Beginner Investing: Cash for Clunkers, Part II
You'll find "beginner investing" courses on the internet. I wonder if they'll include this "cash for clunkers" program as a smart investment?
I must admit I didn't really focus on this "cash for clunkers" program at first. But now it's all over the news. In fact, Congress has now extended the program, adding another $2 billion into the original $1 billion "pot" of money designated for those $4,500 reimbursement checks.
Any beginner investing course should talk about "value" and the importance of buying an investment when it's cheap. So I had thought there might be some opportunities out there for lovers of old muscle cars or clunky SUV's. But, alas, it's not to be. It turns out that there's no opportunity to pick up one of those old clunkers people are trading in. The old clunkers are being put to sleep. Too bad. So much for the value play on clunkers.
Another beginner investing idea would be your return on investment. $4,500 right off the bat seems like a pretty good return, doesn't it? Does that qualify your new car as an investment?
Hold on. Cars are a "depreciating asset." That means they lose value over time. But you do get that check, right?
Hold on again. It's not like you're not going to pay for the new car. If you buy a $25,000 car, you still have to come up with the $25,000 (less the $4,500 cash the government provides). Oh, maybe you get some trade in for your clunker. But if it's really a clunker, there's probably not mush value left there. So it'll cost you.
This doesn't seem to be working out very well as something for a beginner investing course. You're spending your money on something that decreases in value over time. Maybe you're even spending money you don't really have at the moment - which means you'll have to go into debt to get the new car, even with the $4,500 rebate check.
Well, we'll have to leave the decision to each individual out there. Just make your own decision prudently. (I must admit I did check out whether an older car I have might qualify for the program. It didn't. But I confess I did feel the temptation to "take advantage" of the program.)
That still leaves how this program benefits society in general - the common good. It certainly will move new cars off the lots - good for some car companies. And some individuals who prudently take advantage of the program may be better off with a new car. But will that be good for the rest of us?
I must admit I didn't really focus on this "cash for clunkers" program at first. But now it's all over the news. In fact, Congress has now extended the program, adding another $2 billion into the original $1 billion "pot" of money designated for those $4,500 reimbursement checks.
Any beginner investing course should talk about "value" and the importance of buying an investment when it's cheap. So I had thought there might be some opportunities out there for lovers of old muscle cars or clunky SUV's. But, alas, it's not to be. It turns out that there's no opportunity to pick up one of those old clunkers people are trading in. The old clunkers are being put to sleep. Too bad. So much for the value play on clunkers.
Another beginner investing idea would be your return on investment. $4,500 right off the bat seems like a pretty good return, doesn't it? Does that qualify your new car as an investment?
Hold on. Cars are a "depreciating asset." That means they lose value over time. But you do get that check, right?
Hold on again. It's not like you're not going to pay for the new car. If you buy a $25,000 car, you still have to come up with the $25,000 (less the $4,500 cash the government provides). Oh, maybe you get some trade in for your clunker. But if it's really a clunker, there's probably not mush value left there. So it'll cost you.
This doesn't seem to be working out very well as something for a beginner investing course. You're spending your money on something that decreases in value over time. Maybe you're even spending money you don't really have at the moment - which means you'll have to go into debt to get the new car, even with the $4,500 rebate check.
Well, we'll have to leave the decision to each individual out there. Just make your own decision prudently. (I must admit I did check out whether an older car I have might qualify for the program. It didn't. But I confess I did feel the temptation to "take advantage" of the program.)
That still leaves how this program benefits society in general - the common good. It certainly will move new cars off the lots - good for some car companies. And some individuals who prudently take advantage of the program may be better off with a new car. But will that be good for the rest of us?
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