Porsche Fund / Frivolous Purchase Fund
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Many us embedded within the rat race today are super focused on saving for retirement. We regularity and consistently deposit money into various retirement accounts to ensure that we have enough money to live on when we turn 65 (or whatever age we decide to pack it in and retire). This is all fine and dandy, but what about setting aside some money every month into an aggressive investment account with the sole purpose of buying that ultimate dream toy – {insert your own dream toy here}. For me, I would really like to own a Porsche 911 one day.
There must be some fun in life and we can’t be totally serious all the time. So what would it take to buy that car one day? I quickly ran some numbers and here is what I cam up with:
Assumptions:
1. To purchase my 911, I will need about $150,000 25 years from now.
2. My market return on my investments will be about 10% (I am investing aggressively remember)
3. I am starting with a present value of 0$The Details:
Based on these assumptions, to have $150,000 in cash available to go buy that car outright, I am going to have to invest approximately $127 per month for 25 years. Not to bad – at my current age that would have me buying that car at 57 years old. Not old, but not young either. What if I wanted to have that car by the time I was 40. Well, I really need to get serious here – still assuming a 10% return, I will need to save approximately $1100 per month.
I am going to be pretty honest. I have a young family – we need all the money we get. I already contribute 16% of my earnings towards saving for retirement. Doing an extra $1100 per month is not going to happen. Could I do the $127 per month? Probably – I will need to really think about it – but it would sure be fun trying!! The next step is convincing my wife this is what she needs as well….
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2 Comments on this post
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empty spaces said:
if you want that porsche, you better start making more than 10% on your money. did you factor in inflation?
May 9th, 2006 at 10:38 pm -
Kanwal Sarai said:
You could always rent one for the weekend or a week.
Alternatively consider purchasing a used one maybe 3yrs old?
I’ve seen a 5yr old Porsche that was in absolutely mint condition selling
for 35% off it’s original purchase price….you gotta love depreciation.May 10th, 2006 at 7:49 am
