Goal: Buy a Corvette with Cash

[midlifegoals]

Hi all! I am new to the forum, so please move if needed- this just seemed the best place for this post.

I vividly remember visiting the Corvette Plant and Museum as a kid. In fact, I still have a toy model of the 1986 Corvette Indy (mid-engine concept) that captured my imagination from that visit. I had never heard of a mid-engine car at that young age, and the idea of mid-engine Corvette had my head spinning. I have pined over the prospects of driving a Corvette off the Museum Floor ever since.

I've been blessed thus far in my career, and am striving to save enough money to pay cash for my Corvette by the time I turn 40 years old. I have 10 years (and a few months, technically) to accomplish my goal. With the Mid-Engine Corvette right around the corner, the timing couldn't be more perfect!

Now, the reason I'm creating this thread is to seek the experiences from other Corvette owners that have accomplished this goal in the past. I know there are pros/cons of buying in cash (especially with interest rates so low these days), but this is a personal goal of mine- I don't think anything will change my mind on buying in cash. So, for the questions I have for those of you that have done this...

• Do you have any tips on saving the money? Without giving too much detail, I can save between $500 and $1,000 a month towards this purchase specifically (debt free life, for the win).
• Did you invest it while saving, or did you stick to cash?
• With a sold order paid in all cash (and a museum delivery, to boot)... did you lose all negotiating power on the deal? I expect to pay full MSRP given the circumstances...
• Is there another Corvette Forum/Community of similar individuals saving for their first Corvette? It's going to be an exciting 5-10 years saving for this goal, and would be great to share in the experience with others
• Any of the "more experienced" Corvette owners have any opinions on the old-fashioned idea of keeping a Corvette for your entire life? I long for this car to be in my family for the rest of my life... I don't want to constantly 'trade-up', I want it to be a staple of the family, so to speak. Seems tough these days, but I think it's a fair enough goal.

Thanks for reading! It's going to be a fun decade

[Milliwatt Rob]

Welcome to the forum. Reading your post, you sound like my father (died 1990) come back to life. I don't think he ever had a loan in his life, other than a first home mortgage, a 30 year mortgage that he paid off in under 10 years.

I can understand your feelings. Some people think a car like a Corvette is a frivolous luxury that should only be actually purchased out of surplus cash, and not taken on as a financial obligation. I am going to offer this alternate advice to you.

You never know what will happen. You may live to over 100, or you may be gone within a year. Some goals postponed are never achieved at all if life is cut short. On the other hand, being old and broke is pretty miserable.

If you really loathe debt, get yourself a used Corvette and enjoy it at age 30. Put that $600 to $1000 away into a retirement plan. And who knows, by the time you are 40, you may enjoy a windfall or good fortune, and you will be able to buy whatever tickles your fancy out of mad money.

[midlifegoals]

Thanks so much for the advice, and you are absolutely right! I should’ve mentioned, the money to be saved for the Corvette will be separate from retirement savings. My wife and I contribute a very generous amount to our retirement plans (401k) today. That won’t stop. We have a 6-8 month emergency fund built up, too. We are currently saving for a down payment on a house (we had one, but recent moved for work which forced us to sell), which takes precedent over the car savings. We should have enough to put ~20% down on a home in about 24-30 months (without dipping into that emergency fund, but will slow the Corvette fund). Not trying to brag, that’s just our current situation. I grew up without two nickels to rub together (as did my wife), so the blessing isn’t lost on us.

If I wanted to use debt, I suppose I could accomplish my goal tomorrow, but the bank would own the car....and that’s my goal! I don’t desire a Corvette ‘now’ enough to purchase a used one- I feel that any major purchase like that will impede my ability to save for our home/dream car. Of course, ask me in 7 years if I haven’t achieved my goal and see how I feel! Haha

[Boomer]

I always pay cash for cars. I actually think its better for negotiating purposes since your transaction is "cleaner" with no financing. I also have an aversion to debt. I don't have any loans not even a mortgage. As far as the money itself is concerned, I have it as part of my investments. I practice asset allocation and would have the funds invested till the time of purchase at which point I liquidate whats needed.

I think selling financial assets to buy things like Corvettes is why you save and invest in the first place. Of course buying the Corvette is not a financial investment but an investment in fun and a reward for all your hard work.

I admire your planning. Good luck!

[John]

Welcome midlifegoals. I waited 35 years between my first ride in a Corvette, family always being number one and days after we paid the last semester, senior year of college for our youngest, I bought my first one. So worth the wait.

You are doing so many things right! You have a plan and sticking to it.

As you asked, and we are fiscally prudent but neither of us are financial advisers, here a couple of thoughts that have worked exceedingly well for us (by way of example).

We started saving for our mid engine Corvette four years ago. Not one dime of our Corvette fund is in the market. Why, because the time line we respect is the one many follow and that is never invest in the market for something you are going to purchase in less than five years. Is five year inviolate? But as we know, the market can dive at any time and if you are in for less than a five year period, you may never get back to being even. Or course, none of us can predict the future, and the market can go straight up from here for the next five years.

