How Much is Your Net Worth?

(17-12-2014, 09:36 AM)paullow Wrote: I tend not to look at cost of car vs % of net worth as gauge of affordability. Net worth can be very high but income not. Then it might be a perilous ratio. Imo,
it shd be total car expenses per year verses income.
for a very popular toyota altis sedan, all in ie depreciation, petrol, maintenance, insurance, parking, fines etc it might work out to nearly $20kpa.
So if a person earns 200kpa, an altis would be a very comfortable 10% portion of his salary.

Nice discussion on the issue of car.

Agree that comparing expense to income is a better way of preservation of capital rather than comparing to net worth. This actually also has implication on how we invest ie do we look at capital value or cashflows as per CF mentioned?

Obviously when I said having a car is a "waste of money" I was referring to leisure use. Car is a REAL asset if it generates income directly or indirectly. So for a sales person that has to travel around, then car is actually an asset.

OTOH if it is just for transport then it may not help as much unless you cut your travel time by 2hrs as Natnavi said, and you have high opportunity cost (which is different for a family man vs a retiree for example). It is also a factor of how convenient you can get transport including taxi or MRT from your house.

Look at it in another way: What would you do with additional SGD20k a year?

I am not sure if taking public transport is LESS condusive in spending time with family though. I find that talking on public transport improves relationship much better than in a car, maybe because of less stress and also probably Hawthorne effect makes conversations more amicable.

I also concur that having a car is not just a simple PnL thing. The priviledge of driving your parents around is a limited "option" that should be exercised while one still can.

(17-12-2014, 01:23 AM)natnavi Wrote: I beg to differ though or I could be one of the few exceptionally cases.

I bought a car because I want to spend less time traveling and more time with my family. I find traveling time is a waste of time and I rather use the time saved with something more meaningful in my life.

Most of the time the car is in the garage is because the car owners are already at home, spending quality time with their family. Why spend 1.5 hours to get from point A to point B, when I can just take 0.5 hours. A round trip will save me 2 hours.

In addition, it is a lot easier to get things done with a car.

The cons are that my expenses will go up.

Weighing the two, I prefer to save my time rather than saving on my expense.

(17-12-2014, 09:36 AM)paullow Wrote: I tend not to look at cost of car vs % of net worth as gauge of affordability. Net worth can be very high but income not. Then it might be a perilous ratio. Imo,
it shd be total car expenses per year verses income.
for a very popular toyota altis sedan, all in ie depreciation, petrol, maintenance, insurance, parking, fines etc it might work out to nearly $20kpa.
So if a person earns 200kpa, an altis would be a very comfortable 10% portion of his salary.

(17-12-2014, 09:49 AM)CityFarmer Wrote: I concur with the bench-marking of car affordability with income, instead of net worth. It consistent with my approach with stock selection, which prioritizing earning, over net asset.

Having said so, the best still a multiple approach mean. Bench-marking with both % of net worth and income, and ROI which include the intangibles as highlighted by cory. Look at all the numbers, then the decision.

Totally agree..

Personally, i think i have lesser cash than a school going kid. My money mostly invested in biz and stock.

I agree with one of the vb that car operating cost should be a comfortable percentage of gross incomes. This is unfortunately not well ingrained in today's youngsters.

Many fail to answer what do they want to achieve at the end of the road. I seen and heard of money investing large sums in biz and people work working to their death beds, but the question of what is one's life goals is often poorly answered or never answered even. Money doesnt solve problems. It is the proper use of it which solves much of life's problems.

I had the same concern about splurging on expensive cars as well. And i could never understand the saying about face and "showing off". How could there be so many more conti cars than jap cars? Its either a case of heavily indebted individuals or seriously wealthy buggers.

When i dumped my expensive conti car (gross running cost exceeding 50 percent of my annual fixed income), i felt great relief because it wasnt what i was longing for. Even though instalments can cover with fixed salary, it was absolute sinful opulence. This opulence is like an addiction which never ends. Dealers, friends and acquaintances still puzzle over the "seemingly illogical" decision to dump the car. This leads to other point that living life is not a game of winning over opinions, but living out what we innately are and believe in.

My point really is, know what is one's goals are in life. Needs and wants are really two different things. The same formula may not work for everyone, but the same questions has to be answered always. Everyone's goals in life are different, so there is really little point in emulating others or (for matter) imposing the same formula on others.

Thats also the same amazing thing about life. There is always more than a few ways to eat the same cake and savour the same taste differently. The same applies to the market. Different ways to eat the same cake and different satisfaction from eating it.

While my account is still recuperating from the massive financial losses due to the car, i learnt an invaluable lesson. Its a learning journey and i have no shame in admitting this silly and foolish mistake.

(17-12-2014, 01:00 PM)vesfreq Wrote: And i could never understand the saying about face and "showing off". How could there be so many more conti cars than jap cars? Its either a case of heavily indebted individuals or seriously wealthy buggers.

