3005]

I Hulk smashed the like button for your mom. Thanks for the great videos.

[@JarradMorrow]

You rock!

[@chanman951]

This is amazing, I never thought to invest for a vehicle.

[@joea9222]

2% inflation rate... I miss those days

[@JarradMorrow]

😂 I know, right? That part of the video did NOT age well

[@mikeg3170]

Dude, thank you 👍

[@JarradMorrow]

No problem!

[@ericglover5341]

This fund could also work with repairs too... it dents it a little as it goes on so therefore someone could possibly skip having a car maintenance fund as the years go on, too.

[@JarradMorrow]

It could. Since that money for repairs is needed in the short term I personally wouldn’t feel comfortable investing my “repair money”

[@hunter3783]

Are you still 100% in VOO in your future car fund account?

[@JarradMorrow]

Yes

[@terrylange5734]

This is a great video except that it needs to be updated since inflation is running at about 8% and there are a lot of used cars with mega high mileage for sale - people may be buying cars sooner than 8 years

[@JarradMorrow]

Much appreciated! The inflation portion of this video definitely did not age well 😂🙈

[@QuesttoFIRE]

Good strategy Jarrad!

[@JarradMorrow]

Thanks!

[@emikami1]

The concept in this video is good but can stand some improvement. My car strategy is to keep it until the wheels fall off then put the wheels back on and keep driving it until the wheels fall off again then put the wheels back on.... 8 years isn't ideal. Market sometimes have below inflation rate of return over 14 year period. I thought I was going to hear a different type of hack like which car to buy which can give you the best rate to rent it out on Turo when you don't need the car relative to the purchase price. The idea is to have someone else pay for the car.

[@JarradMorrow]

Thanks for sharing!

[@bmmk12]

Awesome concept, brother! I don't get why it only has 1,400 views? My only question - when I file my taxes the year I pull out the money to buy a car, am I taking money out of the investment account to pay the Capital Gains, or is it out of my pocket? (I hope that made sense)

[@JarradMorrow]

Thanks. Really good question. It's going to be completely up to you on how you want to do it. You can either take out a little extra to pay the capital gains tax or you can just pay it out of pocket. Even if it's out of pocket, the cost per month (broken down over 8 years) is extremely reasonable.

[@ruthroylance414]

Hey Jarrad. Missed your videos recently. Might you be able to do an updated video with a return percentage closer to what VOO offers? And perhaps a slightly higher trade-in value if possible?

[@jarc02]

I started a car investing fund with Schwab 1 yr and a day ago as of today. My goal is a new car roughly $27k over 3 years (2 yrs left now). I started with $1000 and add $100 - $300/mo. As of today it is over $4100. I have 25 Shares SCHD and 5 stocks (MO, AAPL, JNJ, PEP, KMB). I will see how this works out.

[@JarradMorrow]

👍🏻

[@brianciofani4698]

Great video. If this generation could check theor ego and drive a nice $6k car for 15 years, life would change. Paid our house off at 37 and crossed over the $1M in assets at 48... on one income.

[@wyattpotter2103]

Hey man this was a good video.

[@JarradMorrow]

Glad you liked it!

[@wyattpotter2103]

@@JarradMorrow Thanks for making it.

[@cwil3598]

19:44 hey my 2002 ram truck still runs!!

[@JarradMorrow]

Heck yea!

[@shanepoulsen8099]

just now finding your videos and so far i am really enjoying them. Do you have excel spreadsheets for things like this so we can adjust numbers?

[@JarradMorrow]

I don't have a spreadsheet set up to where it'd be easy for someone to plug in numbers. I'll look into potentially building one out to share though.

[@Watdamarin]

This is amazing and definitely going to try it! Now I’m curious would these numbers change or have you considered if let’s say more and more states adopt the Cali law of only electric cars by 2030. Would you think your hack would still work? Or would you still have to contribute money doing the same hack?

[@JarradMorrow]

Great question. I'm sure the numbers would change based on car prices of a used electric car. To be honest, I haven't done enough research to understand how they depreciate. The good news is that even if they're more expensive and you've already started this strategy, you'll already be ahead of the game by having this chunk of money set aside. Since we can't see into the future this plan isn't 100% full proof, but it's at least going to leave you in a better position than just setting money aside into a savings account.

[@jordantabor8940]

Great video breaking down this concept. Based on some simple math it looks like a person doing this strategy would aim to withdrawal about 30% of the portfolios value to purchase their car? Is that true? I am trying to see how this could be applied if someone wanted to buy a 15k car, rather than a 9k car.

[@JarradMorrow]

Thanks. You'd just have to set aside a little more than I laid out in the video. I don't know the math for that amount off the top of my head.

