AN ASTON MARTIN - Investment or Enjoyment ?

[Jon39]

In the Declining Sales topic, 'cardigankid' posted the following;

'Whatever anyone says and whatever the level of sales is, anyone who can afford an Aston and would enjoy it, should buy one. Learn from history. In 1971 they struggled to sell DB6 Mk.II's, (which were perceived as old hat). All the same things were being said as some misguidedly say today. But buying a car was not a mistake, despite all the financial problems and disasters which were just around the corner for the company. Anyone who bought a Mk.II Volante in 1971, in the face of conventional wisdom to the contrary, and kept it, has a car worth over a million quid today.

The market is different, and much bigger, but the fundamentals are the same. It is wise to own an Aston if you are in a position to do so.'

.......................................................

I then drew attention to a fabulous one owner 1971 DB6, 90,000 miles (10,000 of which during the last 30 years). Cost in 1971 about £5,000 (that equates to £140,000 now in economic power). It was sold at auction last year for around £750,000.

In practice, I expect this DB6 must have been very much treasured and enjoyed. The owner might not even have seen it sold, and if benefactors were involved, then 40% tax disappears.

Taking a purely investment view, some of you may have a shareholding (directly or within a pension fund) in a company that is long established and now one of Britain's biggest.

If that DB6 purchase money had been put into the shares of that company in 1979, it would now have a value of £577,500. In addition, £244,054 dividends would have been received. Current annual dividend income is £24,436. No resprays, servicing, tyres, repairs, insurance, road tax etc.

Therefore I suggest just enjoy an Aston Martin.

Edited by Jon39 on Sunday 29th March 18:38

[Jon39]

AdamV8V said:

I'm no tax expert (caveat emptor) but wouldn't the value in the share increase not attract capital gains tax though, along with income tax on the dividend?

Assuming top rate tax on both, your £577k capital + £244k dividend = £821k, would only actually net you (£577k *0.72) + (244k*0.55)=£550k

Yes Adam, Capital Gains Tax (CGT) would be applicable on any gains in excess of each persons annual allowance, whenever shares are sold. However since 1987, Personal Equity Plans (PEPs) which in 2008 became Stocks and Shares Individual Savings Accounts (ISAs), have been the place for shareholdings and they are then not subject to any CGT.

A proper investment should provide income (of course cars are not noted for that), and the dividend total I stated, is after the deduction of basic rate tax. If held in a PEP or ISA, there would not have been any additional tax for higher rate payers.

You are right about enjoying an Aston Martin. I raised the topic because I cannot really see a car as a serious investment. Even if we were lucky enough to own an appreciating vehicle, we do tend to become attached to our cars, but would need to sell to obtain any financial return. My guess is that many collectors cars are probably only sold, following an owners demise.

Oh, not just 'some pieces of paper'. The £244,000 dividends, could have paid for a few Astons to enjoy along the way, with the capital untouched and still at work in the business.