Are LR Velars selling?
Discussion
Francois de La Rochefoucauld said:
Ares said:
You think? Over 6 mth periods? Any hard working wealth manager will as minimum wipe their feet over that period? Short-Term, yes, but 6mths. I Don't think he's that unusual.
I know so. 6 months is a ludicrously short term investment horizon. Thats not investing its gambling. NickCQ said:
Ares said:
I've never lost money in any investment over even a 6mth period, let alone a 4yr period. (anyone that has, needs a far better Wealth Manager 
)
Nor did Bernie Madoff's investors (until they did, of course) )
PS - does it give you a warm fuzzy feeling of superiority to call your asset manager a 'Wealth Manager'?
He's not managing huge wealth for us, I'm not trying to play HNWI, Christ far from it. But I've used him since I had less than £10,000 invested, he's always been classed as a Wealth Manager.
Are you hung up on job titles?
NickCQ said:
Ares said:
But with leasing majority of people don't have the money elsewhere? It's wholly unconnected?
Usually when you read these types of threads on PH someone will pop up to talk about how they decided to lease their car because they have magical but confidential other business opportunities that produce superior returns on their capital.It's refreshing to hear a discussion in which someone does not claim that to be the case. However, I suspect your statement that I have quoted will bring out the "car leasers just want cars they can't actually afford" brigade
Ares said:
DonkeyApple said:
Ares said:
You are missing the point, and metrics (and users) of leasing. There is no 'borrow' on the leasee/leaseholder, and you are still not putting any capital as risk, unless you choose to. You are paying for a service, to use the car. There is no more risk than if you leased a photocopier.
I've taken a lease out on my car (that isn't legally my car). I've not invested a penny in it - it's not mine to have invested in it.
If the S4 example was taken up, the person would be paying £300/mth to use the S4 for 4 years. He would not be investing in it, nor would he own the car. He is paying a monthly lease payment to use the car.
IF he had the capital to be able to spend £40,000 (or as I did, £65,000), then he would have the option to do something else with that £40,000 (not £20,000). But chances are, the £40,000 (£65,000 in my case) is already in an investment vehicle where the altered risk would only be to remove it.
But you’re just proving the point not countering it. Apart from the ‘there is no borrow’ as there manifestly is. As explained it won’t be the leasee taking it out but it will be the leasee paying for it. As a mildly irrelevant aside, if you don’t know how much the borrow element of a transaction is but are paying for it how do you know it’s fair value? I've taken a lease out on my car (that isn't legally my car). I've not invested a penny in it - it's not mine to have invested in it.
If the S4 example was taken up, the person would be paying £300/mth to use the S4 for 4 years. He would not be investing in it, nor would he own the car. He is paying a monthly lease payment to use the car.
IF he had the capital to be able to spend £40,000 (or as I did, £65,000), then he would have the option to do something else with that £40,000 (not £20,000). But chances are, the £40,000 (£65,000 in my case) is already in an investment vehicle where the altered risk would only be to remove it.
One of the little pleasures from the financiers’ perspective. But seriously, you’ve just completely outlined the whole risk arbitrage aspect in your post above.
Exactly the same as with my Sky TV. I pay a monthly amount for the use of the service/products as explained in the contract.
If if it did exist, any financial borrow would be an irrelevance in any regard. My only concern regarding value is on the provision of the service. My sole barometer of value is that of paying £29k to use a £65,000 car for 4 years and 60,000 miles against what it would cost to own the £65,000 asset outright, and suffer the depreciation and RFL.
Value is my costs VS the depreciation and RFL (and cost of financing that £65,000 capital is relevant). IF the asset owner has borrowed against the asset, his/her costs are an irrelevance to me, and will be more than offset with tax/depreciation, hence why they can make a profit and still allow me to pay less than the car will (likely) depreciate.
As my costs are fixed for 4 years, there is no risk, there is no financial 'borrow' for me. I'm paying to use a car.
