Financing 600LT or 720s
Discussion
DeuceDeuce said:
Maybe that’s it and I don’t want this thread to get into that argument, I’m just curious what their wealth manager actually recommended they do.
No authorised & regulated, financial professional would specifically ‘recommend’ borrowing when something could be paid for with existing funds. That’s the equivalent of them recommending you borrow to fund a ‘risk based’ investment.
Assuming the poster is using ‘wealth manager’ to describe their investment manager or point of contact for their investments, then it’s in their wealth managers interest to lend to their client against the value of their investments as they get to keep the % fee for the management of investment and a new fee & margin for the new loan facility.
I’m sure that the paperwork related to this ‘advice’ from the wealth manager will document that it was the client’s idea to do this and not a recommendation from the wealth manager. That’s not to say the wealth manager won’t talk to you in a way that suggests it’s a good idea. It’s just that what you think was said and what is documented can be quite different.
Every situation is different which means you can't really compare individual circumstances easily.
For example - what would you do with the cash if you didn't spend it on the car? I use the word spend not invest.
If you're retired and have assets (sometimes cash but not always) sitting in a non crystallised fund and you can withdraw it with little or no tax you might want to spend it.
Where are you vs your lifetime pension allowance?
Is your long goal to be wealthy (tough to determine), maintain your wealth or build it to pass on to a future generation?
Do you have grandparents or parents alive that might leave you an inheritance.
If they left it do you really want it or would you skip a generation and leave it to your children which might lead you to have a different mindset about your own funds.
I know that all sounds very boring BUT its a lot more interesting to think about than gambling on whether your ICE supercar will have depreciated by £50k more than expected in x years.
Fund it, drive it, enjoy it now.
Find a solid, independent IFA that you trust to advise you for the long term.
No authorised & regulated, financial professional would specifically ‘recommend’ borrowing when something could be paid for with existing funds. That’s the equivalent of them recommending you borrow to fund a ‘risk based’ investment.
Assuming the poster is using ‘wealth manager’ to describe their investment manager or point of contact for their investments, then it’s in their wealth managers interest to lend to their client against the value of their investments as they get to keep the % fee for the management of investment and a new fee & margin for the new loan facility.
I’m sure that the paperwork related to this ‘advice’ from the wealth manager will document that it was the client’s idea to do this and not a recommendation from the wealth manager. That’s not to say the wealth manager won’t talk to you in a way that suggests it’s a good idea. It’s just that what you think was said and what is documented can be quite different.
Every situation is different which means you can't really compare individual circumstances easily.
For example - what would you do with the cash if you didn't spend it on the car? I use the word spend not invest.
If you're retired and have assets (sometimes cash but not always) sitting in a non crystallised fund and you can withdraw it with little or no tax you might want to spend it.
Where are you vs your lifetime pension allowance?
Is your long goal to be wealthy (tough to determine), maintain your wealth or build it to pass on to a future generation?
Do you have grandparents or parents alive that might leave you an inheritance.
If they left it do you really want it or would you skip a generation and leave it to your children which might lead you to have a different mindset about your own funds.
I know that all sounds very boring BUT its a lot more interesting to think about than gambling on whether your ICE supercar will have depreciated by £50k more than expected in x years.
Fund it, drive it, enjoy it now.
Find a solid, independent IFA that you trust to advise you for the long term.
Drl22 said:
DeuceDeuce said:
Could you just clearly explain what I’m missing here. His advice was what exactly? What were the terms of the finance he suggested you accept and what was the projected or maybe (ahem) guaranteed, returns you would expect?
I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
The car will definitely depreciate, that’s a fact. This year, instead of lumping my money into a car, I used some of the money to put two deposits into buy to let houses. This is a small yield per year but basically free money as someone else pays for the mortgages. Plus it’s not taxed as a dividend so there’s a saving there, the tax on the same money for a dividend to “cash” the car would have been monstrous. Then investment ISA’s 25% growth this year, which is not normal but I’ll take it. Then made a larger contribution to my pension than I would have if I bought the car cash. Again tax savings. Then VCT’s. I’m surprised I have to explain this to you if you are indeed a wealth manager. I’m not suggesting somebody with the right appetite for risk shouldn’t finance their car and keep funds invested but it will never be the recommended course of action from a financial professional.
