Worse advice you've seen or been given?

[Ari]

I thought since we had a 'golden' advice thread, a 'worse' advice thread might be interesting.

I always like 'If it appreciates, buy it, if it depreciates, finance it' because it gets trotted out so regularly and it sounds so wise!

But how does financing it magic away the depreciation? It doesn't, it just adds finance costs on top. Even if you lease, depreciation doesn't go away and there is only one person covering it somehow- you. Conversely, financing an appreciating asset can make a lot of sense, allowing you to buy it at today's price rather than a future higher price.

Not sure it counts as advice as such, but 'don't worry, I can't get pregnant' has probably been the worst advice received for more than a few...

[Zoobeef]

They are hinting that the cost of the finance will be less than the depreciation.

[Ari]

Zoobeef said:

They are hinting that the cost of the finance will be less than the depreciation.

There is only one person covering depreciation, and that's the buyer, however cleverly it's dressed up. Businesses aren't charities, they don't generously pay it for the customer out of the goodness of their heart. So if you finance a depreciating asset, you're paying twice.

Even interest free finance is generally only a form of discount on something that is hard to sell or has been marked up in the first place to cover the cost of the 'free' interest. Finance costs the business offering it something, and they're not in business long if they're not both covering that cost, paying their overheads and making a profit, all out of what they're taking from the customer.

[hairyben]

Ari said:

There is only one person covering depreciation, and that's the buyer, however cleverly it's dressed up. Businesses aren't charities, they don't generously pay it for the customer out of the goodness of their heart. So if you finance a depreciating asset, you're paying twice.

Even interest free finance is generally only a form of discount on something that is hard to sell or has been marked up in the first place to cover the cost of the 'free' interest. Finance costs the business offering it something, and they're not in business long if they're not both covering that cost, paying their overheads and making a profit, all out of what they're taking from the customer.

precisely.

I've just been looking at van leasing pricing, the driveaway cash price seems to be similar to what you'd pay in gross leasing for 5 years. Except one leaves you with an asset worth 40% or so of the gross. Yet all these people are convinced its the best. Hiring/leasing/renting anything long term is never cheaper, maybe some specific tax write off sits make it attractive though.

Me, my dads advice as a 16 year old kid starting an apprenticeship on the leccy board to wear a shirt and tie first day to make a good impression. In a very "them and us" working environment it marked me out as not one of the lads, I didn't have the brownosing requisred to be one of the engineers there and I think I was still paying the price for it 6 years later.