When i dumped my expensive conti car (gross running cost exceeding 50 percent of my annual fixed income

Agree with your post but I thought your statement above sounds baffling

(17-12-2014, 12:26 PM)Porkbelly Wrote:

(17-12-2014, 09:36 AM)paullow Wrote: I tend not to look at cost of car vs % of net worth as gauge of affordability. Net worth can be very high but income not. Then it might be a perilous ratio. Imo,
it shd be total car expenses per year verses income.
for a very popular toyota altis sedan, all in ie depreciation, petrol, maintenance, insurance, parking, fines etc it might work out to nearly $20kpa.
So if a person earns 200kpa, an altis would be a very comfortable 10% portion of his salary.

(17-12-2014, 09:49 AM)CityFarmer Wrote: I concur with the bench-marking of car affordability with income, instead of net worth. It consistent with my approach with stock selection, which prioritizing earning, over net asset.

Having said so, the best still a multiple approach mean. Bench-marking with both % of net worth and income, and ROI which include the intangibles as highlighted by cory. Look at all the numbers, then the decision.

Totally agree..

Totally agree.
Put it another way, because most of us have limited capital we have to allot our capital for the best return in terms of most satisfaction to us. And yours may be different from mine.
If i have a car then i may not have holidays lol.

Funny thing is some of us who can have a car and many holidays too, will still give up the car.
Why?
i suppose each one of us has a different sense of the value of money.
Or we are getting too old to drive, like me?

I disagree that owning a car is depending on one income and ROI. I can afford a new basic Japanese sedan without taking any loans, but I prefer to keep it with banks just to earn 2/3% of interest. To me is that if I can afford a car I don't need to buy, but if I need a car then I don't see my affordability.

In short, the benchmark for car ownership should be the monetary and non-monetary benefits the car driver would get. The latter is very much depending on human mindset. For some, driving a car not only convenient but also give them priority in finding a girl friend.

For me simply not, perhaps I am stingy

(17-12-2014, 01:09 PM)specuvestor Wrote:

(17-12-2014, 01:00 PM)vesfreq Wrote: And i could never understand the saying about face and "showing off". How could there be so many more conti cars than jap cars? Its either a case of heavily indebted individuals or seriously wealthy buggers.

When i dumped my expensive conti car (gross running cost exceeding 50 percent of my annual fixed income

Agree with your post but I thought your statement above sounds baffling

Baffling to me in the first place, when I signed on the loan agreement more than 2 years ago and only to feel like a chore maintaining the car. I couldn't understand why I had to burn that much capital. That was history.

Reading the replies makes feel like it is a growing up process.

For the majority of people, the ability to display wealth or to signal: " I have arrived" is very, very important.

A car is the most visible, unlike a Patek Phillipe or country club memberships.
(Then again having a sticker on the car's windscreen with a country club logo is just as good.)

Yet, being the most expensive place on earth to own a car... it confirms that affluence is well and thriving.

"Affluence" is different from "wealthy".

this is a case where networth is worth much more than chasing after that well paid job, that nice car or watch or credit card in e small crowded tiny little red dot
https://sg.news.yahoo.com/chinas-mountai...08423.html

His unheated hut is half way up a mountain with no electricity, and his diet consists mostly of cabbage. But Master Hou says he has found a recipe for joy.

"There is no happier way for a person to live on this earth," he declared, balancing on a hard wooden stool outside his primitive mud brick dwelling.

Hundreds of millions have moved to China's urban areas during a decades-long economic boom, but some are turning their backs on the bright lights and big cities to live as hermits.

Their choice puts them in touch with an ancient tradition undergoing a surprising modern-day revival.

Hundreds of small huts dot the jagged peaks of the remote Zhongnan mountains in central China, where followers of Buddhism and local Taoist traditions have for centuries sought to live far from the madding crowds.

"The Zhongnan mountains have a special aura," said Hou, who moved to the hills almost a decade ago and wrapped himself in a long black robe, smiling as the wind rustled the surrounding woods.

Hou grew up in the bustling coastal city of Zhuhai, next to the gambling Mecca of Macau, but now his days consist almost entirely of meditation, with pauses to chop firewood and vegetables.

"Cities are places of restless life. Here is where you can find inner joy," he said. "Now I'm happy to be alone."

Winter temperatures can drop below minus 20 degrees Celsius and deadly snakes lurk under rocks, but the mountaintops are growing increasingly crowded amid rising dissatisfaction with materialism.

Hou -- who looks in his 40s but says Taoists do not reveal their age -- was recently joined by two apprentices.

Wang Gaofeng, 26, has a wispier beard than his master, and said he had quit a management-level job in China's vast railway system a year ago.

"Watching TV and playing video games are just temporary excitement, like opium. That kind of pleasure is quickly gone," he said, chomping on some freshly boiled cabbage.

- Poisonous mushrooms -

It is a radically individualistic contrast to the collectivist mantras of past decades.