If anyones’s interested, my experience (20+ years as a wealth manager) tells me that the people that use finance are either just lazy (often too wealthy and uninterested to care about doing anything other than what the salesman suggests) or have no liquidity but are asset rich. Then there’s the last group, the ones that genuinely believe that borrowing at a relatively expensive rate is in their best interests and nothing to do with the fact their WM makes money from their investments and lending.
To be clear, I’m not having a go at finance, it’s suitable in many cases, I’m just saying it’s hard to make the case for its suitability when cleared funds are available instead.
Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
ttexige said:
Gfv is really good on a 650s with Santander. My 650s is costing me £650 a month with a 10% deposit. It was £1500 a month on the 570s. I couldn’t believe the price for a 650s so snapped the deal up. Mclaren finance was not a very good deal when I asked although this was October last year.
I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
This is quite interesting, I've never financed a vehicle (I guess due to "old school" thinking).I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
How does the GFV thing work?
You walk into Santander and ask for it? Or is there a website with comparative GFV values and different finance companies competing for the business?
Do you have the option of keeping the car at the end of your agreement?
Cheers
DeuceDeuce said:
The only thing I want you to explain to me is what I asked in my post above.
Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
If you are a wealth manager you’d understand what projected returns (no one really knows, previous performance is no guarantee of future etc) would be from the information I’ve given you, you would also understand that those types of investments are not entirely about the returns, they are also about the tax savings they offer. Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
The finance is typical supercar finance over two years with a balloon at the end. Again, if you know your stuff you’ll know what this entails.
I find it very odd that someone with your supposed knowledge seems to need this all spelling out and please let me know who you work for so I can ensure I go nowhere near them.
Drl22 said:
If you are a wealth manager you’d understand what projected returns (no one really knows, previous performance is no guarantee of future etc) would be from the information I’ve given you, you would also understand that those types of investments are not entirely about the returns, they are also about the tax savings they offer.
The finance is typical supercar finance over two years with a balloon at the end. Again, if you know your stuff you’ll know what this entails.
I find it very odd that someone with your supposed knowledge seems to need this all spelling out and please let me know who you work for so I can ensure I go nowhere near them.
So, hypothetically speaking, Joe Bloggs has £200K in cash and he’d like to purchase a £200K super car and keep it for two years - the cash is from an inheritance and there are no current investments (investment virgin).The finance is typical supercar finance over two years with a balloon at the end. Again, if you know your stuff you’ll know what this entails.
I find it very odd that someone with your supposed knowledge seems to need this all spelling out and please let me know who you work for so I can ensure I go nowhere near them.
You are suggesting that it is better to ‘invest’ the £200K for two years rather than buy the car for cash, because the returns from the investment will be better than paying the interest on finance? When you take into account upfront investment fees, ongoing management fees, and that it is unlikely (and risky) to even invest during such a short term / two year period, and expect to receive a return within the two years which compensates for the upfront fees and/or early withdrawal fees and the finance interest, I don’t think it makes any sense. For sure, if it was for 5 - 10 years, but then I wouldn’t finance a car over 5 - 10 years either - I would use the cash.
MAC 720S said:
So, hypothetically speaking, Joe Bloggs has £200K in cash and he’d like to purchase a £200K super car and keep it for two years - the cash is from an inheritance and there are no current investments (investment virgin).
You are suggesting that it is better to ‘invest’ the £200K for two years rather than buy the car for cash, because the returns from the investment will be better than paying the interest on finance? When you take into account upfront investment fees, ongoing management fees, and that it is unlikely (and risky) to even invest during such a short term / two year period, and expect to receive a return within the two years which compensates for the upfront fees and/or early withdrawal fees and the finance interest, I don’t think it makes any sense. For sure, if it was for 5 - 10 years, but then I wouldn’t finance a car over 5 - 10 years either - I would use the cash.
