My first thought would be to buy a house or invest the money, but then I realized I am not 20 anymore and don't think like someone who is.
When I was 20 I had a similar dilemna. Do I spend the $10,000 I had scrouged and saved for on a Mustang GT (the car was the reason I had saved in the first place) or do I keep my old car and buy $10,000 worth of company stock, which was at an all time low due to Desert Storm.
I bought the car and after 6 years and sold it on for $3000. The company stock would now be worth about $136,000. No regrets.
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At your age and with your resources I wouldn't spend £10K+ on a weekend car - it'll probably only get used on summer weekends anyway and the depreciation cost on a 'per mile driven' basis will be very high.
If I were you I would buy a 10-year-old Jap import (R33 Skyline, FTO, Celica, MX-5, whatever takes your fancy). Try to find a rust-free one with lowish mileage (they are around - I've bought & sold a couple). You should get one for around £5k. Then insure it on 'classic car insurance' with limited mileage (3k a year should be enough?).
You won't lose much on depreciation and the car shouldn't give you too much grief (personally, I would steer cleer of an Elise).
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Despite what the estate agents and property programmes on telly would have us believe, now is not the time for a 20 year old to get on the property ladder.
Property is ridiculously over-valued. People are borrowing 4-5 times their annual income because of dodgy self-certification of income practices. This will all stop when mortgage lending falls under FSA control shortly. The average house price is nearly 5 times the average income - the historical norm is 3. The turn has started, and it'll only accelerate from here on in. I know prices don't yet relect this, but they take months or even a year to adjust - the other signs are all there. For instance:
Look at the property for sale in your local rag. See how many advertise 'no upward chain'. That's all the buy-to-let landlords bailing out.
Houses are generally going for around 90% of the original asking price - at the height of the boom 18 months ago there was no way you could pay any less than the asking price.
Houses now take about 6 weeks to sell, compared with 3 weeks at the height of the boom.
Estate agents have loads of houses in their windows, and very few buyer enquiries.
In short, enjoy the money and buy a sports car! Think about the housing market when (a) you're older, and (b) it has normalized.
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"Despite what the estate agents and property programmes on telly would have us believe, now is not the time for a 20 year old to get on the property ladder."
GrahamF1 - I agree 101% - either salt it away for a few months and watch the property market for a bargain (good long term plan)
OR
Buy a TVR and enjoy!
I had this situation when I was in my late 20's - £15K to spend on car or house - Went for house.
Financially I am better off but I have regretted not grabbing the chance. I'm now 40 something with a wife, a house, 2 cockatiels, 3 fish and a Rover P5B (the 3.5 litre one) to support!
Good luck whatever your decision
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"The company stock would now be worth about $136,000. No regrets."
No regrets? blimey I would be slitting my throat, what kind of automotive machinery could you buy now for that money?
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Any twenty year old who is sensible with money should have it taken away from them.
No brainer, get the car.
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My heart rules - I'm with The Growler and Tom Shaw on this one...:-)
We're only on this earth once (as far as I'm aware anyway) so do the things you want to do now or when the opportunities present themselves and, when you're my age and more, you'll have lots of happy memories to look back on.
At your age you probably think you will live for ever but time flies, believe you me...:-)
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PS
One of my aunts, on the occasion of her 86th birthday, told my mother that she was saving her money for her old age. She died just six years later worth even more but, unfortunately, you can't take it with you...:-)
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I'm reminded of the wise advice I was given when leaving the RAF with a gratuity and still being a young man.....
"Spend half of it on wine,women and song and then just fritter the rest away"
No, I didn't heed this Socratic wisdom, but looking back over time....it wasn't a bad idea!
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I agree with the advice on not buying property.. The post election tax rises will be very painful on post tax incomes and hit the market badly.
I would not spoend all my money on a well worn Elise: at £11k you will probably need to spend £2k to make it safely thrashable - which is what you plan to do?
Agree with Aprilai - buy some real power - a Skyline twin turbo/single turbo would give more fun per pound.
