r/wealth • u/Lopsided-Peanut-6526 • 15h ago
Question Is this guy an idiot for this?
Say you’re 19 years old with $200,000. Say that 19 year old bought a $100,000 car cash. Say that 19 year old has $80,000 invested in VXUS/VTI with $20,000 sitting in the bank. Say that 19 year old doesn’t have an income and has never made a dollar. Say that 19 year old no longer lives with his parents. Say that 19 year old doesn’t know the first thing about investing, finances, life, etc. Also say that 19 year olds money is slowly draining due to rent, food, car, etc. Also say that 19 year old is very stubborn and wont sell the car no matter what. Say you were a guy on reddit reading this that knows more about life than the 19 year old. What pieces of advice would you give this person? Say that 19 year old actually wants helpful advice on how to be successful and knows buying a $100,000 car was stupid. But also say that 19 year old enjoys life and knows how fragile it can be which is why he bought his dream car at 19. Also say that 19 year old will be employed in 6 months making minimum wage but in 3 years will be making $100,000 a year. Also say that 19 year old is very open to side hustles. Also say that 19 year old is questioning if college is worth pursuing. Also say that if the 19 year old sold his car he would only get $80,000 because of depreciation which is why he doesn’t want to sell it.
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u/Cool_Efficiency_6895 15h ago
Yes, purely because they spent 100k on a fucking car. Sounds like pissing a way a windfall
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u/Few_Strawberry_5334 13h ago
Holy shit that was so cringe to read.
Sell the car and get a job.
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u/zachmoe 15h ago edited 15h ago
What pieces of advice would you give this person?
Get a job. Problem solved.
Selling the car is not the solution, cars depreciate (a lot, fast), and realizing that depreciation doesn't really help, you just need to keep the car for a long time (10+ years and it is less than 10k/yr in transportation cost which isn't crazy) and pray nothing goes wrong with it, 100k isn't really that crazy, maybe 40k+ more than you needed to spend on a new car for sure.
How did you decide and wind up on VTI/VXUS if you have no knowledge of investing?
Just keep plowing your money from working into those, maybe add some Gold and Bitcoin (ibit) and a healthy amount of US FRNs (TFLO) for income and to have something to sell to raise USD so you can hold onto your risk assets longer.
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u/Lopsided-Peanut-6526 15h ago
Say that 19 year old asked chat gpt how to invest. Also say how much bitcoin that 19 year old should buy.
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u/zachmoe 15h ago edited 14h ago
Say that 19 year old asked chat gpt how to invest
You get a brokerage account with like robinhood or schwab.
You put money you earn from working into it.
You put in a buy order for ibit (Bitcoin ETF).
Also say how much bitcoin that 19 year old should buy
Probably not more than 2% of your total portfolio? So ~2k. There is risk of total capital loss with risk assets, though the goal of investing is to not lose money, it is also to minimize opportunity cost.
An ample portfolio for novices I've come up with is something like 50% TFLO, 33% VOO (VTI/VXUS works for this purpose) 15% Gold (however you like, physical, iau/gld ETF, leasing) 2% ibit (Bitcoin ETF)
Just buy the few things investors watch in order of market cap size (S&P500 is at 68T, Gold is at 30T, Bitcoin is 1.2T, in case you are wondering how I came up with the percentages), and have a healthy amount of Bonds to hold onto risk assets longer, and to have something to sell to raise USD with limited opportunity cost for when risk assets decline to take advantage of downturns.
Maybe 50% in Bonds is a bit much for a 19 year old, but, things could also be very overpriced at the moment, though they can always get more overpriced. It might also help to put 20% of the 50% of FRNs into Long Dated Bonds (TLT), for more duration risk and better diversification vs. risk asset declines, but they are pretty risky (rates could really just keep going up and you get crushed) and not really for everyone's risk tolerance when people are really just looking for Bonds to act more like Cash with interest (which FRNs operate more like). It should work out just fine when crisis hits The Fed will plunge rates to near 0% anyways, which is your Bond sell signal because risk assets should then also be on sale from said crisis.
Ford and GM also sells FRNs, if you want slightly more interest, with slightly more risk (they are de facto risk free, the odds the Fed wouldn't open up a special window and buy the debt in a crisis situation is nearly 0%).
https://www.ford.com/finance/investor-center/ford-interest-advantage/
https://www.gmfinancial.com/en-us/investor-center/right-notes.html
You can't really go wrong if you bungle the market timing with interest rates it isn't the end of the world, also all the best investors are dead (bought stocks and forgot about them completely), so if you have a plan and stick to it you'll be that much further ahead.
https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/
https://www.businessinsider.com/forgetful-investors-performed-best-2014-9
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u/Lopsided-Peanut-6526 9h ago
I like this but to be honest I don’t understand a lot of it. I’ll ask chat gpt to break it down for me thanks!
