Pension idea involving cars
Discussion
Pension idea involving cars
Ok so on the day of public sector worker strikes over pensions is there an alternative. As a public sector working (who didn’t strike) I am considering pulling out of my pension and investing the money.
So here is the idea (semi serious) invest about £12k into cheap second hand cars, lock them in a dry barn (weld the doors shut so not tempted to tinker with them) wait 30 to 40 years for retirement age and then get them out and sell at auction (for restoration).
Even Un restored I have heard of very high prices being achieved for rare cars in barn finds (many of these were cheap common cars once upon a time).
My initial thoughts are of a Japanese late 80s early 90s sports and coupe themed collection. All bought cheap as possible.
Mr2s (mk1 mk2 and mk3), gen 4,5 and 6 celica, mk3 and mk4 supra, mk2 rx7, 200sx, crx, skyline 300zx. Anything basically that can be bought for hundreds now with potential to be a classic later.
So pistonheads is the idea a good one and what cars would you buy?
Ok so on the day of public sector worker strikes over pensions is there an alternative. As a public sector working (who didn’t strike) I am considering pulling out of my pension and investing the money.
So here is the idea (semi serious) invest about £12k into cheap second hand cars, lock them in a dry barn (weld the doors shut so not tempted to tinker with them) wait 30 to 40 years for retirement age and then get them out and sell at auction (for restoration).
Even Un restored I have heard of very high prices being achieved for rare cars in barn finds (many of these were cheap common cars once upon a time).
My initial thoughts are of a Japanese late 80s early 90s sports and coupe themed collection. All bought cheap as possible.
Mr2s (mk1 mk2 and mk3), gen 4,5 and 6 celica, mk3 and mk4 supra, mk2 rx7, 200sx, crx, skyline 300zx. Anything basically that can be bought for hundreds now with potential to be a classic later.
So pistonheads is the idea a good one and what cars would you buy?
You'd need to be really lucky to make any money!
Over the last 20 years, inflation has roughly halved the value of your 'investment'. So if you invested £20k 20 years ago, it would need to be worth £40k now to break even. How many cars would have doubled since 1991 if you left them in a dry barn? Maybe a 964RS? About £60k new I think, and you may just about get £80k for a barn find now. Alternatives would have been mk1 escorts, mini coopers, etc, but there is plenty of chance these would have rusted away in the meantime. So you really need to plan to triple the value in 20 years, and I think its only things like the F40 and 288GTO that have done this in the last 20 years.
Now, I'd say a very original early Elise is a good bet. Or with more money, a 996 GT2 or GT3 RS. You might break even, but not make money.
Finally, add in the cost of the barn, insurance (you don't want the barn burning down or someone nicking your pension) and the likelihood of expensive refurbishment when you cash in, it's unlikely to be worth it unless you're lucky.
Also remember that you get tax relief on pension contributions, and can take a tax free lump sum on maturity - you'll have paid tax on the money spent on the cars, and could well get hit for CGT when you sell too.....
Nice idea though!
Over the last 20 years, inflation has roughly halved the value of your 'investment'. So if you invested £20k 20 years ago, it would need to be worth £40k now to break even. How many cars would have doubled since 1991 if you left them in a dry barn? Maybe a 964RS? About £60k new I think, and you may just about get £80k for a barn find now. Alternatives would have been mk1 escorts, mini coopers, etc, but there is plenty of chance these would have rusted away in the meantime. So you really need to plan to triple the value in 20 years, and I think its only things like the F40 and 288GTO that have done this in the last 20 years.
Now, I'd say a very original early Elise is a good bet. Or with more money, a 996 GT2 or GT3 RS. You might break even, but not make money.
Finally, add in the cost of the barn, insurance (you don't want the barn burning down or someone nicking your pension) and the likelihood of expensive refurbishment when you cash in, it's unlikely to be worth it unless you're lucky.
Also remember that you get tax relief on pension contributions, and can take a tax free lump sum on maturity - you'll have paid tax on the money spent on the cars, and could well get hit for CGT when you sell too.....
Nice idea though!
There are loads more cars than that that have gone up in value, mk1 and mk2 escorts, capri’s old mini’s beetles early mustangs etc we are not talking comparisons between value when new or even mid point in the market and current values, I’m talking buying them when really cheap (under £500) while common, spread the risk over 20 or more cars, some of them are bound to be far rarer in 30 to 40 years time thus worth a lot more. Might require insurance against fire etc but would otherwise assume all would require restoration anyway. What about these million dollar barn finds in America where people discover huge collections of forgotten cars. Surly its got some potential if you have access to a free barn.
I think it's very risky. For a start, the cars will deteriorate horribly if not properly looked after. They will rust and the engines will seize.
People buying these barn finds are not buying a car, they are buying an identity. People are willing to spend a fortune to buy a brand new Aston Martin DB5, but there's a catch. The only way to buy a brand new Aston DB5 is to buy an old one and 'restore' (replace every part with new) it. Limited numbers of originals to start from mean lots of people fighting for them, so the price goes up. That is the only reason these cars are worth lots, almost all of the cars of the era in a similar state to what yours will be after 30 years in a barn are worth nothing. No one would buy a 'barn find' MGB, Morris Ital, Jaguar XJ....even 'barn find' E-types are only worth £10k or so. Now, think of all the cars made in the 70's, now look at the ones that are worth lots of money even in terrible condition. Do any of the cars you have mentioned or, indeed, any car you can buy for 'a few hundred pounds' have anything like the provenance or rarity to make it likely that they will be so sort after in 30 years time that people will buy basket cases just for the identity, and then spend £100,000's building a new one?
That's even assuming it will be possible, you can build a new Ferrari 250 because they are quite simple, will you be able to do that to a 200sx? Where will you get the ECU's from?