My costs for Sky TV are fixed for 2 years. There is likewise no risk and likewise no 'borrow' for me. I'm paying to use the TV services.
The leased car has a borrow element implicit within the financial structure and you are funding it in your monthly cost. The lease company does not fund this element to the manufacturer on your behalf, they structure it and pass it on to you as the consumer with an uplift. That's how it works and is a key profit centre of leasing.
But the really important aspect and where you are genuinely misleading yourself is the statement that you have no risk. You do, all you have done is shifted the risk from being based on the value of the vehicle to being based on the value of your £65,000 investment. As you quite rightly point out, someone who does not have £65,000 is not taking that risk. For them they are locking the singular risk of the variable value of the car in via the structured product but in your case you are not, you are merely switching the risk by choosing not buy the car but to retain the £65,000 in the capital markets hoping, gambling, speculating etc that the future returns will outperform.
And your statement that you are not paying VED is also incorrect. You are paying for it and in fact have agreed to a financial structure where you don't actually know how much you are paying for it. You are likely to be paying more given how such products are structured for every element to be a profit centre.
So to reiterate, the lease is only zero risk in this regard if you do not have the £65,000, you have and you have made the conscious decision to leave this £65,000 in the markets on the investment assumption that it will return more to you over the next 3 years than the cost of the lease. And there, in a nutshell is the risk. It's not gone you have simply shifted it across to another asset.
Ares said:
That's perhaps often the case. But the biggest pull for me to lease is when the cost are, in balance, likely to be less and the risk zero.
Something that is interesting is why you would choose to rent for 4 years instead of 3 when the car will be out of warranty and with the reputation of Alfa and their dealerships being a tad flacky!What would happen if you got a lemon that was never away from the garage and you are contracted for 4 years,you could not get out very easily if at all?
DonkeyApple said:
Ares said:
DonkeyApple said:
Ares said:
You are missing the point, and metrics (and users) of leasing. There is no 'borrow' on the leasee/leaseholder, and you are still not putting any capital as risk, unless you choose to. You are paying for a service, to use the car. There is no more risk than if you leased a photocopier.
I've taken a lease out on my car (that isn't legally my car). I've not invested a penny in it - it's not mine to have invested in it.
If the S4 example was taken up, the person would be paying £300/mth to use the S4 for 4 years. He would not be investing in it, nor would he own the car. He is paying a monthly lease payment to use the car.
IF he had the capital to be able to spend £40,000 (or as I did, £65,000), then he would have the option to do something else with that £40,000 (not £20,000). But chances are, the £40,000 (£65,000 in my case) is already in an investment vehicle where the altered risk would only be to remove it.
But you’re just proving the point not countering it. Apart from the ‘there is no borrow’ as there manifestly is. As explained it won’t be the leasee taking it out but it will be the leasee paying for it. As a mildly irrelevant aside, if you don’t know how much the borrow element of a transaction is but are paying for it how do you know it’s fair value? I've taken a lease out on my car (that isn't legally my car). I've not invested a penny in it - it's not mine to have invested in it.
If the S4 example was taken up, the person would be paying £300/mth to use the S4 for 4 years. He would not be investing in it, nor would he own the car. He is paying a monthly lease payment to use the car.
IF he had the capital to be able to spend £40,000 (or as I did, £65,000), then he would have the option to do something else with that £40,000 (not £20,000). But chances are, the £40,000 (£65,000 in my case) is already in an investment vehicle where the altered risk would only be to remove it.
One of the little pleasures from the financiers’ perspective. But seriously, you’ve just completely outlined the whole risk arbitrage aspect in your post above.
Exactly the same as with my Sky TV. I pay a monthly amount for the use of the service/products as explained in the contract.
If if it did exist, any financial borrow would be an irrelevance in any regard. My only concern regarding value is on the provision of the service. My sole barometer of value is that of paying £29k to use a £65,000 car for 4 years and 60,000 miles against what it would cost to own the £65,000 asset outright, and suffer the depreciation and RFL.