[@megcaistor]

Really appreciate this video Jarrad. The other one was great too but this just provided that extra bit of detail and addressed possible outcomes, so thanks! One question, say you invest in VTI or something for your strategy. How do you keep this specific investment strategy separate from your other investments? Or do you just put all your taxable investments into one account and try and keep track of how much is designated for the car strategy?

[@JarradMorrow]

Appreciate the feedback. For this second one I wanted to show off the math and thought process in more detail. With current car prices and inflation, these numbers will need to be adjusted, but the basic equation still works. I have my car fund in an M1 Finance investment account. You can have up to 5 different accounts through them so I've designated 1 of them to my car fund.

[@mike20855]

i have a 2015 sonata. i do the same thing i buy a car thats a few years old and drive it for about 8 yrs before buying another. great car except its currently burning through oil. hyundai is doing oil consumption tests and might be replacing the engine free due to a known defect with certain hyundai and kia engines

[@davidlee7644]

I don’t it would make sense this year tho when new cars and used cars are so close in prices.

[@mike20855]

@@davidlee7644 well cars depreciate significantly right when they're purchased new so the buyer takes a loss instantly. buy a used car and the value is the same the next day no loss

[@ModestOutlaw]

Great system! Will definitely start myself when next car is paid for hopefully in cash. Is there a way to access your spreadsheet by chance?

[@janiceg7661]

I’ve travelled for work years then worked from home, so my 2008 Toyota RAV4 has 70k miles and everyone tells me to get a new car. I’m like, why? It’s practically brand new! I keep it immaculate. I do think it needs a paint job and I sometimes think installing a backup camera may be nice but we shall see….I’d rather invest $$.

[@J-N-dj3ni]

Would you recommend doing this for a house? Same strategy but with higher rate of money invested and for a longer time, to be able to clear it in one fell swoop.

[@juststraightupgood]

Its coast fire 🔥, but for a car! LOL

[@JarradMorrow]

Great point! Haha I never thought about it that way.

[@wyattpotter2103]

If I can pull off my goals of getting a Tesla Semi and becoming a truck driver to be able to keep a lot more money compared to a regular Semi I would need to make a car fund to get a new Tesla Semi every 10 years if possible. Or if I took it far enough that I could only take out 3.65% a year to be able to do that someday or even better like 1.8% or less so it could take out only the divides on VTI on average so no principle would ever be sold but of course if this worked out I would have to take a good chunk of money out a few times if I get that far. Hey if I did that that would mean I could when I retire I could also have a Tesla Semi as a second daily driver.

[@JarradMorrow]

Haha a Tesla Semi as a daily driver would be great!

[@jcvarner]

Out of curiosity why did you switch from starting at $107 a month to $250 a month? That seems like a huge difference.

[@bosephusjr]

Hi Jarrad.. love the content.. keep the videos coming! Do you happen to have a shareable file of that ?excel? spreadsheet that I could download or you could email to me? Without being too lengthy, I'm a car guy & would be interested in crunching the numbers for cars in different price ranges. I also turned 50 y/o last August so while there is still some time remaining to implement this strategy, time is running out! Thanks my friend.. happy new year & I hope 2022 is a gangbusters year for you. Dave

[@cindymartinez7761]

Great Video!! What type of investment do you place the funds in? I'm new to all of this?

[@JarradMorrow]

Appreciate the feedback. I personally prefer index fund ETFs over individual stocks so I currently have all of my car fund money in VOO.

[@cindymartinez7761]

@@JarradMorrow thank you!!

[@remembertosmile6256]

Could you put a plan together for a child’s college tuition? :)

[@JarradMorrow]

Unfortunately I won't be making that type of video. Sorry!

[@Chris-py3ec]

I like idea but not sure I follow the logic of selling off your entire 'car stock' portfolio for that $9K purchase, then having to pay capital gains taxes, only to repurchase more stocks that you may have to possibly pay fees on in the future? Wouldn't it make more sense to just take out what is needed within that account and continue to fund it throughout the second cycle?

[@JarradMorrow]

In the numbers I show you're not selling off your entire stock portfolio. You're only selling off what you need to purchase the car. So you're only paying capital gains tax on the gains you withdraw and leaving the rest in the account.

[@Chris-py3ec]

@@JarradMorrow ahhh... so that does make sense then heheh :)

[@rustyshackleford58008]

Would you begin an account like this in an individual brokerage and contribute to it before maxxing out contributions to a Roth IRA?

[@JarradMorrow]

Negative. I'd max out a Roth IRA before starting and account like this.

