How to Buy a Lambo!

December 15, 2022

Imagine money isn’t a factor in your decision making.  You have F@%# you money.  What would your life look like?  Specifically, what kind of car do you drive?  Remember, price doesn’t matter anymore.  BMW, Tesla, Lamborghini, Bugatti, Bentley, Rolls Royce?  The world of automobiles is now your oyster.  My brother bought a Lamborghini Huracan in 2020.  He’s always wanted a Lambo and was 40 years old when he bought it.  The amount of attention he gets driving it is unreal.  I mean, UNREAL!  Whenever he stops fuel up, people ask him about the car, it’s constant.  The number one question he gets is, “What do you do?”  It’s extra funny because he tells people he is in I.T. and they often respond with something like “I don’t know what that is but I’m going to do it!”  Uh, no they aren’t. But that doesn’t mean they can’t own their dream car too.  Most of the people that talk to him are extremely early in their working lives.  Often even in their teens.  They forget my brother worked hard for over 20 years to get that car. 

I have another friend whose car collection puts almost every car collector’s garage to shame.  He’s told me everyone says the same things to him as my brother.  He is also in his 40’s.  Why is their age important?  With some planning and time, almost anything financial is possible… Only celebrities and trust fund babies have supercars in their 20’s (I know that isn’t a full list of people in their 20’s that have super cars but you catch my drift).  Planning for a goal doesn’t mean you can cruise along and buy a $200 million yacht after 20 years.  But what does it take to buy a Lamborghini?  Probably less than you think.  Let’s turn to the math, shall we? Assuming:

             Lamborghini Huracan Evo Spyder (According to Kelley Blue Book) brand new in 2022 is roughly $300,000

             A 20-year time frame for purchase

             An annual portfolio return of 7% on average

             Equals a monthly investment of…$575.90. 

Are you thinking what I’m thinking?  That is WAY less than expected.  Think back over the last 20 years of your life, could you have found $575 to invest?  Probably.  There are some people that spend that much on coffee.  AND, the good thing is you can keep putting that $575 toward the insurance each month for owning a Lamborghini!  If you are anything like me, you are too shrewd to buy a Lambo… You’re frugal, so buy a BMW M5! 😉 Afterall, it would be nice to have some trunk space or to shuttle kids and/or grandkids around…psst, the M5 is what I want as my super cool dad car.  Let’s see how the math works.

             BMW M5 (According the BMW Website and the one I want…at least for this blog) is $115,500

             A 10-year time frame for purchase

             A portfolio return of 7%

             Equals a monthly investment of…$667.30

Hmm, what if I make it 15 years as $667/month is heavy.  The math ends up being $364.40.  Isn’t compound interest cool!  But what if cars aren’t your thing?  You would be happy in a Chevy Spark starting at $14,595 as long as you could drive it to your killer lake house!  Again, let’s turn to the math.

             $750,000 Lake house purchase price

             20% Down payment of $150,000 with a 20-year time frame 

             A portfolio return of 7% for the down payment

             Equals a monthly investment of $287.95 for the down payment

Granted, in this scenario, you would have a monthly mortgage payment along with taxes and insurance, but you could rent the place out to make up for the costs of ownership and use the lake house as an occasional getaway.  If you put your 20% down and qualified for a mortgage payment at 7% (I know that is high but that is what things are like these days), your monthly principal and interest payment would be just under $4,000/month.  Add on another $500 for taxes and insurance and upkeep and you have a hefty bill to manage.  But maybe you rent the house out for $250/night and you do that 20 nights each month.  Well, now you are at $500/month in positive cash flow (Obviously, this is just a generalization and there are expenses, taxes, and such involved in owning a property, but this is for illustrative purposes only).    

Now, let’s get back to what this is all about.  It’s to illustrate that long-term, big goals are absolutely achievable with slow and consistent work.  A lot of you reading this have daughters that will one day have weddings.  The average cost of a wedding in 2019, According to was $33,900.  How old is your daughter?  Mine is 1.  If she gets married at 25, assuming a wedding costs $75,000 at that time because, you know, inflation, I need to invest about $100/month.  If I wait until she is 10, my monthly investment becomes $236.62.  I’ll take the $100/month.  Hopefully, she’ll want a small wedding. 

 Regardless of what the goal is, thinking about it in advance and planning for it, makes it a much more achievable and manageable process.  Next time we chat, let’s see what we need to think through long-term that you want and start planning for it!

Rory Hartmann CFP®

Neither asset allocation nor diversification guarantee against investment loss. All investments and investment strategies involve risk, including loss of principal.

Content here is for illustrative and educational purposes only. It is not legal, tax, or individualized financial advice; nor is it a recommendation to buy, sell, or hold any specific security, or engage in any specific trading strategy. Results will vary. Past performance is no indication of future results or success. Market conditions change continuously.

This commentary reflects the personal opinions, viewpoints, and analyses of Resolute Wealth Management. It does not necessarily represent those of RFG Advisory, clients, or employees. This commentary should be regarded as a description of advisory services provided by Resolute Wealth Management or RFG Advisory, or performance returns of any client. The views reflected in the commentary are subject to change at any time without notice.