Second, I hate my local bank as far as the interest level they pay, and so instead of keeping our Corvette fund in our local bank’s savings account where they are “generously” paying 0.01% savings rate, we have ours major savings account at “Marcus” (Marcus.com, affiliated with Goldman Sachs, an on-line internet bank)and get 2.25% FDIC insured. Marcus also has CD’s but they only pay fractionally more for our timelines. Of course they are other top rated internet banks. We also have our emergency fund with them as a separate account. What I love about their system is that it is so effortless, that none of their accounts have a minimum balance, and that you can should you wish, transfer money back and forth without charge.

Again, this just a partial answer to your much bigger question. These are just some things that have worked well for us. Not saying they are right, just giving you considerations for you to ponder.

Welcome to the forum! We are very glad you joined us.

[Racer86]

Careful, life is what happens while your waiting!

[Mobius]

I like your plan.

Here's what I'd recommend:

• Contact Fidelity and open a Brokerage Account for your Corvette Fund
• Have a portion of each paycheck direct deposited into this brokerage account
• Add additional funds to the brokerage account when possible

Within the brokerage account, you'll be able to invest in just about anything, from precious metal ETFs to stocks, stock ETFs, mutual funds, bonds, and bond ETFs.

I would personally suggest federally tax-exempt bond ETFs or bond mutual funds.

Three bond mutual funds I've owned for many years are:

• GHYAX
• NHMAX
• OPTAX

Fidelity allows you to buy these funds with no loads or sales charges, as well. Yields fluctuate, but are currently annualizing at 3-4% depending on the fund. Dividends are paid monthly, and reinvested into the fund (my recommendation). These monthly dividends are federally tax exempt.

If you like this approach, and have any questions, send me a PM.

[midlifegoals]

Thanks everyone for the wonderful advice! I was leaning towards investing in a growth fund of funds (a robo-advisor, ie Betterment or Wealthfront), but if I can get CDs producing 2.5%+, my mind may be changed. I would hate to risk my goal for the prospects of making an extra $10k-$20k in the market. I’d rather wait an extra year than lose my investment (and, of course, the Corvette). Well advised.

Today marks Day One of the mission. I will keep you all advised as long as the forum is active! If anyone else has any advice, please share.

[Racer86]

In January of this year, the rate of inflation was 1.6%. So, your CD funds at 2.5% are only making you a corrected rate of .9%. And on of that, you have to pay income tax. Not much profit when you consider that GM raised their corvette pricing $450-$ 2500 last year. 2.5% is ok for older people that have several hundred thousand dollars to park in CD’s, but for young people you need to assume some risk. What I think is you need to learn about investing, make your own decisions. Yes, it is hard and and can have risk, but unless you already cash rich, a small 2.5% Cd will not make you enough money for that vette. If you think CD are the way you want to go, at least look into a structured CD plan where you have several CD’s with different rates and maturity dates so you can take advantage of possible future rate increase’s. If you are young, you have time to assume some risk. Remember, if you have a 401k at work, you are “in the stock market”.
i retired at 50 years old, but I took many risks. Some were great, some hurt. That’s life. Live it!

[John]

Well put Racer86. I divide our assets into two groups as I kind of noted above, e.g., invest in the market for 5+ year timelines, keep it safe and boring with savings/similar for a less than five year timeline projected usage (including our emergency fund).

[C8-wannabe]

midlifegoals, is your goal to buy a new one? If so, I'd recommend saving $ and buy used.

Also, while your goal of 10 years is great, not to be morbid, but tomorrow is never promised.

If you have good enough credit, with rates so low currently, I recommend being an owner sooner than later, nothing wrong with a used C6, C7.

Good luck!

[Racer86]

Well put Racer86. I divide our assets into two groups as I kind of noted above, e.g., invest in the market for 5+ year timelines, keep it safe and boring with savings/similar for a less than five year timeline projected usage (including our emergency fund).

John, of course you have a great plan in place. You are a smart guy.
But, I think Midlifegoals is way too young to put his vette money in CD’s. Money is made in the market every day. He need to be in the game. His 401k is a great deal especially if this company has a cash matching program. And where is his 401k money invested, stocks and bonds. Yes, the market can go up and down, but history proves it is still the best place to invest. Only place better is to own your own company. But that is another long story.
OR, Midlifegoals could increase his skills and become so valuable in the market place, that he can make enough money in one year to buy a vette with cash. And in a few years that home also. Want more, make more, but you can’t do that standing in line. Yesterday’s WSJ had an article about boom times in Texas with truck drivers making $150,000 per year, and a barber with a mobile trailer setup as a barber shop that IS making $120,000 this year, and is planing to add several more trailers to his business. So maybe the boom only lasts 5 more years, the truck driver made close to a million dollars in that time. Hard work, you bet. Same thing in the tech industry. Or as a young person be safe and stand in line and watch the players run right past you.
Just my thoughts, worth $.04 with inflation Hope I don’t get into trouble again.