AND that's assuming these cars ever do become 'classics', I don't want to debate it too much but it's by no means guaranteed that any of the cars you have mentioned will suddenly be worth a bucket load in a few decades time. Again, look at all the cars made in the 60's, and now look at how many of them that were ever really cheap are worth enough to have been worth salting away. You'd have to pick carefully. Escort's, VW buses...a few others, but it took 30+ years.
However, I'd be buying Sierra Cosworths (will have to be saloon's, the hatches have already gone), Impretzza (rare ones, RB5 etc), Evo's (earlier ones, makkinenen's etc), Rang Rover classics...hmm, all I can think of off the top of my head.
People buying these barn finds are not buying a car, they are buying an identity. People are willing to spend a fortune to buy a brand new Aston Martin DB5, but there's a catch. The only way to buy a brand new Aston DB5 is to buy an old one and 'restore' (replace every part with new) it. Limited numbers of originals to start from mean lots of people fighting for them, so the price goes up. That is the only reason these cars are worth lots, almost all of the cars of the era in a similar state to what yours will be after 30 years in a barn are worth nothing. No one would buy a 'barn find' MGB, Morris Ital, Jaguar XJ....even 'barn find' E-types are only worth £10k or so. Now, think of all the cars made in the 70's, now look at the ones that are worth lots of money even in terrible condition. Do any of the cars you have mentioned or, indeed, any car you can buy for 'a few hundred pounds' have anything like the provenance or rarity to make it likely that they will be so sort after in 30 years time that people will buy basket cases just for the identity, and then spend £100,000's building a new one?
That's even assuming it will be possible, you can build a new Ferrari 250 because they are quite simple, will you be able to do that to a 200sx? Where will you get the ECU's from?
AND that's assuming these cars ever do become 'classics', I don't want to debate it too much but it's by no means guaranteed that any of the cars you have mentioned will suddenly be worth a bucket load in a few decades time. Again, look at all the cars made in the 60's, and now look at how many of them that were ever really cheap are worth enough to have been worth salting away. You'd have to pick carefully. Escort's, VW buses...a few others, but it took 30+ years.
However, I'd be buying Sierra Cosworths (will have to be saloon's, the hatches have already gone), Impretzza (rare ones, RB5 etc), Evo's (earlier ones, makkinenen's etc), Rang Rover classics...hmm, all I can think of off the top of my head.
mikey P 500 said:
There are loads more cars than that that have gone up in value, mk1 and mk2 escorts, capri’s old mini’s beetlee early mustangs
I'll give you the Escort Mk1 but the others, I don't think so. I can buy a Mini, Capri or Beetle basket case for...what, well under £1000? Mustang might be worth more but only if it's a matching numbers car and in the right spec, if you had bought the wrong year or the wrong gearbox type it's be worth next to nothing, certainly not worth putting away.See here:
http://cgi.ebay.co.uk/1965-Ford-Mustang-Convertibl...
perfectly nice, early, Ford Mustang. Worth about £25k, how much do you think it would be worth if it had been in a barn for the last 30 years? £5k, maybe? The American cars you are talking about are incredibly rare, hemi cuda's and the like.
There seems to be a misconception that all old cars are worth a fortune, and that all us classic car owners double our money every 3 years. It's just not true. The problem is people hear about £100k E-types and £5mil Ferrari 250 GTO's, they don't hear that you can now pick up a decent Spitfire for £2k (so they have actually gone DOWN in value over the last 10 years or so) or what it costs to keep a classic in reasonable condition.
Edited by varsas on Thursday 30th June 18:46
You're right, if you'd filled a barn with mk1 2 door escorts and early Capris in 1990 you'd be doing fine now. Same if you'd chosen series 1 landrovers or 2 door range rovers. However, what if you'd thought Hillman Avengers or Chevettes were the car to go for then? They were much the same value as mk1 Escorts 20 years ago, and no one expected pricing to increase as they have.
As I said, you may strike lucky and have an unloved car now that is worth loads in the future. I've got no idea what this may be though - maybe Alfa GTV, Ford Ka, Ford Puma, early MX5. There is much more chance of losing it all rather than gaining anything.
As I said, you may strike lucky and have an unloved car now that is worth loads in the future. I've got no idea what this may be though - maybe Alfa GTV, Ford Ka, Ford Puma, early MX5. There is much more chance of losing it all rather than gaining anything.
Its only a semi serous idea, I think in 30plus years time its got a fair shout of being worth more than a public sector pension (but that’s a another debate). I also think in the future restoring old cars will be much quicker cheaper and easier due to 3d printing getting more popular (if your not familiar, no tooling will be required to produce parts just CAD drawing (drawings can be made by scanning the old parts) then just print the required part. What will be rare however I believe will be some of these cars that are now being scraped, not all of them but as said the skill is to guess at the correct ones (my reason for this post) and its got potential.
Like the idea but you probably struggle get a decent unabused example of any cars you mention for a few hundred £. MR2 Mk1s suffer from rust, good ones are over £2000. CRX,s are all boy raced now I think the last time I saw a good unmodified immaculate one it was £4000!!! Still love both of them though.
You need a standard good condition car to start with, and then it might pay off...........or it might not
You need a standard good condition car to start with, and then it might pay off...........or it might not
Bit of a gamble over the next 40 years! Will classic cars still be desirable over that time period? What will petrol availability and price do to the market for classic mass produced 90s cars?
Will the prius and original insight be more 'in vogue' in the future? Smart roadster? Original lotus elise surely? Vx220? Always difficult to predict hence leaving my 'investments' to the alledged experts.
Mike
Will the prius and original insight be more 'in vogue' in the future? Smart roadster? Original lotus elise surely? Vx220? Always difficult to predict hence leaving my 'investments' to the alledged experts.
Mike
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