[@FrankBurgos]

car prices are crazy now.

[@JarradMorrow]

Yeeea this video didn't age very well 😂

[@FrankBurgos]

@@JarradMorrow I was going to say that but didn't want to leave a negative comment. Your videos are helpful and i appreciate them Jarrad. I'm definitely going to use this strategy for my next purchase only problem is I'm a "Truck Guy" but i tend to buy reliable trucks that last me a long time. Thanks for all your help

[@JarradMorrow]

I'm perfectly fine with people poking fun at the obvious so don't hesitate to joke around like that in the comments of my videos. The good news is that this video will be relevant again because these high prices aren't sustainable for consumers. We're already seeing repossessions start to increase so it's just a matter of time. I feel for the people who needed to buy a vehicle during this car bubble because they couldn't avoid it. Appreciate the comment 👍

[@FrankBurgos]

@@JarradMorrow thanks Jarrad. On another note maybe you can point me In the right direction. I'm contemplating converting my traditional IRA to Roth IRA and trying to do this in a way that doesn't create a huge tax burden. I know that I'm going to pay the tax man either way. Since market is down i was thinking this might be the right time since the value of is less than all time high. Do you have any videos you can share or advice when converting to Roth?

[@JarradMorrow]

I haven't made a roth conversion video specifically. You're correct, doing one right now would be ideal since the market is down. The one thing I would caution against is making sure you're not converting enough to bump you up to the next tax bracket when you account for your current income if it doesn't make sense. I did a roth conversion in December which was just bad timing since the market has gone down around 20% since then 😂

[@samuelsteinhauer8713]

Love your videos Jarrad but the economy doesn't work this way. There are many variables that are incomprehensible over a 60 year period.

[@JarradMorrow]

Thanks for sharing your opinion.

[@peaklifeadventures]

Awesome video! I am currently using this model for myself, thank you! I have one question- How did you calculate capital gains tax? I am not familiar if it is taxed on the increase or only when you sell the asset?

[@JarradMorrow]

Good question. I calculated the long term capital gains tax by the amount I sold. So if you had gains in the account of $12k but you only needed to withdraw $9k to buy a car then you would only pay cap gains tax on the $9k and not the full $12k.

[@111DAKIDD]

@@JarradMorrow ...Perfect! Now, how do we go about figuring out exactly the percentage we would pay on the withdrawal ? Thank you...

[@oscartrejo9523]

What type of account do you use to invest on car fund?

[@JarradMorrow]

Just a regular taxable account. Leaving all of my retirement accounts for all other life expenses when I eventually need it.

[@IBMformatted08]

@@JarradMorrow I am still not sure what kind of account or where I can open such account. I have 27k saved up, drive a '15 KIA Optima, still owe a little more than 9k on it. How can I set up an account I can use this model on?

[@kelliezimmerman9621]

Jarrad what type of account do you use for this? Ira or a regular brokerage account?

[@JarradMorrow]

Regular taxable brokerage

[@kelliezimmerman9621]

@@JarradMorrow Thank you so much Jattad. I am opening my account today.

[@julieschomer7624]

Tell your mom you are doing a great job!

[@JarradMorrow]

Haha thanks I will :)

[@Mr.Moneybags40]

i need some f-you money jarrad lol

[@JarradMorrow]

Haha you can get it! Just have to work for it and do things different from the majority.

[@HotelBravo556]

Boy, this video didn’t age well with the car market.. little did Jarred know that “today’s $9,000 car” would be $18,999 two years later, let alone 8 years later..

[@JarradMorrow]

Yeeeea about this video 😂. The process definitely still works, but numbers just need adjusted if prices stay inflated like this. I'll put out an update to this video soon. I'll also be poking fun at myself as well so don't worry 😂

[@HotelBravo556]

@@JarradMorrow haha no one knew what was coming. I'll keep an eye out. Loving your channel, man.

[@ethanzhou909]

Buying a brand new Tesla would be an exception.

[@JarradMorrow]

Maybe? I'd have to do a little more research because I don't know much about how they depreciate and how long they last.

[@cheeshengleong9264]

@@JarradMorrow yes please. A video on this research would be awesome!

[@thedyslexicengineer7308]

From what I’ve seen they hold there value pretty well! I’m holding out until the 1,000,000 battery

[@jameslewis4524]

my investment strategy for buying a car. 1. Don't buy a car.

[@JarradMorrow]

Sounds good to me 👍

[@Mr.Moneybags40]

" gov't issued cars" lmao

[@JarradMorrow]

Haha

[@Ladyboston]

My daughter is getting 1 she won’t listen to me but maybe she will you

[@JarradMorrow]

👍