Tuesday, June 21, 2011

A car for every lifestyle

As we go through different stages in our lives our car needs change. In my early twenties my needs were very simple. It was me, myself and I living a lifestyle that allowed, even encouraged, driving two door coupes. I worked my way through a number of coupes, such as an 88 Shelby Daytona, 91 Honda Civic SI Hatchback, 89 Toyota Celica GT, and 2006 Honda Civic SI to name a few. My philosophy was: I sit in the front, so what do I care about how much room is in the back seat? I will never be sitting there.

Now, in my early thirties, thoughts of family are on my brain, and again I find myself reassessing my car needs. I am still driving coupes, alternating between a 2009 Honda Civic SI and a 2004 Mazda RX8, although technically my RX8 is considered a four door, but I am starting to fear the impending change. In a desperate attempt to hold on to my youth I try to convince myself that I can make the coupe work with a family. This dream was recently shattered when I had to take my nephew, with car seat, out for the day. After this trip, I realized making it work was just a dream and once the family comes, I will not only be adding a couple of little ones, I will also be adding two extra car doors.

Car companies realize that people’s needs change early on, thus the invention of offering different models by the same manufacturer. The core idea is that within the same brand, a buyer is able to move up to different models depending on needs.

Buyers must also realize, as I have done, albeit reluctantly, that your vehicle needs change over time and these evolving needs need to be taken into consideration before making any purchases.

Based on my calculations, it will be 20+ years before it will be practical for me to own another coupe, but I am a car guy and often not very practical.

Tuesday, June 7, 2011

Diversify your investments

It takes so much capital to start, maintain and expand an auto dealership that there usually isn’t much cash left for other investments. I have heard many auto dealership owners tell me their retirement will be funded by the ultimate sale of their dealership business and property. “I make the best return on my money through my dealership business; therefore why invest in anything else?” While I like the passion and confidence these dealers express, I must admit that I am worried for their futures.

In light of the changes in the auto industry over the last ten years, I would recommend that every dealership owner have some of their money held outside their business. Many of the dealers that had their dealerships cancelled or retired over the past couple of years lost their current source of income and the nest egg they had been banking on for many, many years. Just as you wouldn’t put all your extra cash in a single stock, you shouldn’t have all your cash tied up in a single business venture.

It doesn’t take much to have a diversified portfolio. Contributing to your Registered Retirement Savings Plan as well as the Tax Free Savings Account and investing in stocks, bonds, mutual funds or other securities that are unrelated to the auto industry will give you a degree of diversification and lower risk in your investments.

With maximum annual RRSP contributions capped at $22,000 for 2011 and $5,000 per year for the TFSA’s you can easily see that your investments in these types of vehicles can grow substantially over time. Make the commitment to fund these types of investments annually, and more importantly work with someone who understands your concerns and risk tolerance so you’ll feel comfortable with the investing process.