Is it wise to invest my cash on hand to recoup interest paid on car loan?

[gerald_g]

This perhaps is the common dilemma for cash buyers.

If you have the money to pay for a vehicle in cash, unfortunately, you can't get in line to get the vehicle that you want since you will pay in cash - Is it wise to invest the money you have to recoup the interest (maybe 6-9%) I will pay annually to dealers?

Or maybe the better question to ask is - Where could we invest, if our money diminishes every month due to monthly amortization?

[_Qwerty_]

you can try UITFs.. PNB is offering it..

example computation if you had 100T and invested it last 2010..

[uls]

ganito...

like he has 1M in cash to buy a car but he can only get the car he wants if he buys thru installment

so he wants to invest that 1M to earn what he's losing in interest payment

the money he's investing is being used to pay monthly installment so he's taking out money every month

what kind of investment can earn back the interest while the capital is being reduced every month?

[uls]

how about investing in something that can earn the monthly car payments

like buy a condo and rent it out so the rental income goes to paying the monthly car payments

[jhnkvn]

You do know it's unethical for dealers to favor installment plans over cash right? That's why Toyota Philippines' Chairman and CEO once scolded Toyota dealerships for abusing T86 buyers before. Truth be told, it's better nga for them to just accept cash straight-out as this adds into their liquidity pile. But they're facing the same problem as yours -- where do I invest the cash?

Tama si uls, you go for income-generating investments.

As for that UITF, that's actually a rather poor performance. 45% in 3 years means around 13% compounded annual performance. The US' S&P 500 performance within a similar time frame is 48.75% (Oct 15, 2010 - Oct 17, 2013). And to think the US is in a slowdown and investors looked at the Philippines as a shining light.

[_Qwerty_]

ok na yang 45% in 3 years.. dito sa pinas ha.. where else can u invest your money na medyo hindi high risk...

You do know it's unethical for dealers to favor installment plans over cash right? That's why Toyota Philippines' Chairman and CEO once scolded Toyota dealerships for abusing T86 buyers before. Truth be told, it's better nga for them to just accept cash straight-out as this adds into their liquidity pile. But they're facing the same problem as yours -- where do I invest the cash?

Tama si uls, you go for income-generating investments.

As for that UITF, that's actually a rather poor performance. 45% in 3 years means around 13% compounded annual performance. The US' S&P 500 performance within a similar time frame is 48.75% (Oct 15, 2010 - Oct 17, 2013). And to think the US is in a slowdown and investors looked at the Philippines as a shining light.

[kimbon]

how about investing in something that can earn the monthly car payments

like buy a condo and rent it out so the rental income goes to paying the monthly car payments

well, it depends the condo cost vs rental income.
personally i would not invest in condo with a ROI of more than 8 yrs instead I'd rather invest if someone would even offer me a half a million price of pre selling parking slot located in business district, a commercial/residential high rise bldg. I'm here though for a wanted buyer. Anyone's offering? Hehe

[Gecko Guy]

You can try to put your 1M sa VUL... I'm using Sunlife of Canada, in 4 months kumita ng 100K+ yung 1M ko

[1D4LV]

i would prefer paying it by cash.
depreciation + interests would make you at a losing end, which you need to invest it in an investment channel that is more than that.
may maintenance costs pa, gasoline and parking costs.

this way, wala ka ng iniisip.

[_Qwerty_]

sinasabi yata nya yung scheme nang mga SA ngayon na pag cash buyer ka eh hindi ni e entertain.. lalo na pag bago yung model.. gusto nila in house financing bago ka mabigyan nang unit..

in order to get your money back.. eh kailangan you have twice the amount.. yung una for the car then yung second for investment.. so kailangan yung kikitain nung investment mo mas malaki don sa in house interest na i charge nung dealer..

[uls]

in short -- if the money you're investing is the same money you're using to pay the car there is no investment that can earn back the interest coz your capital is being eroded every month

you need capital that stays invested

[jut703]

If you're after capital gains alone, VULs lose out to UITFs. The only advantage is the insurance coverage.

Info on performance of different funds are available on the internet. Sun Life VUL grew 17.7% in 2014, while BDO grew 20.83% IIRC.

Also, VULs have higher admin fees and you usually can't withdraw them right away, so they're really bad for the short term (<5 years).

Best way to gain is still through directly investing in stocks, especially in the current bull market.

[Gecko Guy]

If you're after capital gains alone, VULs lose out to UITFs. The only advantage is the insurance coverage. --- Please give example...