That would be different if it was inheritance because you wouldn’t be paying tax to release it from a business and pay yourself dividends. You are suggesting that it is better to ‘invest’ the £200K for two years rather than buy the car for cash, because the returns from the investment will be better than paying the interest on finance? When you take into account upfront investment fees, ongoing management fees, and that it is unlikely (and risky) to even invest during such a short term / two year period, and expect to receive a return within the two years which compensates for the upfront fees and/or early withdrawal fees and the finance interest, I don’t think it makes any sense. For sure, if it was for 5 - 10 years, but then I wouldn’t finance a car over 5 - 10 years either - I would use the cash.
The tax isn’t relevant to the discussion of financing a vehicle purchased over 2 years versus using cash. You are suggesting that it is better to invest for two years because it will cover the finance interest charges. I’m saying it is unlikely to successfully invest for two years with a ‘guaranteed’ return, which would also offset the costs of the investment as an alternative to using the cash to buy an asset which could be disposed of at any point-in-time.
Investments only work if in it for the long-game which is not a good argument as an alternative for short term car finance. Always use cash if available.
Investments only work if in it for the long-game which is not a good argument as an alternative for short term car finance. Always use cash if available.
MAC 720S said:
So, hypothetically speaking, Joe Bloggs has £200K in cash and he’d like to purchase a £200K super car and keep it for two years - the cash is from an inheritance and there are no current investments (investment virgin).
You are suggesting that it is better to ‘invest’ the £200K for two years rather than buy the car for cash, because the returns from the investment will be better than paying the interest on finance? When you take into account upfront investment fees, ongoing management fees, and that it is unlikely (and risky) to even invest during such a short term / two year period, and expect to receive a return within the two years which compensates for the upfront fees and/or early withdrawal fees and the finance interest, I don’t think it makes any sense. For sure, if it was for 5 - 10 years, but then I wouldn’t finance a car over 5 - 10 years either - I would use the cash.
Given the original question in this thread is about GFV’s if Joe Bloggs doesn’t want to risk more than a set amount of his £200k then by using a PCP he can secure a GFV, in effect the interest is his “insurance cost” of walking away. That is attractive to a lot of people, and whilst might not be the “best investment” from an interest point of view may well bring piece of mind. You are suggesting that it is better to ‘invest’ the £200K for two years rather than buy the car for cash, because the returns from the investment will be better than paying the interest on finance? When you take into account upfront investment fees, ongoing management fees, and that it is unlikely (and risky) to even invest during such a short term / two year period, and expect to receive a return within the two years which compensates for the upfront fees and/or early withdrawal fees and the finance interest, I don’t think it makes any sense. For sure, if it was for 5 - 10 years, but then I wouldn’t finance a car over 5 - 10 years either - I would use the cash.
At the same time he can use the balance to invest and reduce that insurance cost “hopefully”.
Mac 720
You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
OldAndTired said:
Mac 720
You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
Good post, although I might disagree on point E) If you can afford to “rent” the car via a PCP then you can afford it, even if you don’t have the cash to buy it outright. That would be like saying you can’t rent a property if you don’t have the cash to buy it outright.You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
The other advantage of a pcp is that you shouldn’t be scared to use the car. If you’re paying for 10,000 miles per year then use them, you don’t get anything back. If you buy for cash people seem to be less willing to use them as they are losing money.
AndyC_123 said:
ttexige said:
Gfv is really good on a 650s with Santander. My 650s is costing me £650 a month with a 10% deposit. It was £1500 a month on the 570s. I couldn’t believe the price for a 650s so snapped the deal up. Mclaren finance was not a very good deal when I asked although this was October last year.
I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
This is quite interesting, I've never financed a vehicle (I guess due to "old school" thinking).I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
How does the GFV thing work?
You walk into Santander and ask for it? Or is there a website with comparative GFV values and different finance companies competing for the business?
Do you have the option of keeping the car at the end of your agreement?
Cheers
You just pay down the loan to the gfv in whatever time frame you set, I set it to 4 years. At the 4 year point you then pay the gfv to own the car (you can refinance that) or hand the car back to the finance company.