[John]

I agree, that is unless he knows that he will need $12K three years from now to replace their front deck (or whatever). For our assets are probably 80% in the market (including of course not counting our less than five year Corvette purchase, emergency fund and similar set asides kept in a more cautious manner).

[Boomer]

For our assets are probably 80% in the market

Everybody's situation is different. On days like today when the Dow is down 400 points I'm only gonna be down a few thousand bucks cause I only have 19% (18.86) in equities. I'd check my 70% allocation to two year Treasury notes but they never change. They just trickle out some interest which is great cause I'm in capital preservation mode.

I do have fun with the stock market. Bought every two points down on SPY (equivalent to 20 S&P 500 points) beginning Oct 3 with the last buy on Dec 24 at 12:59 PM a minute before the market closed at 1 PM on Christmas eve. Got SPY at 234.50. Made a total of 15 buys during that period. Because of the rally that ensued in early Feb I again became over allocated in equities and have been back in sell mode with most recent sale done on Fri. Today was also gonna be a sell till the market cracked but its not closed yet. Any uptick in equities from Fri's close will prompt me to sell. Any downturn today less that 5%, I will do nothing.

Did the same thing in a much bigger way 10 years ago and bought every 50 points down on the S&P for over a year till March 9, 2009 when the market turned. Those buys are up 300% today. In all big drops and rises that have occurred in the last ten years I have participated in this way.

I have a description of this strategy and actually have done an outline for a "scholarly" paper I may publish one day. The name I have coined for it is "Market Defined Investing". The premise is I can't (nor can anybody else) predict what the stock market will do, but I can respond to what it does. Therefore within an established asset allocation, I buy/sell stocks to keep my equity allocation in my lane similar to what I do when driving my C7.

Maybe another opportunity is beginning today. I have no idea! I will need 5% down from Friday's close at which time I will buy. Following that depending on additional drops, I will start a buy strategy at predetermined points on the down slope to maintain my equity allocation. If it doesn't go down further I don't do anything. If it goes up I will be a seller when it gets back to last Friday's close. If it doesn't do that, I also won't do anything. The market defines what I do.

Again its mainly for fun but the money's good. Excess proceeds created by this are routinely funneled into two year Treasuries where they become capital preservation.

Think I got carried away here. Like the way I worked the C7 into this?


PS: This strategy would not be viable without commission free on-line trades.

[JB]

In January of this year, the rate of inflation was 1.6%. So, your CD funds at 2.5% are only making you a corrected rate of .9%. And on of that, you have to pay income tax. Not much profit when you consider that GM raised their corvette pricing $450-$ 2500 last year. 2.5% is ok for older people that have several hundred thousand dollars to park in CD’s, but for young people you need to assume some risk. What I think is you need to learn about investing, make your own decisions. Yes, it is hard and and can have risk, but unless you already cash rich, a small 2.5% Cd will not make you enough money for that vette. If you think CD are the way you want to go, at least look into a structured CD plan where you have several CD’s with different rates and maturity dates so you can take advantage of possible future rate increase’s. If you are young, you have time to assume some risk. Remember, if you have a 401k at work, you are “in the stock market”.
i retired at 50 years old, but I took many risks. Some were great, some hurt. That’s life. Live it!

interesting that t you retired so young and are playing. I Am a firm believer in the saying..the first 50 years is for making money...the second fifty is for spending it.

depending on where you live, real estate can be a nice return as well although our new tax laws could put a damper on it.

To the original poster ...the key to proper financial health boils down in my opinion not only how much you earn and invest but also how you live and spend.

there is a fine balance to discover whatever your income level is ...on what you prioritize as the difference between wants and needs..

include that as a portion of your financial plan and you will always be on the right path.

just my two cents.

In hindsight buying a preowned corvette whose owner lovely cared for it is something I always joked I would do but never did.

that suggestion made by another member on this forum to you is quite a valid one...

i never did it as I have always purchased new vehicles over the past 40 years of driving and buying cars....

hindsights always 20/20 and if I could go back in time....i think buying a preowned corvette should have been on my hit list just because the ownership base is so intense about their beloved sports cars. Find one of them using the internet to read their ownership history might be a smart plan.

That would be my suggestion for you to consider.

the prices of c7 z06 650 hp manual transmission vehicles should be quite attractive especially as the c8 releases and the vehicle should be quite iconic in the ownership experience.

at the ripe old age of 60 I could buy 50 c7 zr1’s for cash...if I wanted but I actually enjoy my 130k mile c6 z51 manual as my daily...

its not always what you can afford but rather what you actually find what YOU need ...(to be happy in life)

its a life style choice that creates a long term strong and healthy body at the gym and its that same concept that delivers long term healthy financial standing as well.

thats the best advice I can give..