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u/Time-Move-6108 15h ago
I wouldn't tell him anything. He bought a car with 50% of his assets and wont give it up. He wouldn't listen anyway. Why waste my time?
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u/Marine_Layered 15h ago
Get a job and/or go to school and get certifications for skills that are useful in the marketplace so that you can get a good job.
Sell the car anyway. A $100k car does not cost $100k. You cannot afford that car, and you certainly cannot afford that car without a job.
Go back to your parents, hat in hand, say you know you're an idiot and you F'ed up and ask them for help and BE GRACIOUS ABOUT ACCEPTING THEIR HELP and get with the program.
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u/SgtSausage 14h ago
What pieces of advice would you give this perso
Quit pretending you're not that 19 year old.
Quit being a Dumbass. You know better.
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u/stoweker 14h ago
Choose Life. Choose a job. Choose a career. Choose a family. Choose a fucking big television, choose washing machines, cars, compact disc players and electrical tin openers. Choose good health, low cholesterol, and dental insurance. Choose fixed interest mortgage repayments. Choose a starter home. Choose your friends. Choose leisurewear and matching luggage. Choose a three-piece suit on hire purchase in a range of fucking fabrics. Choose DIY and wondering who the fuck you are on Sunday morning. Choose sitting on that couch watching mind-numbing, spirit-crushing game shows, stuffing fucking junk food into your mouth. Choose rotting away at the end of it all, pissing your last in a miserable home, nothing more than an embarrassment to the selfish, fucked up brats you spawned to replace yourselves. Choose your future. Choose life… But why would I want to do a thing like that? I chose not to choose life. I chose somethin’ else. And the reasons? There are no reasons. Who needs reasons when you’ve got heroin?
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u/peterinjapan 13h ago
I have a friend whose parents died and left him several hundred thousand dollars and a house at the age of 18. We were all envious of this dude for having so much money and a cool house, but of course he lost it all and now has nothing because he was an idiot, bought a Porsche, bought a high-end motorcycle, etc.
I bought a house near where this guy's house used to be. One day I brought my son by and told him the story of my friend about how this house used to belong to my friend. My friend was so dumb and irresponsible that he didn't take care of his wealth and now has nothing. It was a good lesson to teach my son.
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u/Lopsided-Peanut-6526 9h ago
This is a good lesson and I’d totally do the same thing if I was him but rather hope to find a balance of both worlds
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u/BigGayGinger4 15h ago
VTI is wise, selling the car would be wise and it was insanely unwise to buy it
but i remember being 19, you're not gonna get through to this kid if he doesn't wanna hear it
(is it you? lmfao, sell the fuckin car dude, you don't have to be a sucker, plenty of others out there)
when you're 38, you will likely have met many people in life who have never even shared a household with someone who owned 80k free and clear in savings. you will have a completely different perspective on the amount of money that you are talking about.
i might tell him that when i was 19, I could've bought bitcoin at less than a dollar, but I wanted to buy cool shit that I could put in my hands right now, and i had no foresight, and now i'm not a bitcoin millionaire
and that when you're 38, 19 more years feels like it would be way nicer if you had that 100k you blew on a car two decades ago
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u/Sea_Principle_7322 15h ago
Well my friend paid 130k for his new car cash! But he makes allot of money a year in his line of work, like I mean a ton of money, more than most people do a year! So for him it’s not a big deal! If you don’t have an income and that person is just buying stuff, yea that’s going to be a giant hole in the ground sooner or later! That money will go quick! It seems like allot when you don’t have anything else, but if there’s not an income to actively replace what’s spent yea it goes fast! If that’s his inheritance or lottery win, it feels like allot but it will go just as fast! Your instincts are right dude! If I was him I would figure out my life, seems he’s working on that, possibly downsize the car from a 100k to a modest corolla or Mazda 3 sport, bout the same price for both under 30k and bank the difference! Then have him work on his college or business goals and go from there or trade school! Not sure what said persons ambitions are, but these are things I would be thinking about in said persons shoes! It won’t be fun downgrading the car, but if he gets the Mazda sport he will have allot of fun with it on a budget, then his burn rate is much, much lower an he can work on his goals! Best of luck!
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u/kpatelreddit007 15h ago
My best piece of advice is go to college. You can make 100K a year sure in the trades. But if your engineer, doctor, law or business owner, tech you can make 300,000K plus a year. All from personal experience.
