Buying a new car is a massive financial mistake, says self-made millionaire Grant Sabatier. (via CNBCMakeIt)
To get around, Sabatier recommends cost-saving measures like carpooling or using public transportation. But if it's necessary to own a car, "buy the nicest kind of used car that will get you from point A to point B," he tellsThat's because, he says, buying a new car is "one of the worst financial decisions that you can make in your life."
Not only is a new car often quite expensive, but it's not an investment that will gain value over time. "Realize that you're trading two things when you buy a new car," Sabatier says. "The first: You're trading all of your life that you spent making the money to buy it." And second, "you've lost the opportunity for that money to grow over time."
Buying a $40,000 car, for instance, he says, would require a year's worth of work if you're earning $20 per hour after taxes and working 200 hours annually. If you had invested that money instead, it would be worth more than $240,000 after 30 years with a 6 percent rate of return, or more than $440,000 with an 8 percent rate of return.
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