Can I afford to buy my dream car?

By FMB on 

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Caption: Photo by Niklas Veenhuis

Jonathon has always been a petrolhead and had a fascination for sports cars in particular. Over the years he has always owned nice cars but usually second hand. He was pretty well off but it would have been far too frivolous to spend serious money on a supercar. Also, he had no idea how much money he was going to need in future so to splurge a significant amount in his 50’s seemed risky.

5 years ago Jonathan approached FMB. He had several pensions from different jobs and he had no idea what they were all worth or how much of a pension they would bring. He wanted a complete overhaul of his finances.

When we work with clients to create a full financial plan, we start at the beginning and find out about our client’s interests, family, hopes and aspirations. In this case Jonathon’s love of cars was apparent straight away. He had actually been to look at a Maserati in the showroom and walked away earlier that month.

By consolidating most of the pensions, which were money purchase schemes not defined benefit schemes, it was much easier to create a coherent investment strategy. One of the older pensions had tax benefits which would have been lost if it was moved so that remained untouched.

By creating a cashflow model of all Jonathon’s assets it was clear that even allowing for the car purchase, there was more than enough to allow his lifestyle to continue for the rest of his life (we assume 100 years for everyone to begin with!).

For his next meeting at our office 6 months later, Jonathon was proud to arrive in his brand new Maserati Granturismo Sport which had cost over £80,000 and he was more than happy for his fellow FMB petrolheads to come and have a closer inspection!

Over the last 5 years since he made that decision, markets have been favourable and he has already made the money back in investment growth, but he could have afforded it regardless. The evidence was in the cashflow model.

So for the last 5 years, instead of wishing he had the car, Jonathon has actually been driving the car with a huge smile on his face…at least that’s how we like to imagine it!

It doesn’t really matter what your dream is, the point is life is short and why wait until it’s too late if you can afford it now.

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