Value is my costs VS the depreciation and RFL (and cost of financing that £65,000 capital is relevant). IF the asset owner has borrowed against the asset, his/her costs are an irrelevance to me, and will be more than offset with tax/depreciation, hence why they can make a profit and still allow me to pay less than the car will (likely) depreciate.
As my costs are fixed for 4 years, there is no risk, there is no financial 'borrow' for me. I'm paying to use a car.
My costs for Sky TV are fixed for 2 years. There is likewise no risk and likewise no 'borrow' for me. I'm paying to use the TV services.
The leased car has a borrow element implicit within the financial structure and you are funding it in your monthly cost. The lease company does not fund this element to the manufacturer on your behalf, they structure it and pass it on to you as the consumer with an uplift. That's how it works and is a key profit centre of leasing.
But the really important aspect and where you are genuinely misleading yourself is the statement that you have no risk. You do, all you have done is shifted the risk from being based on the value of the vehicle to being based on the value of your £65,000 investment. As you quite rightly point out, someone who does not have £65,000 is not taking that risk. For them they are locking the singular risk of the variable value of the car in via the structured product but in your case you are not, you are merely switching the risk by choosing not buy the car but to retain the £65,000 in the capital markets hoping, gambling, speculating etc that the future returns will outperform.
And your statement that you are not paying VED is also incorrect. You are paying for it and in fact have agreed to a financial structure where you don't actually know how much you are paying for it. You are likely to be paying more given how such products are structured for every element to be a profit centre.
So to reiterate, the lease is only zero risk in this regard if you do not have the £65,000, you have and you have made the conscious decision to leave this £65,000 in the markets on the investment assumption that it will return more to you over the next 3 years than the cost of the lease. And there, in a nutshell is the risk. It's not gone you have simply shifted it across to another asset.
I also have no risk. I have guaranteed cost, guaranteed return. I know on day one what the car will cost me for the duration of the contract.
I do have risk with my investments, but that is mutually exclusive to the car lease, and everything else I buy. I never for one second considered using my capital, in the same way as I didn't consider re-mortaging my house to pay for it (nor paying off my mortgage, or an amount of it with that same capital).
The car will cost me less than the same car will almost certainly depreciate over the same period. That is the only financial calculation I made. That was the only basis for risk/value.
On VED, all I said was that when calculating the cost of buying the car outright you had to add in the cost of VED, which you don't with leasing.
Granfondo said:
Ares said:
That's perhaps often the case. But the biggest pull for me to lease is when the cost are, in balance, likely to be less and the risk zero.
Something that is interesting is why you would choose to rent for 4 years instead of 3 when the car will be out of warranty and with the reputation of Alfa and their dealerships being a tad flacky!What would happen if you got a lemon that was never away from the garage and you are contracted for 4 years,you could not get out very easily if at all?
Two, I negotiated a 4th year warranty which, whilst not as fully comprehensive as the full manufacturers, is backed by the leasing company.
Three, by year 4 I'll know the car and if it is a lemon
Four, I've never had issue with a car in year 4. Years 1,2 & 3 yes, but by year 4, they've either been fixed, or were never going wrong.
Beyond that, I always do four year deals. It's the sweetspot for me.
Ares said:
One, I can get out.
Two, I negotiated a 4th year warranty which, whilst not as fully comprehensive as the full manufacturers, is backed by the leasing company.
Three, by year 4 I'll know the car and if it is a lemon
Four, I've never had issue with a car in year 4. Years 1,2 & 3 yes, but by year 4, they've either been fixed, or were never going wrong.
Beyond that, I always do four year deals. It's the sweetspot for me.
I didn't know you could just withdraw from a contract?Two, I negotiated a 4th year warranty which, whilst not as fully comprehensive as the full manufacturers, is backed by the leasing company.
