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Partner wants to buy a Super Car worth 150k

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  • fatlittlepig
    replied




    Okay, here’s a compromise. There are several funds with 10 annualized returns over 30% and YTD returns over 50%. Clearly they all escaped your Morningstar research (FLP and Goggles). How about I name a fund that I don’t own? You clearly don’t even think they even exist.
    Click to expand...


    not interested, proves nothing.

    Leave a comment:


  • EntrepreneurMD
    replied
    Okay, here's a compromise. There are several funds with 10 annualized returns over 30% and YTD returns over 50%. Clearly they all escaped your Morningstar research (FLP and Goggles). How about I name a fund that I don't own? You clearly don't even think they even exist.

    Leave a comment:


  • fatlittlepig
    replied
    We all know what's going on here, don't feed the troll.

    Leave a comment:


  • afan
    replied
    To the original question:
    If one is buying and selling cars as a business, then it could be a good idea to borrow to fund it. I gather this is routine for many businesses, not just cars. For some businesses the profits on sales are large enough to cover all transaction costs, fees and maintenance plus interest on the loans. If so, this could be a good way to increase the scale of a profitable business.

    If it is an expensive toy, then buy it for cash.

    As others have pointed out, home remodeling rarely turns a profit. It can if the home is so far below market that the price is depressed. Around my neighborhood, people are buying up older homes, doing extensive remodels and selling at sunstantial profits. There are buyers who want a fancy house but don't want to do the work themselves. As the Crash illustrated, this is a good business until the market turns down. Of course, one has to sell as soon as possible after the remodel. A spiffy nee kitchen is only trendy and brand new for a short while.

    Virtually impossible to come out ahead on a vacation unless you get lucky at the roulette table.

    Boats could be like cars if one is a boat dealer. Otherwise they are yet another waste of money. Same for fancy restaurants (never pay off), clothes (astounding depreciation when bought new) and jewelry (could be profitable for a good dealer, otherwise a terrible investment). All part of a consumerist delusion that the secret to happiness is high consumption, on what it seems not to matter.

    We don't spend large amounts of money on any of the above. Our consumption patterns have not really changed since I started working. We live like the schoolteachers who are aome of our best friends, although some do a lot more travel than we do.

    Leave a comment:


  • jacoavlu
    replied
    the thing I don’t understand is why your introduction to us was the “Can You Afford It” about your two kids’ anticipated higher education expenses. Seems such a ludicrous question for you to reach out and ask.

    Leave a comment:


  • EntrepreneurMD
    replied





    Guess I now see why people in my position don’t share their success. I feel a lot of what I contribute is above the heads of many here…but not all. It seems a lot more complicated at the decamillionaire level, probably what’s throwing people off, but I’m sure there are others here who can relate or see my roadmap to get here (and beyond). 
    Click to expand…


    If all else fails, it’s ALWAYS a good idea to insult the majority. Always.
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    Some have let me know they don't understand the numbers, so working to clarify. I agree it's complex.

    Leave a comment:


  • EntrepreneurMD
    replied
    Afan, now I remember where the $220K came from. It was not a vehicle purchase price, If you look back, it was loans against several automobiles, not one. We have kept 4 at a time for the last decade.

    Leave a comment:


  • EntrepreneurMD
    replied




    Repeat, the topic was about investing in the market using debt on another asset. It wasn’t about you. Thank you for understanding.
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    Thanks, I mistook it as I am the one who noted using the vehicle as collateral for low cost 2% loans.

    Leave a comment:


  • EntrepreneurMD
    replied




    Why in the world would someone in the position described have a 2M emergency fund? If one had such a fund, why would they need a HELOC to back up the e fund? If someone is risk averse, how would they get to the poiint of ever using the HELOC, which the post implies he/she does?

    If someone is risk averse, why take on all this debt?

    The secret to wealth is arbitraging 12-18 months of zero interest on the amount put on credit cards?
    Saving hundreds of thousands by coupons and rebates?

