If you built a car to suit your personal tastes…

It’s not an investment…

There is not a lot more that I love than to browse classified listings of cars and other oddities. Cars especially. I love cars. I own them, I’ve raced them, I love driving them, and thinking about them. Hell I’ve invested in them…

The key word here is invested. Many people misuse the word. An investment as Wikipedia puts it (I’m ad libbing it a bit here), is where you place a dollar into a vehicle (not a car) with some expectation of a beneficial return in the future. For the stock market or real estate (and without belaboring my opinion on the matter here) there is a reasonable expectation that you can “buy low” and later “sell high” or reap an ongoing cash flow return. When you spend money on something you love, this is not an investment- this is a commitment. For example, I recently read an advert. For a car I love, the Subaru WRX STI. This is a turbocharged sport modified variant of the common Subaru WRX. The gentleman who posted the ad stated something to the effect of “don’t bother wasting my time with the ‘they’re only worth $15k, I’ve invested over $55k”. Reality check brother, do you expect a beneficial return from your investment. 

In theory if the method of spending money on a relatively common car by customizing it would result in a beneficial outcome, the $55k “invested” should reasonably make you money, i.e. you should sell it for some profit, let’s say 20% or a value of $66k. Now I know people spend money stupidly, but, no one would spend that kind of money buying someone else’s taste, unless that person happens to be a famous car tuner in which case, there is value in the brand of the person who modified the car. 

What I’m getting at is, while you may feel you’ve invested into the project and spent a large some of money on the project, it is not an investment if you do not make a profit. Unless of course your beneficial gain is that you will part ways with your car that has cost you a lot of money. This intangible gain may be a justification for the use of the word invested in the car. But be careful in fooling yourself. 

So…how do you actually invest in cars?...coming soon…