You can use a company’s like magnitude finance and they will give a few different options aswel.
You can have a final ballon payment option where they don’t guarantee the value of the car and at the end of that you need to settle/refinance the ballon you can’t hand it back. Ferrari finance do a lot of these deals.
Northernboy said:
ttexige said:
Gfv is really good on a 650s with Santander. My 650s is costing me £650 a month with a 10% deposit. It was £1500 a month on the 570s. I couldn’t believe the price for a 650s so snapped the deal up. Mclaren finance was not a very good deal when I asked although this was October last year.
I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
Does that include the extended warranty?I can’t see the 650s dropping that much to be honest, seems the best value deal on any super car at the minute.
RichardAP said:
OldAndTired said:
Mac 720
You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
Good post, although I might disagree on point E) If you can afford to “rent” the car via a PCP then you can afford it, even if you don’t have the cash to buy it outright. That would be like saying you can’t rent a property if you don’t have the cash to buy it outright.You are thinking too hard about this. In the world of PH property always goes up so leveraging a buy to let is free money!
The only time finance makes sense is if at least one of the following is true:
A) Liquidating investments have a cost/ tax disadvantage to them that offsets any finance costs.
B) Any offsetting tax advantage.
C) Wanting a “put option” at the end of the finance term - ie the right to hand the keys back at a GFV. Sure in the long run it’s more expensive but you have peace of mind knowing your all in maximum cost. (Assuming finance company doesn’t go bust!).
D) Having the cash instead gives you optionality on other investment opportunities that may arise - but also gives you liquidity for temporary but unexpected financial liabilities that might occur.
E) You can’t actually afford the car, and don’t have either offsetting investments nor the cash and have no choice but financing. (You shouldn’t be buying it - but most people don’t care and would tell you to mind your own business and f@@k off!).
But people who say “I use finance because I don’t want to put cash in a depreciating asset” are the true idiots, who simply don’t understand the maths of financing a car.
When you finance you ARE putting cash into a depreciating asset. It’s worse that that. You are leveraging your portfolio to do it.
But reasons A) to E) are all valid and justified.
The other advantage of a pcp is that you shouldn’t be scared to use the car. If you’re paying for 10,000 miles per year then use them, you don’t get anything back. If you buy for cash people seem to be less willing to use them as they are losing money.
Drl22 said:
DeuceDeuce said:
The only thing I want you to explain to me is what I asked in my post above.
Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
If you are a wealth manager you’d understand what projected returns (no one really knows, previous performance is no guarantee of future etc) would be from the information I’ve given you, you would also understand that those types of investments are not entirely about the returns, they are also about the tax savings they offer. Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
The finance is typical supercar finance over two years with a balloon at the end. Again, if you know your stuff you’ll know what this entails.
I find it very odd that someone with your supposed knowledge seems to need this all spelling out and please let me know who you work for so I can ensure I go nowhere near them.
I just want to understand what your wealth manager said to change your mindset from paying in full versus paying for finance? The point I’m trying to make isn’t about the pros & cons of paying cash versus credit, it’s about what advice you received.
The other thing your advisor/wm will definitely recommend is for you to have a cash or near cash reserve to cover unexpected expenditure. For a man of your means with significant investments this figure will be perhaps £50k or more. Does your WM recommend a cash reserve and did you take that advice?
I’ve seen many suitability reports that document: ‘I advised you to pay of xyz debt before considering investing and to keep £x as an emergency reserve but you declined this recommendation because blah blah blah’.
Most of the time it is the advisor that steered their client to make those decisions as it is earns them a fee if the client invests. It’s never documented that way though, and that’s what I’m trying to make clear.
Things your WM will not have made a formal recommendation on:
1. Buying direct BTL properties. That’s beyond their scope of advice. They may have taken a fee to sort out your mortgages though
2. Taking out finance at c6.4% to buy/rent a car.
3. To keep no funds in cash as you’re far better off investing everything.
The FCA is prescriptive about what needs to be considered and documented when giving advice. It’s not even a grey area. These are the facts. Yes, some people can make more than 6.5% per annum after fees and taxes, sometimes considerably more, but that risk is ALWAYS at the client insistence and never by a formal recommendation from an adviser. Whoever the adviser is will be getting a certain amount of his/her suitability work checked by compliance from time to time and they will be in the sh*t for anything that is not adhering to some very tight suitability parameters.