Three, by year 4 I'll know the car and if it is a lemon
Four, I've never had issue with a car in year 4. Years 1,2 & 3 yes, but by year 4, they've either been fixed, or were never going wrong.
Beyond that, I always do four year deals. It's the sweetspot for me.
This used to be an interesting thread discussing the merits and otherwise of the LRV, but now it's turned into a borefest of major proportions discussing leasing and wealth management/investment, thanks to Ares et al. Can you not take that crap and discuss it in the relevant threads elsewhere?
Ares said:
I have no borrow element, anymore than the borrowing cost the manufacturer took on to build the factory, and passed it all the way up the food chain.
I also have no risk. I have guaranteed cost, guaranteed return. I know on day one what the car will cost me for the duration of the contract.
I do have risk with my investments, but that is mutually exclusive to the car lease, and everything else I buy. I never for one second considered using my capital, in the same way as I didn't consider re-mortaging my house to pay for it (nor paying off my mortgage, or an amount of it with that same capital).
The car will cost me less than the same car will almost certainly depreciate over the same period. That is the only financial calculation I made. That was the only basis for risk/value.
On VED, all I said was that when calculating the cost of buying the car outright you had to add in the cost of VED, which you don't with leasing.
This is not correct. And for the exact reasons that I have laid out as clearly as I am able to and from using your own information that you put forward. I also have no risk. I have guaranteed cost, guaranteed return. I know on day one what the car will cost me for the duration of the contract.
I do have risk with my investments, but that is mutually exclusive to the car lease, and everything else I buy. I never for one second considered using my capital, in the same way as I didn't consider re-mortaging my house to pay for it (nor paying off my mortgage, or an amount of it with that same capital).
The car will cost me less than the same car will almost certainly depreciate over the same period. That is the only financial calculation I made. That was the only basis for risk/value.
On VED, all I said was that when calculating the cost of buying the car outright you had to add in the cost of VED, which you don't with leasing.
You are paying the borrowing costs of the leasing company plus a margin, their borrow will be specific to the product that you are hiring. It isn’t a general debt cost of operation. It’s per unit and passed directly on with an uplift. You are paying the VED plus an uplift and when you made the descision to not use your £65k to purchase the car but to keep it in the market you instantly transferred the risk you did not make it go away.
In your exact case you have transferred the risk not removed it and you have buried the costs not removed them. You will only know if that was the correct financial choice to make at the end of the lease contract when you will know the opportunity cost and whether it was positive or negative. You simply do not know the answer yet. And that very simple aspect shows very clearly how you have transferred the risk not removed it in your specific case.
It really is worth taking 5 mins to work it through and see the crux of what you’re missing as it is quite a big thing in reality.
Ares, you must have a PhD in Man Maths.
10% on a managed fund
If you were putting it into your own business where the capital could be put to better use, I'd let you have it, but to give it to a fund manager and expect 10% is living in cloud cuckoo land. You can get about 3% if you lock up cash for 5 years, by way of a bench mark and my pension as of last Thursday averaged 5% for the previous 12 months. It would have grown by 10 but one of the funds collapsed (which is why I spread my risk) bringing the average down. If you can guarantee me 10% growth you can manage all of my money.
You're worried about risk? FFS, for the duration of the lease the car will be covered by warranty, so it will be the lowest risk period of the vehicles life. Or, if you're worried about risk, just by a Japanese car like mine and bask in the trouble free motoring. 1 light bulb since it was built in 2011 has been the extent of the repairs.
10% on a managed fund
If you were putting it into your own business where the capital could be put to better use, I'd let you have it, but to give it to a fund manager and expect 10% is living in cloud cuckoo land. You can get about 3% if you lock up cash for 5 years, by way of a bench mark and my pension as of last Thursday averaged 5% for the previous 12 months. It would have grown by 10 but one of the funds collapsed (which is why I spread my risk) bringing the average down. If you can guarantee me 10% growth you can manage all of my money.You're worried about risk? FFS, for the duration of the lease the car will be covered by warranty, so it will be the lowest risk period of the vehicles life. Or, if you're worried about risk, just by a Japanese car like mine and bask in the trouble free motoring. 1 light bulb since it was built in 2011 has been the extent of the repairs.
