Check S&P return from 2000 - 2009.
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What point are you trying to prove by cherry-picking numbers (dotcom bubble - the great depression)?
Long-term S&P return with dividend reinvested is about 10%-11%. I used OPās purchase date (FYI right before the Great Recession) to build a model or a very conservative 6% annual return.
You cannot ignore the cost of capital in calculating the cost of ownership vs lease.
I did my first lease after deciding that it would be an entertainment expense vs. a transportation expense.
Up until then Iād never spent anywhere nearly this much per vehicle per year, but then I also always had shittier cars.
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I didnāt read the entire thread but the best part of leasing is the ability to drive a new car every 2-3 years for me. If you have a stable and relatively high income, US car market is the best in the world for an enthusiast. In vast majority of the world, you cannot drive a high MSRP German/British/American without spending a very good chunk of your income even if you are a āhigh earnerā. An average white collar professional can afford relatively comfortably most luxury brands that will be a stretch to impossibility for his peers in the other parts of the world.
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Google S&P lost decade you will have the answer.
OP owned the Ridgeline for just over a year, it was a used 2007 model.
I am well aware of a negative return in that 9 year period that started from the peak of the dot com bubble and ended at the bottom of the Great Recession. This is a clear case of cherry-picking numbers and means nothing for a long term return on investment.
Fortunately, weāre not in the midst of a global pandemic with unprecedented shut downs to the economy
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Quite the contrary, itās actually an example of no returns on a long time period for US stocks. I donāt think thatās cherry picking at all, there are other ways to mitigate it (like a diversified portfolio). But if we care that much about opportunity costs, then just buy a Camry and drive it for 10 years and invest whatever money you wouldāve saved.
Well, if picking the highest point of the bubble before the crash and then the lowest point of the following crash is not cherry-picking then what is cherry-picking? 
Camry example doesnāt make any sense. My point is that you must account for a capital cost if you finance and conservatively assume 6-8% return on any equity you have in a car to compare it with a lease cost.
This works better over much longer terms. Becomes rough when looking at much shorter terms, especially during global unrest.
Yes, short term it can easily go both ways. However we can do that continuously and allocate the money required for the car ownership to a long term investment fund.
The younger me buying a two year old G37x and paying $26k cash (taxes and fees included) didnāt think about capital costš¤¦
After selling the car in five years, I realized that my old g37x did cost me over $3k annually just in depreciation and taxesā¦ Leasing smart way makes a lot of sense and I believe offers more value (safety, comfort & time).
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Personally, I would not buy because I donāt enjoy dealing with maintenance or disposing the car. We have an old Mercedes and it has been a pain in the ass and expensive to maintain. I am speaking strictly from an experience perspective since I value driving as an experience (and my time too).
We devised the Leasehackr Score, which is the number of years your effective monthly payments on a lease (including drive-off and taxes) take to reach the MSRP, to give users a metric on the value of the lease. A lot of time the figure is over 10 years. If I ask myself whether I would like to drive the same car for 10 years, the answer is a resounding āno.ā (Warning: the Leasehackr Score does not account for registration fee, maintenance cost, return on the S&P 500 etc.) Swap out the MSRP with the purchase price if you want a super simple metric to compare lease v purchase.
One can argue that it is a nuisance to shop for a car every 2-3 years too, but it does not seem to be a problem for most of the folks hereā¦
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Agreed. Leasing is a relatively cheap way to enjoy a car that I would not otherwise be able to afford. America is the only country where leasing is an appealing option.
I like this way of thinking about it. For something I have to spend an hour + in each day, I should enjoy it as much as possible.
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Thank you for the reply. I agree I would also not like to own a car for over 10 years and have to deal with the maintenance at this point in my life. Its funny like many here I enjoy shopping for a car every three years. I look forward to the āchaseā for my first lease .
This guy gets it! Preserve your capital for more important thingsā¦ like investingā¦ not depreciating assets.
But if you really think you will be earning 10% on your capital, you could buy a car with long term financing at a rate much lower than 10%. My credit union is offering a 5 year loan, up to 125% of the purchase price, at an interest rate of 2.24%.
But if you really think you will be earning 10% on your capital, you could buy a car with long term financing at a rate much lower than 10%. My credit union is offering a 5 year loan, up to 125% of the purchase price, at an interest rate of 2.24%.
This is definitely the way to go but with every payment, you increase equity in a depreciating asset. That locked equity in 99% of cases is dead money.
It works the same way for some housing markets that see very low asset appreciation (Midwest). Having too much equity in your house might not always be such a good thing even adjusted to risks.
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