DeuceDeuce said:
Drl22 said:
DeuceDeuce said:
The only thing I want you to explain to me is what I asked in my post above.
Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
If you are a wealth manager you’d understand what projected returns (no one really knows, previous performance is no guarantee of future etc) would be from the information I’ve given you, you would also understand that those types of investments are not entirely about the returns, they are also about the tax savings they offer. Out of interest, does your willingness to borrow in order to invest apply to mortgaging your main residence for relatively tiny APR vs car finance?
Again, to be clear, I’ve got no problem with a grown up making their own investment decisions but I don’t think it’s right to suggest your own investment decisions are actually those recommended and documented by an authorised & regulated wealth manager.
The finance is typical supercar finance over two years with a balloon at the end. Again, if you know your stuff you’ll know what this entails.
I find it very odd that someone with your supposed knowledge seems to need this all spelling out and please let me know who you work for so I can ensure I go nowhere near them.
I just want to understand what your wealth manager said to change your mindset from paying in full versus paying for finance? The point I’m trying to make isn’t about the pros & cons of paying cash versus credit, it’s about what advice you received.
The other thing your advisor/wm will definitely recommend is for you to have a cash or near cash reserve to cover unexpected expenditure. For a man of your means with significant investments this figure will be perhaps £50k or more. Does your WM recommend a cash reserve and did you take that advice?
I’ve seen many suitability reports that document: ‘I advised you to pay of xyz debt before considering investing and to keep £x as an emergency reserve but you declined this recommendation because blah blah blah’.
Most of the time it is the advisor that steered their client to make those decisions as it is earns them a fee if the client invests. It’s never documented that way though, and that’s what I’m trying to make clear.
Things your WM will not have made a formal recommendation on:
1. Buying direct BTL properties. That’s beyond their scope of advice. They may have taken a fee to sort out your mortgages though
2. Taking out finance at c6.4% to buy/rent a car.
3. To keep no funds in cash as you’re far better off investing everything.
The FCA is prescriptive about what needs to be considered and documented when giving advice. It’s not even a grey area. These are the facts. Yes, some people can make more than 6.5% per annum after fees and taxes, sometimes considerably more, but that risk is ALWAYS at the client insistence and never by a formal recommendation from an adviser. Whoever the adviser is will be getting a certain amount of his/her suitability work checked by compliance from time to time and they will be in the sh*t for anything that is not adhering to some very tight suitability parameters.
Then goes onto critique his financial situation are you some kind of ambulance chasing no win no fee plonker touting for business?
Who on earth do you think you are demanding DRL answers your inane questions without the courtesy to respond to his ?
Another thread derailed by a fool trying to make a name for himself.
Edited by HIS LM on Friday 29th January 20:52
DeuceDeuce said:
I’m not sure why you feel the need to insult me and attack my credibility? I’m not criticising your investment choices. I don’t know enough about your circumstances to critique your financial situation.
I just want to understand what your wealth manager said to change your mindset from paying in full versus paying for finance? The point I’m trying to make isn’t about the pros & cons of paying cash versus credit, it’s about what advice you received.
The other thing your advisor/wm will definitely recommend is for you to have a cash or near cash reserve to cover unexpected expenditure. For a man of your means with significant investments this figure will be perhaps £50k or more. Does your WM recommend a cash reserve and did you take that advice?
I’ve seen many suitability reports that document: ‘I advised you to pay of xyz debt before considering investing and to keep £x as an emergency reserve but you declined this recommendation because blah blah blah’.
Most of the time it is the advisor that steered their client to make those decisions as it is earns them a fee if the client invests. It’s never documented that way though, and that’s what I’m trying to make clear.