I saw a Velar in the Car Park today. It was a bit “gangsta” as in all black with fairly heavily tinted windows. It actually looked very nice and unlike the previous 2 that I’d seen.
So it seems (to me anyway) that the looks are very colour-sensitive.
I still think an F-Pace is better looking though
So it seems (to me anyway) that the looks are very colour-sensitive.
I still think an F-Pace is better looking though
DonkeyApple said:
Ares said:
I have no borrow element, anymore than the borrowing cost the manufacturer took on to build the factory, and passed it all the way up the food chain.
I also have no risk. I have guaranteed cost, guaranteed return. I know on day one what the car will cost me for the duration of the contract.
I do have risk with my investments, but that is mutually exclusive to the car lease, and everything else I buy. I never for one second considered using my capital, in the same way as I didn't consider re-mortaging my house to pay for it (nor paying off my mortgage, or an amount of it with that same capital).
The car will cost me less than the same car will almost certainly depreciate over the same period. That is the only financial calculation I made. That was the only basis for risk/value.
On VED, all I said was that when calculating the cost of buying the car outright you had to add in the cost of VED, which you don't with leasing.
This is not correct. And for the exact reasons that I have laid out as clearly as I am able to and from using your own information that you put forward. I also have no risk. I have guaranteed cost, guaranteed return. I know on day one what the car will cost me for the duration of the contract.
I do have risk with my investments, but that is mutually exclusive to the car lease, and everything else I buy. I never for one second considered using my capital, in the same way as I didn't consider re-mortaging my house to pay for it (nor paying off my mortgage, or an amount of it with that same capital).
The car will cost me less than the same car will almost certainly depreciate over the same period. That is the only financial calculation I made. That was the only basis for risk/value.
On VED, all I said was that when calculating the cost of buying the car outright you had to add in the cost of VED, which you don't with leasing.
You are paying the borrowing costs of the leasing company plus a margin, their borrow will be specific to the product that you are hiring. It isn’t a general debt cost of operation. It’s per unit and passed directly on with an uplift. You are paying the VED plus an uplift and when you made the descision to not use your £65k to purchase the car but to keep it in the market you instantly transferred the risk you did not make it go away.
In your exact case you have transferred the risk not removed it and you have buried the costs not removed them. You will only know if that was the correct financial choice to make at the end of the lease contract when you will know the opportunity cost and whether it was positive or negative. You simply do not know the answer yet. And that very simple aspect shows very clearly how you have transferred the risk not removed it in your specific case.
It really is worth taking 5 mins to work it through and see the crux of what you’re missing as it is quite a big thing in reality.
If you want to go up the supply chain, I'm paying the lease companies overheads, labour costs, finance costs. The importers shipping fees, their overheads, labour costs, the manufacturer's overheads, raw materials costs, fixed costs, labour costs, MD's bonus, MD's wife's credit card bill, kids school fees, dog vet's fees, etc etc...
But the reality of it is, I'm paying £600/mth to use a car. How that is broken down after I pay it is of absolutely no relevance.
I pay £38/mth for Sky, same arrangement as my car. Part of that is Sky's debt, Jeremy Darroch's salary, etc etc. Do you consider me as paying the borrowing costs of Sky's Infrastructure? Or the cost of the sky kit I have in my house? No.
And what money I have or don't have outside of my car lease (or Sky contract) is irrelevant. Neither factored into my decision making process.