I waited till my 50s to buy my first sportscar. It was great but I no longer enjoyed noise/draughts and the hassle. Do it when you are young.. but spend half the money (allowing £2k for repairs and £5k for a car and save the rest.
So speaks a boring ex accountant:-)
madf
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wow what a response! logged on just now to see 22 replies! thanks!
Well, I tell you what - Im very tempted to go for something upto say £6k - allowing me a bit of money in the bank.
Basically, with the Cooper S I originally brought a Mini ONE after a lot of saving. I waited 3 months for it and owned it for 18 months covering just under 20,000 miles. I managed to sell it and lose only £500 in that time - which was the main influence for buying the Cooper S. After working in my last job for about 6 months I managed to pick up my current S from a trade source in mint condition with only 1600 miles on the clock and paid only £1500 more than I got for the ONE. I have a buyer lined up for my car and will lose about £500 after 9000 miles of use in just under a year. They are brilliant cars for depreciation if you can buy them for the right money.
As a consiquence, i dont want to buy a 'dud' car and lose the money I have saved up. I think the wisest thing to do is spend upto £6k and keep some aside along with my other money. At least then I wont feel soo guilty!
Quite like the idea of a caterham but concerned about insurance. Where could I get a quote online? Any idea what group insurance they are as well?
Thanks a lot for all the messages
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As for property, never buy, just rent. That way you can move anytime you feel like it, you don't have hefty mortgage payments and you can escape neighbours you hate. The UK property market is a mythical bubble which people feel has made them wealthy far beyond their capacity to earn but will surely deflate.
Nothing to feel guilty about. Get the car you want. It's your life, nobody else's and there isn't a rewind button.
(Book of Growler 3:1).
PS: (TIC) I've got a hairy-scary '69 Mustang 351 cu. in. V-8 for sale which you really need a G-suit for when accelerating in a straight line as it pushes your eyeballs to the back of your head. I do advise several pairs of underwear on for tackling corners.....
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Or do what I did; Seven years ago, I 'invested' some of my redundancy money in taking and passing my bike test via Direct Access (£500 for all tuition, including use of school bikes).
It opened up a whole new world of Big Boys pleasure, and even the missus enjoys joining in, too. Perfect result, as I ride alone, with friends, or tour with the missus as takes my mood, and of all my interests - I have many - nothing comes close for smile-on-face escapism and long lasting after-effect.
As I have similarly said before; Sunday morning. 6:00am. Sun up. Garage door opens, and out trundle bikes from my Hornet 600, through VFR 750, to SP2 and Blackbird. Fire up, and trickle away quietly, leaving Slumberland behind us, Cagers still tucked up in bed or nursing a hang over. Brains in gear. Mist across the fields. Sometimes a hot air balloon wafting gently overhead. Sweeping, rising and falling A-road for miles in front. 13,000RPM and six gears to play with, and the prospect of a fry up an hour ahead. Life doesn't come better.
Sometimes we're back by 09:00, other times, we're out all day, perhaps covering 500 miles from Bucks, over Welsh Mountains, and back, shattered as soon as we stop, for tea. Either way doesn't matter. Whether taken at a brisk clip, or cruised gently, this drug lasts all week, before it's time for the next fix.
To stay a member of this club, my Hornet 600 has cost about fifty pence per mile to run over nearly seven years of ownership (so about half that of our V70 2.4T, and only marginally more than SWMBO's 306). Bargain.
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Blimey SjB you're getting as lyrical as I tend to be.
But you're 100% right on.
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>>As for property, never buy, just rent.>>
Renting means dead money - much better to use it in conjunction with a mortgage.
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Two sides to it. Owning means paying for the new roof, replacing the windows, repairing the drains, etc etc.
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Renting means the landlord won't do it either!
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Forget investing it buy the car that you want. You are guaranteed of losing a wedge - but how long is one's life ! At your age you should live for the moment.