    If one can profit from borrowing money and using it to buy an expensive toy couldn’t one profit more by using that borrowed money to invest in a profitable enterprise? Say, leverage up to pour money into those, unnamed, mutual funds that return 30% per year?

    I would love to hear the details on any of this. As presented the claims make no sense.

    They idea of someone with a $13M networth spending $150k, $170k or $220k (numbers keep changing) on cars is so grossly irresponsible that I hope no such people actually practice medicine.

    But this is certainly entertaining.

    Now I have to go climb in one of my helicopters that have various aircraft carriers in the cargo bays. All solid gold, of course. Made my money by collecting couch change, borrowing to the limit, using the borrowed money to buy solid gold mansions and putting all of some other money in hedge funds that return 20,000% every year. Really. Every word of that is exactly true.
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    Hi Afan,

    Regarding statement 1, My annual expenses are just under $2M, so the emergency fund is 1 year's expenses. A bit longer than the recommended 6 months. I do have other plans with the funds as opportunities come along, so a little bit of dry gunpowder there too. I will, in the near future, be taking about $350K of it to pay off my ARM as it will be resetting in a few months to a rate higher than I get on my CD's. Regarding the HELOC, I believe I specified in this string that it's untapped, and has been so for a few years now given the cash reserves. It's there as back up for a 2007 type of economic event. Generally, the larger one's business/endeavors grow the larger one's risk gets.

    Regarding statement 2, the debt is at 0-3.5% interest and was required to complete construction of a 16K sq ft office building. The interest rate on my cash reserves is at 1.5-3% essentially a wash but the cash reserves are maintained to protect cash flow. I plan to pay off all debt within the next 3-5 years. Why take on the debt. It now generates for me $360K in commercial real estate leases, the real estate depreciation gets me about $80K/year in depreciation deductions, and over the long term the value of the property should appreciate. There are also unlimited deduction for property taxes, loan closing costs, etc. vs. the new limits on residential.

    Regarding statement 3, borrowing against other people's money at 0% does help build wealth. There is no secret, it's just one of many methods and the impact is more beneficial the larger the amounts you are working with. With almost $2M in annual expenses, you can estimate for yourself what impact couponing, rebates, credit card rewards and the like have on finances, including sales tax.

    Regarding statement 4, you are correct. One could profit more investing the entire automobile purchase price into the markets rather than leverage a depreciating asset. As I specified earlier in the string, that would be an impractical argument against buying any depreciating asset you desire - whether it's an automobile, a boat, a plane, furniture, appliances, vacations, Starbucks and so forth. So my argument is if you are going to own it anyway, why not make money off of it. Some even contract their cars to exotic rental companies to earn income off of those renting.

    Regarding statement 5, I'm glad to provide more details if desired so it makes more sense. I just don't provide details on sector funds as it often initiates disagreement with the index fund crowd. Yes, I have owned them for a few years now.

    Regarding statement 6, I'm sorry you feel a car purchased for $172K (I specified details of the purchase price earlier in the string) by someone with a $13M NW is grossly irresponsible. Perhaps I should consider selling it. Keep in mind I'm only in my mid 40's with a 7 figure income, so there is plenty of future income in addition to the current assets to cushion the long term financial impact of the acquisition. The $150K referenced is regarding OP's amount in general for a supercar. Not sure regarding the $220K, perhaps that was someone else or I made a typographical error, I can go back and look if you point it out to me.

    Regarding statement 7, I'm glad it's entertaining. I also hope it helps some here. I know I learn from others.

    Regarding statement 8, others not believing what's true has no impact on me but can limit your perception of what's achievable. The funny thing is there are other primaries around me that have achieved more success. Not sure why some think I can't have more successful people around me, although my wealthiest acquaintances are not physicians.

    Thanks.

    Leave a comment:


  • Panscan
    replied
    Also I don't understand " a boat is something people either have or don't"

    OK? So that makes it not a bad idea financially? People spend tens to hundreds of thousands on boats which are rarely used. Again if it's what you want, so be it. But I'm not sure how thats better than a car. Boats can also be very dangerous. Surrounded by people drinking, who have no idea what they're doing. Going 60 on a boat feels like 150 in a car unless you have like a 40 foot speedboat.