But today's hermits are following a well-beaten historical path, and experts say quiet types have preferred to live alone in the mountains of China for more than 3,000 years.

Taoism -- loosely based on the writings of a mythical figure named Laozi who lived some 2,500 years ago -- calls for an adherence to "the way", which practitioners have long interpreted as a return to the natural world.

Unlike their Western equivalents, religiously inspired outsiders who often shunned society completely, China's mountain dwellers have historically been sought out by politicians.

"Hermits played a political role, they pushed society forward and maintained ancient ideas," said Zhang Jianfeng, part-time mountain dweller and founder of a Taoism magazine.

But the officially atheist Communist Party came to power in 1949, cutting the hermits' political connections.

Anti-religious campaigns reached fever pitch during the decade of upheaval beginning in 1966 known as the Cultural Revolution, when many of the temples and shrines in the Zhongnan mountains were destroyed and their denizens dispersed.

Nonetheless experts estimate several hundred hermits survived the period unscathed deep in the hills, with some even said to be unaware the Communists had taken power.

Their numbers have risen since the government relaxed religious controls in the 1980s.

"Twenty years ago, there were just a few hundred people living in the Zhongnan mountains. But in the last few years, the number has increased very quickly," said Zhang.

"Now perhaps there are too many people blindly moving to the mountains," he added.

"There are incidents every year, people eating poisonous mushrooms, or freezing to death... some people lack common sense."

Much of the hermit revival can be attributed to American writer Bill Porter, who in the 1993 published the first book about the mountain dwellers.

It was a commercial failure in the US, leaving Porter living on government food stamps. But its 2006 Chinese translation became a hit, selling more than 100,000 copies.

"In the 1980s no one paid the hermits any attention, because everyone had a chance to make a buck and improve their lives materially," said the shaggy-bearded author. "People thought it absurd to go in the opposite direction."

Now he notes more well-educated former professionals among the denizens of what he calls "hermit heaven", and one who did not want to be named told AFP he was a government official on sabbatical.

"You get a much wider mix, people who are jaded or disillusioned in the current economy and are seeking something more," said Porter.

- 'Inner peace' -

China's decades of breakneck economic growth have created a substantial middle class, but a few of them now openly question materialist values.

Around a dozen young people from across China live in a clump of wooden huts which acts as a testing ground for aspiring hermits, albeit outfitted with electricity and a DVD player.

Liu Jingchong, 38, moved in after quitting a lucrative job in the southern city of Guangzhou this year, and plans to live completely alone.

"I felt life was an endless circle: finding a better car, better job, a better girlfriend, but not going anywhere," he said, sitting cross-legged on a cushion.

"When I'm alone on the mountain, I will just need shelter, a pot, and seeds from the pine trees."

More than half the hermits in the range are said to be women, and Li Yunqi, 26, spent several weeks at the cottages.

"I like the life of a hermit, living on a mountain. I came here for inner peace and to escape the noise of the city," she said, wearing a puffy pink coat and fiddling with a smartphone as an off-road vehicle carried her down a muddy path to civilisation.

OK wow, nice to see the discussion flowing from my initial post, and how the thread has sort of morphed into a "car discussion thread", haha.

In relation to what valuebuddies, vesfreq and specuvestor have mentioned, yes I feel that it is kind of ridiculous to see so many top-end car models on the streets. Most are of the BMW, Peugeot, Volkwagen, Mercedes or sports car types (which are the bestsellers incidentally), rather than the Hondas, Toyotas or Hyundais. It could be a case of being heavily indebted (what Chinese like to call punching your face to resemble a fat person), or they could be drawing on rental income from their multiple properties to feed the installments.....

My experience is that I've never needed the car, not even when my daughter was born 5 years ago. The positive is that I live rather close to the city and also have straight buses and trains to Orchard Road, so granted this made life a little more bearable. But we still had to "struggle" up the buses/trains with the pram back then, but it wasn't that big a chore. And I do agree that time spent on the buses and trains allows me to connect better with my family - I always get to joke around with my girl and ask my wife about her day. I seriously couldn't do that if I was driving (I know this for a fact because I do borrow my parent's car now and then, and I need to concentrate on the road!).

One thing I also do not understand is the purchase of a car as a status symbol. Why should it be so desirable to continually impress people whom you either don't know, or simply don't care about? I ask myself whether Singapore is simply too stressful, or too boring (maybe both?); and whether our goals and priorities have shifted so much such that only material items can bring us joy and satisfaction (if only fleeting). I also lament how our society is turning more and more materialistic by the day, with around 40,000 people owing more than a year's worth of salary due to over-spending.....

I think I find a lot of satisfaction in reading, just being with my family, enjoying good music and yes, eating (which may explain my increase in weight over the years!). If everyone out there could understand that happiness need not be about the next car to buy, the next bag to get and the next watch to wear, I think this world would be overall a much better place......