Things your WM will not have made a formal recommendation on:
1. Buying direct BTL properties. That’s beyond their scope of advice. They may have taken a fee to sort out your mortgages though
2. Taking out finance at c6.4% to buy/rent a car.
3. To keep no funds in cash as you’re far better off investing everything.
The FCA is prescriptive about what needs to be considered and documented when giving advice. It’s not even a grey area. These are the facts. Yes, some people can make more than 6.5% per annum after fees and taxes, sometimes considerably more, but that risk is ALWAYS at the client insistence and never by a formal recommendation from an adviser. Whoever the adviser is will be getting a certain amount of his/her suitability work checked by compliance from time to time and they will be in the sh*t for anything that is not adhering to some very tight suitability parameters.
Attacking your credibility was wrong and I apologise for that. Every situation is different, as I am sure you recognise but it does annoy me this cash everything attitude on PH. People do as they choose, I cash purchased the RR and the S3. It suited me at the time to do that. Of course I hold cash reserves but I also have plenty of cash I can get at in my business but half my battle is transferring that money in efficient ways. Dropping 150k on my 458 was not a smart way to do things. You can work out what the tax on that dividend would be as a additional rate TP. Equally, withdrawing the money from investments isn’t smart either. I just want to understand what your wealth manager said to change your mindset from paying in full versus paying for finance? The point I’m trying to make isn’t about the pros & cons of paying cash versus credit, it’s about what advice you received.
The other thing your advisor/wm will definitely recommend is for you to have a cash or near cash reserve to cover unexpected expenditure. For a man of your means with significant investments this figure will be perhaps £50k or more. Does your WM recommend a cash reserve and did you take that advice?
I’ve seen many suitability reports that document: ‘I advised you to pay of xyz debt before considering investing and to keep £x as an emergency reserve but you declined this recommendation because blah blah blah’.
Most of the time it is the advisor that steered their client to make those decisions as it is earns them a fee if the client invests. It’s never documented that way though, and that’s what I’m trying to make clear.
Things your WM will not have made a formal recommendation on:
1. Buying direct BTL properties. That’s beyond their scope of advice. They may have taken a fee to sort out your mortgages though
2. Taking out finance at c6.4% to buy/rent a car.
3. To keep no funds in cash as you’re far better off investing everything.
The FCA is prescriptive about what needs to be considered and documented when giving advice. It’s not even a grey area. These are the facts. Yes, some people can make more than 6.5% per annum after fees and taxes, sometimes considerably more, but that risk is ALWAYS at the client insistence and never by a formal recommendation from an adviser. Whoever the adviser is will be getting a certain amount of his/her suitability work checked by compliance from time to time and they will be in the sh*t for anything that is not adhering to some very tight suitability parameters.
The WM didn’t actually tell me about the BTL, you’re right, my accountant who works in tandem with him did. The way I look at it is return or no returns I only stand a chance of making money if I invest, I stand none plonking it in a depreciating asset. I’ll take my chances on that but spread my risk.
To finish, because this has been far more in depth than I expected. Cashing your car sounds cool and sounds like you’ve done something special but the chances are it probably isn’t that clever and in some cases probably isn’t even true. It might make sense if you’ve sold your business for a few million but that’s not my situation, I’m grinding, building for the future as well as enjoying the here and now. The feeling of owning your car 100% simply means you are tied 100% to your asset. It’s horses for courses but I know my course.
Edit: to the above poster, thanks! I don’t know how I got into this situation of explaining myself but hope that others who finance their cars or ask questions can take something from this and avoid being put off by the if you can’t pay cash you can’t afford it brigade.
Edited by Drl22 on Friday 29th January 20:53
A specific observation on the OPs point about tax liability on investments that would have to be liquidated to pay in cash. I expect you realize the investment valuation is only paper, until you do liquidate, so essentially you are only noting the gain you make on the tax liability between the time that you liquidate to buy the car, and the time you actually finally liquidate, perhaps during retirement,
Financing a car or paying cash is hardly a new case - it is well modeled. Financing with GFV only makes sense if you must have a new car every 3 years. In every other case, cash is king.
Financing a car or paying cash is hardly a new case - it is well modeled. Financing with GFV only makes sense if you must have a new car every 3 years. In every other case, cash is king.
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