And for me, risk is eradicated, removed. I pay a fixed amount for a fixed service. Risk free. If the market rate value leads to a perceived depreciation figure on my car of less than £28,300, then I have paid extra to have risk-free piece of mind. If it had depreciated more than £28,300 then I have still had the same risk-free peace of mind, but paid nothing for it. Either way, with my car, I have zero risk. Regardless of any market conditions, stick market crashes, Brexit impact, republican take-over....my car will cost me exactly the same. Nails on. Zero risk.
Willy Nilly said:
Ares, you must have a PhD in Man Maths.
10% on a managed fund If you were putting it into your own business where the capital could be put to better use, I'd let you have it, but to give it to a fund manager and expect 10% is living in cloud cuckoo land. You can get about 3% if you lock up cash for 5 years, by way of a bench mark and my pension as of last Thursday averaged 5% for the previous 12 months. It would have grown by 10 but one of the funds collapsed (which is why I spread my risk) bringing the average down. If you can guarantee me 10% growth you can manage all of my money.
You're worried about risk? FFS, for the duration of the lease the car will be covered by warranty, so it will be the lowest risk period of the vehicles life. Or, if you're worried about risk, just by a Japanese car like mine and bask in the trouble free motoring. 1 light bulb since it was built in 2011 has been the extent of the repairs.
I've never said guarantee. Never said expect. Just gave a forward likelihood based on past performance. I'm not taking about locking cash away, I'm taking about managed funds. The same guy looks after my pension, which grew 11% Jan 2017 - Jan 2018. (You need a better wealth manager/fund manager 10% on a managed fund
If you were putting it into your own business where the capital could be put to better use, I'd let you have it, but to give it to a fund manager and expect 10% is living in cloud cuckoo land. You can get about 3% if you lock up cash for 5 years, by way of a bench mark and my pension as of last Thursday averaged 5% for the previous 12 months. It would have grown by 10 but one of the funds collapsed (which is why I spread my risk) bringing the average down. If you can guarantee me 10% growth you can manage all of my money.You're worried about risk? FFS, for the duration of the lease the car will be covered by warranty, so it will be the lowest risk period of the vehicles life. Or, if you're worried about risk, just by a Japanese car like mine and bask in the trouble free motoring. 1 light bulb since it was built in 2011 has been the extent of the repairs.
)And with my car, I'm not worried about risk. Not one iota. I've chosen a risk free route (and don't have to saddled with a f*ck awful Japanese dull-box...
)Ares said:
I pay £38/mth for Sky, same arrangement as my car. Part of that is Sky's debt, Jeremy Darroch's salary, etc etc. Do you consider me as paying the borrowing costs of Sky's Infrastructure? Or the cost of the sky kit I have in my house? No.
Because you're not comparing purchasing methods for your satellite TV access to a certain set of channels. You get it that way, or you don't get it.Ares said:
And what money I have or don't have outside of my car lease (or Sky contract) is irrelevant. Neither factored into my decision making process.
Isn't that the point? It IS relevant. You are choosing not to use your available capital to fund the car's availability to you. You are choosing to do something different with it...Ares said:
And for me, risk is eradicated, removed. I pay a fixed amount for a fixed service. Risk free.
No, the risk has been moved, not removed... You're just looking at one part of your entire financial position, and using that for the man maths.Ares said:
If the market rate value leads to a perceived depreciation figure on my car of less than £28,300, then I have paid extra to have risk-free piece of mind. If it had depreciated more than £28,300 then I have still had the same risk-free peace of mind, but paid nothing for it. Either way, with my car, I have zero risk. Regardless of any market conditions, stick market crashes, Brexit impact, republican take-over....my car will cost me exactly the same. Nails on. Zero risk.
But what you're doing with the money INSTEAD of buying the car does carry risk.Now: You have £x.
Four years time: You have had four years in an Alfa, and you have £y.
You know that the Alfa has cost you £28,300, but you do not know that the difference between £x and £y is £28,300 - because the one thing you can say for sure is that it isn't. If the way you've invested the money that would have been parked in the drive if you'd bought that car has outperformed the finance costs, then the difference is less. If they haven't, then it's more.
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