A $50,000 Car Costs...$300,000?
Opportunity Cost is Brutal.
Ever thought a $50,000 car could really cost you $300,000?
Sounds dramatic right?
But let's dive into a tale of two car buyers – Chris and Taylor – and see how a simple decision could have a staggering impact on your financial future.
Chris's Flashy Choice: The $50,000 Car
Chris decides to splurge on a brand-new, $50,000 car. He puts down $10,000 and finances the rest. His monthly payment?
A cool $800 for the next 60 months.
It's a great ride, but at a great cost.
Taylor's Smart Move: The $25,000 Car
Taylor opts for a more modest but reliable $25,000 car.
Like Chris, Taylor puts down $10,000, but her loan is much smaller. Her monthly payment?
Just $300 for the next 60 months.
The $500 Difference:
Here's where it gets really interesting… 👀
Taylor is paying $500 less per month than Chris.
Instead of just saving it, she invests that $500 each month in a diversified portfolio with an average return of 7%.
After five years, Chris has a nice car but zero savings from his car payments.
Taylor?
She's got her car paid off and an investment worth about $34,000.
Not too shabby, right?
It gets better…
If Taylor keeps that $34,000 invested for another 25 years, without adding another dime, that amount could grow to over $300,000, assuming a 7% annual return.
Chris, meanwhile, might be looking at his next car purchase already.
The Takeaway:
This isn't just a story about buying cars. It's a wake-up call to the power of opportunity cost.
Every big purchase decision isn't just about what you spend now…
It's about what you could be giving up… or getting in the future.
Good old opportunity cost!
That $50,000 car isn't just a car – it's potentially a $300,000 decision against your financial growth.
So next time you're making a big purchase, ask yourself: Is it worth a potential $300,000 in the long run?
Think about it.
Dividendology
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