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>>Two sides to it. Owning means paying for the new roof, replacing the windows, repairing the drains, etc etc.>>
Precisely. You look after a valuable asset. I bought my superbly built Victorian semi-detached in the mid-1960s for just over £2,300; it's now worth at least £190,000 and probably more, based on sales of similar properties down our road.
Only snag is that there is not enough room between the properties for a garage and my car has to be parked on the drive.
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The other snag of course is that the value of the property is pretty worthless. Should you sell up you still have to find somewhere else to live and that will have gone up by the same amount.
The only way to make is to eventually downsize. Most people however, end up leaving their houses to their kids (who are already homeowners themselves and probably better of than they were) or having relatives and the taxman fighting over it.
I speak as a homeowner myself, but if I could step back in time I would not be.
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The main difference I have found is that after a fixed term, no more mortgage, rent goes on. At the start of our mortgage, repayments were dearer than rent, midway it was on a par, at the end it was peanuts compared to rent. Now there are non.
P S Buy a sporty car, don't go made with it, and be prepared to change when Cupid strikes for real!
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>We're only on this earth once (as far as I'm aware anyway) so >do the things you want to do now or when the opportunities >present themselves and, when you're my age and more, you'll >have lots of happy memories to look back on.
I say:
Spend 10% of the money on a hooker and bank the rest, don't waste it on a house that will lose money faster than a car but keep it for when you are older and NEED a fast car, not WANT one.
You could of course get a fast motorcycle for a year, if at the end of that time you are still alive you will have learnt enough about road surfaces and going fast to be able to have fun in a Skoda estelle on 155 remoulds. At the end of THAT year, settle down and buy your house.
When you are bored get a second mortgage and buy a very fast family car like a M5.
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Don't buy a house at the moment (at least not in the Midlands). I have a couple of other houses - one of which I bought last October - quite nice too, and in a good area. Haven't managed to get a tenant in it; rents are sliding (too many people doing buy-to-let); sales are slow and values seem to be dropping a bit.
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"Quite like the idea of a caterham but concerned about insurance. Where could I get a quote online? Any idea what group insurance they are as well?"
Caterham not my type of car really - they look the part but can be a bit of a pain to own, I gather. £5-6k will get you only a fairly tatty one, from what I've seen of them at this price.
If you like the Lotus Elise kind of shape than why not consider a Mitsi FTO. Quite a natty little 2.0l V6 (very very smooth) and it really looks the part. Being a Mitsi they are extremely reliable (with one or two 'stock' faults that are easy to fix).
£5k will buy you a very tidy import from Japan which will be rust-free and no more than about 40k miles. Most are Tiptronic, but there are a fair number of manuals if you look hard.
There are two V6's - a MIVEC engine (variable valve timing) and a non-MIVEC engine as used in the Galant V6. The non-MIVEC engine is the most reliable. Check one of the dealers (www.japco.co.uk) or the owners club (www.ftooc.org). I regularly service one of these and I rather like them (although non-service parts are typically Mitsubishi - ie. very expensive!) - would make a nice weekend car. You want something that is reliable and easy to work on - not something that spends half its time being fixed.
Other options include the Skyline (quite a bit bigger) or the Nissan 200SX Touring (Turbo, leather trim etc.) which is also reliable and fun to drive if you prefer RWD.
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The other snag of course is that the value of the property is pretty worthless. Should you sell up you still have to find somewhere else to live and that will have gone up by the same amount. The only way to make is to eventually downsize. Most people however, end up leaving their houses to their kids (who are already homeowners themselves and probably better of than they were) or having relatives and the taxman fighting over it. I speak as a homeowner myself, but if I could step back in time I would not be.
Why not sell now and rent? You're not forced to buy a house.
I agree now is not the time to buy, but when the market has fallen it is a great time to buy a structurally sound but scruffy house. Do it up cosmetically and move on and do it again. If you are so inclined you can be mortgage-free in not too many years. Shed loads of money to be made if you are wise. Have all the cars/bikes you like then. Spend a few grand on a fun weekend car if you like, but pick a classic which won't lose too much if any. A good Pug 205 GTi springs to mind. You can always sell it and get your money back.
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