Info on performance of different funds are available on the internet. Sun Life VUL grew 17.7% in 2014, while BDO grew 20.83% IIRC. ---- How much are being passed on to the depositors??? That's the question.... how much interest are banks giving right now for so called Time deposits? My 100K before yielded 3-5K/annually whereas my 100K vul already got me 10K/4 months!

Also, VULs have higher admin fees and you usually can't withdraw them right away, so they're really bad for the short term (<5 years). ---- Not true at all, I just withdrew 100K interest last week...If you're going to withdrew the whole amount/policy then you'll be charge for sure but that's normal.

Best way to gain is still through directly investing in stocks, especially in the current bull market.

---- This I agree too but since i don't much about investing in stocks directly that's the reason why I'm letting somebody do it for me. I'm not good with it.

[jut703]

UITF trust fees are just 1.5%.

[Gecko Guy]

*jut: OT na tayo sir pero, kung ganoon kaganda ang UITFs na sinasabi mo, then can you tell us how much na kinita mo sa mga UITFs mo now? (I assume that you have UITFs already) Ako kasi I'm citing my personal experience..... I'm just telling na base sa experience at research ko, mas malaki kinikita ng investment ko ngayon sa VULs ng Sunlife kesa sa mga VULs/UITFs, etc offer ng mga banks.
I'm not against banks or trying to sell anybody VULs ng Sunlife but I'm just giving options kay TS based on my personal, actual experience and nothing else.
Para di OT ---- It's wise to invest your cash on hand TS to recoup/offset the interest that you incur in your car loan. Where to put it? Sinagot na nila and my input....not in banks but in VULs ng Sunlife of Canada. Why? Because mas malaki kinita ko sa VUL ng Canada vs. Bank in 4 months! Is this 100% good? Definitely NO, I'm just stating the trend from Nov 2014 to March 2015.
Cheers!

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*jut: OT na tayo sir pero, kung ganoon kaganda ang UITFs na sinasabi mo, then can you tell us how much na kinita mo sa mga UITFs mo now? (I assume that you have UITFs already) Ako kasi I'm citing my personal experience..... I'm just telling na base sa experience at research ko, mas malaki kinikita ng investment ko ngayon sa VULs ng Sunlife kesa sa mga VULs/UITFs, etc offer ng mga banks.
I'm not against banks or trying to sell anybody VULs ng Sunlife but I'm just giving options kay TS based on my personal, actual experience and nothing else.
Para di OT ---- It's wise to invest your cash on hand TS to recoup/offset the interest that you incur in your car loan. Where to put it? Sinagot na nila and my input....not in banks but in VULs ng Sunlife of Canada. Why? Because mas malaki kinita ko sa VUL ng Canada vs. Bank in 4 months! Is this 100% good? Definitely NO, I'm just stating the trend from Nov 2014 to March 2015.
Cheers!

[jut703]

I don't think you quite understand the volatility of the market. It just so happened that when you placed in your money, the market was down and picked up over the course of 4 months. It could have very well been the opposite, wherein a market correction could've occurred over the same 4 months, and you could've lost an equally large amount.

But if you wanna compare, my index fund (just follows PSEi) has gained 10% in less than 3 months since the PSEi has gone from 7,000 to 7,800 since December.

I've had better gains with stocks, some growing 30% in the span of a few months. Or if you wanna cite the curious case of Double Dragon, which doubled it's IPO value in just a few days.

[Gecko Guy]

*jut: Oo nga sir, di ba sinabi ko na wala ako alam dyan At na-swertihan ko lang din yung paglagay ko ng money sa VUL ko....Binigay ko lang naman yung share ko sa thread, di ko naman sinabi uy bili na kayo ng VUL ng Sunlife ah.
Anyway, if you're that good in your craft, maybe you can share it para naman malaman namin paano yang stock market, para happy din si TS dba?
Pasensya na wala akong alam sa PSEi at Double Dragon na sinasabi mo eh...

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*jut: Oo nga sir, di ba sinabi ko na wala ako alam dyan At na-swertihan ko lang din yung paglagay ko ng money sa VUL ko....Binigay ko lang naman yung share ko sa thread, di ko naman sinabi uy bili na kayo ng VUL ng Sunlife ah.
Anyway, if you're that good in your craft, maybe you can share it para naman malaman namin paano yang stock market, para happy din si TS dba?
Pasensya na wala akong alam sa PSEi at Double Dragon na sinasabi mo eh...