Random off-topic response to one of your throwaway comments:
"Buying a car or a house in cash is showoff-y"
When did buying a car in cash become showoff-y? My parents and grandparents always paid cash for their cars, because it's a depreciating asset and taking out a loan for it is just throwing money away. I didn't buy a car until I could afford it in cash - and when I did, that's when I realized this wasn't terribly typical, as the dealership kinda looked at me funny and lamented that they couldn't give me any further discounts (possibly because they were already selling it to me for like $400 under dealer price).
I think buying a car on credit may be an American thing - at least I don't know of anyone who has bought a car on credit. It seems like an absurd waste of money to do so - why not just buy a secondhand car you can afford outright?
Interest on car loan is still higher than any investment I can think of with equivalent risk characteristics. 3-year treasuries are currently yielding about 0.75%, 3-year car loans are about 3-4% on a quick Google search. I don't see how you could arbitrage that into a profit.
Also, paying off (non-tax-deductible) loans essentially buys you after tax dollars, while investments must be bought with pre tax dollars (though some are capital gains taxes if you hold them long enough). That's an additional 15-40% you have to chop off the return rates of investments when comparing them to paying off debt.
OK. Car-dealers loans (made by the car-marker banks) run usually around 1% where I live. Inflation is currently around 2.5% yty. Also some investments are quite tax-free, but most investment run about 25% taxes here in Germany.
Well, does 'cash' mean physical cash or does it mean 'not on credit'? You're assuming the latter, but that doesn't make any sense, because buying on credit is effectively buying for more 'cash', just spread over some time (taking net values of later amounts into account of course). So I assume it means the former.
Means "not on credit". And I don't see why that doesn't make sense, because if buying on credit = buying for more 'cash', why would you want to pay more for the car?
I thought about doing that, but the "discounts" are usually things like 0% financing for X amount of time or "we'll waive the financing charge", which means that if you take them, you are in exactly the same place as if you'd bought for cash in the first place, you just have to remember to pay off the loan early.
"Buying a car or a house in cash is showoff-y"
When did buying a car in cash become showoff-y? My parents and grandparents always paid cash for their cars, because it's a depreciating asset and taking out a loan for it is just throwing money away. I didn't buy a car until I could afford it in cash - and when I did, that's when I realized this wasn't terribly typical, as the dealership kinda looked at me funny and lamented that they couldn't give me any further discounts (possibly because they were already selling it to me for like $400 under dealer price).