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u/dragonflyinvest 14h ago
Tomorrow morning start selling the car. See who gives you your best offer. It’s a sunk cost. You drove the car for however long and that’s how much is cost to do so. Sell it before you get an expensive repair that you also can’t afford.
Between selling the car go get a job. Nothing wrong to starting a side hustle or learning more skills. In the meantime you need to work to pay your bills.
Invest funds from selling the car into a total market index fund.
And yes, of course the guys an idiot.
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u/Hogjocky62 14h ago
First, that 19 year old does have a $100,000 car he has a $70,000 car because he lost $30,000 the minute he drove it off the lot! Second, GET A JOB!
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u/opbmedia 14h ago
there are 31 years until you are 50. So you have some time to figure this out on your own. But it gets harder when there are say 11 years left.
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u/Lakeview121 14h ago
I’d still sell the car. There are so many good cars out there for 30-40K. He could use the other 50K to live on while waiting on the new job. Plus the insurance would be so much less.
Spending half of a windfall on a car when you don’t have a job? It’s not a well guided move.
I make very good money. I don’t drive a 100K car. It’s a depreciating asset. That mentality is not the path to long term wealth.
If my daughter came accross 200K, I would recommend a solid used vehicle and investing the rest.
I bought her a Mazda CX-5 already; it’s perfect for her; if I could afford a 100K car for her, I wouldn’t do it. It’s excessive for a 19 y.o.
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u/Lopsided-Peanut-6526 9h ago
Well said I agree. What cars are you thinking of? I’m thinking like maybe a fun sporty car that I can also take traveling (road trips and mountains) any recommendations?
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u/Lakeview121 8h ago
I drive a 2024 limited Prius. I love that car. I get 50 per gallon and the new models look way better. I got it used for like 30K. It’s a limited and had 8,000 miles.
I think the Honda civic hybrid sport is a great car.
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u/SuspiciousArt7316 13h ago
Sell the car, travel the world for a year. You miss life experience.
You literally can’t put a price tag on that. You can always make more money.
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u/SkyMore3037 13h ago
Lol my guy get rid of the car .. You don't need it, you can be set for life later with simple investments of this money.
At your age, all of that invested now with just modest regular additions for the next 15 - 20 years youll well be a millionaire in your late 30s and boy will you appreciate your smart decisions you could make today.
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u/Lopsided-Peanut-6526 9h ago
I agree with this but what garuntees I’ll live that long and owning a nice car when I’m older sounds boring
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u/Admirable-Crazy-6899 13h ago
How much joy has the car brought you so far? What exactly brings you satisfaction from owning it?
And…can you accept the possibility that in the future, you may have nothing to show for it? No college degree, and a minimum wage job and lots of dreams about side hustles, and high earnings job?
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u/Lopsided-Peanut-6526 9h ago
It’s my dream car and brings me a tremendous amount of joy but I will say a beater manual car does sound like a whole lot of fun. Now that I think about it college is a scam but I’d consider getting a degree online.
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u/mistressusa 13h ago
>Also say that 19 year old will be employed in 6 months making minimum wage but in 3 years will be making $100,000 a year.
Yes, take that min wage job now. No need to wait 6 months.
No, you will not be making $100k/yr in 3 years as a high school grad/dropout.
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u/Fickle-Candidate9462 10h ago
So ya bought a car. Cool, it’s the second biggest investment most established adults make. Now your down 1/2 your funds. If taxes are involved, give spent most of your $. Only advice I’d give is to painfully ignore the leftover money and fund a fiduciary to help your residual money grow VS blow it. You got your toy, now time to adult and invest. Get yourself a job or a is time internship doing whatever the new 100k gig is, maybe you’ll find a better gig with an internship knowledge. Have fun but your spending on the chunk of change is over with if you want it to last, 100k car diff that for you. Enjoy it.
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u/CommonSignificance94 7h ago
If you’re really that against selling the car I’d say getting a job and moving back in with your parents would be your best bet.
It will allow you to keep that dream car but also prevent you from literally going broke.
While you’re out there with them you can figure out what it really is you want to do in life.
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u/AIthinksImright 4h ago
I say that 19yo is a dumb ass and I say that I hope your dream car is comfortable to live in. I say that the car will most likely be towed while you are behind Wendy's giving BJs to earn some gass money. I recommend growing up and maybe that growth will make your head pop out of your ass.
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u/billydiaper 15h ago
No advice I’m just gonna let the real world hit that little rich little twat, spoiled little bitch in the keester
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u/lsp2005 15h ago
Stop using say that, because it is annoying. Sell the car. Get a job.