    Its all the same stuff, spend your money how you want to as long as you meet your goals. I don't understand the need to say this way is silly and this way isn't.

    The home remodel thing though made me chuckle as they inevitably cost twice the original planned price and basically no one is making money on a remodel. You also can in fact lose your house on a remodel as the recent Bogle head post shows.

    Leave a comment:


  • Panscan
    replied
    Who says they are doing illegal stuff on road? If you spend 200k on a performance car there's a decent chance you're going to track it at some point.

    Also the kitchen remodel is a horrible analogy. Make money? Get real. Thats what everyone tells themselves before they pour 100k into something that nobody else wants. You do it because you want the kitchen how you want it ( just like other home remodels). Doing it to make money? Maybe like 30 cents on dollar.

    Leave a comment:


  • afan
    replied
    Why in the world would someone in the position described have a 2M emergency fund? If one had such a fund, why would they need a HELOC to back up the e fund? If someone is risk averse, how would they get to the poiint of ever using the HELOC, which the post implies he/she does?

    If someone is risk averse, why take on all this debt?

    The secret to wealth is arbitraging 12-18 months of zero interest on the amount put on credit cards?
    Saving hundreds of thousands by coupons and rebates?

    If one can profit from borrowing money and using it to buy an expensive toy couldn't one profit more by using that borrowed money to invest in a profitable enterprise? Say, leverage up to pour money into those, unnamed, mutual funds that return 30% per year?

    I would love to hear the details on any of this. As presented the claims make no sense.

    They idea of someone with a $13M networth spending $150k, $170k or $220k (numbers keep changing) on cars is so grossly irresponsible that I hope no such people actually practice medicine.

    But this is certainly entertaining.

    Now I have to go climb in one of my helicopters that have various aircraft carriers in the cargo bays. All solid gold, of course. Made my money by collecting couch change, borrowing to the limit, using the borrowed money to buy solid gold mansions and putting all of some other money in hedge funds that return 20,000% every year. Really. Every word of that is exactly true.

    Leave a comment:


  • Tim
    replied
    Repeat, the topic was about investing in the market using debt on another asset. It wasn’t about you. Thank you for understanding.

    Leave a comment:


  • CordMcNally
    replied


    Guess I now see why people in my position don’t share their success. I feel a lot of what I contribute is above the heads of many here…but not all. It seems a lot more complicated at the decamillionaire level, probably what’s throwing people off, but I’m sure there are others here who can relate or see my roadmap to get here (and beyond).
    Click to expand...


    If all else fails, it's ALWAYS a good idea to insult the majority. Always.

    Leave a comment:


  • EntrepreneurMD
    replied
    Goggles, if I could do fiction this well, I'd be writing fiction books till I'm blue in the face. I can't fathom either.

    Unfortunately, everything I've said is true. Yes, the Ferrari in this post is my actual car. Yes, my daily driver is an M6. Yes, I own a 3 provider practice and a pharmacy, 19K sq ft in commercial real estate, the big house, an oversized emergency fund (I'm very risk intolerant), the mutual funds referenced do exist and I have owned them for years. From my private messages and likes, it seems most already know this. Obviously to provide absolute proof I would have to reveal my identity to all. If it makes you feel better, at least one of the moderators here knows my identity.

    Guess I now see why people in my position don't share their success. I feel a lot of what I contribute is above the heads of many here...but not all. It seems a lot more complicated at the decamillionaire level, probably what's throwing people off, but I'm sure there are others here who can relate or see my roadmap to get here (and beyond).

    At least a lot of my comments get a whole lot of likes, like a dozen or so sometimes. I kind of enjoy the exchanges with FLP too, hope he does as well.

    I am a bit eccentric, preferring sector funds to indexing and preferring to wait until the next big market correction to increase market allocation.

    My brother got a black Tesla 3 last year. Very sharp and just a tad quieter than my Novitec exhaust!

    Leave a comment:

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