my fren is very interested in this car, but still considering due to the price tag 340k. thus taking this opportunity to ask around if he can afford it.
he has zero commitment, has no intention to buy property since he doesnt need it.
currently he has liquid asset of around 700k.
savings per month is around 9k from salary (note: not gross income)
side income of about 5-10k monthly
he is 28
yay or nay.
i say he can.....

Subject: BMW 530e M Sport
Status: Interested
Savings: RM9k / mth
Loan: RM4k / mth
Verdict: BUY

Is 340k equal his yearly gross income?

If lesser don't buy...

obviously can buy, with that port folio, he is more than qualify to afford it. live life before it is too late.

would like to understand how this works? on what basis is this formula of 1 year income = value of car derived from?
based on your calculation. this guy need to earn almost 30k a month to afford this car.
and since he has no commitment. the repayment is only less than 20% of his monthly pay.
currently he is saving 14-19k per month...

Yay. He can definitely afford it. Even can put in substancial amount downpayment if not intend to get full loan.

This is just a guideline, it's not exact science..
But it's a good guideline taking in the the other big ticket expenses that is going to happen in a person life...
Namely, house, wife, kids and education, cars, retirement

House - is your friend just satisfy with a normal condo 600k or a 1mil link house or a 1.5m semi d? He's gonna buy just 1 house his entire life?
I
Wife - unknown - if he meet a gold digger that is attracted to his 530e, he could welll spend 1m on wife throughout a lifetime

Kids - 300k - 500k living expenses. The kicker is when your kid want to study overseas.. 1m education.... This is per child mind you.

Car - your friend want to buy 340k at 28. Assuming he change car every ten years, i reckon he gonna change another three times.. so his next car gonna downgrade to civic? Or u think he wanna maintain his status and buy an equivalent or more expensive car 3 more times! He could welll spend more than 1m just on cars..

Retirement fund.. 25 years of 0 income. if he want to maintain his 530e status.. 1m is not going to cut it

There really is no right or wrong answer here...
My short answer is if he want to buy his car and maintain a 530e lifestyle, then he ain't there yet..
But if he is determined that he can sacrifice some of the things i just said, then ask him to go ahead

Else i think he better just wait until his 30s, when he has a clear idea of his financial status then buy... Besides, buying a car later means you will get a more advance car

Funny if he dont see the need to use the money to expand the side income..... Rich ppl buy asset while poor ppl buy liability

so your advice is to not purchase the car then. you mention kids and wife and 25 year of retirement fund. no offense, but what makes you think his wealth wont grow since he is only 28 now. as mentioned, he is saving around 14-19k per month, this is after deducting all expenses. and if he properly plans the purchase, he wont even need to touch his current savings at hand. btw 1m for overseas education is on the high side, based on my understanding that amount of money is needed only if you enroll in courses like medicine or some high-end university. the average would be around 300-500k.

mind elaborate on poor ppl buy liability? housing loan also a liability you know? and if im not mistaken, he is using the money to grow his side income. but at the same time considering to use 20% of the income for the car.

If yr house loan for own stay not generating income then yes, if u can generate income to cover house loan then no. Property in this era is liability cos price is too high, old days 50k house can generate 1k income while now u need min 300k unit to generate the same 1k.
If side income that good why dont go all in.....

Perhaps you can also share with us your numbers and reasons as to why you say "he can"?

---

If your friend has no other purpose for the money, he could totally buy it cash and afford it at this point of his life.

If he believes in his capabilities, he can probably earn more than the depreciation and interest rate amount.

If he has solid foundation on his finance portfolio now, by all mean just go ahead. If for me at year 28 yrs old with such income and no commitment i will try to make my portfolio rock solid first before enjoying the fruit.
Thing can go south and nobody can predict it in future so the foundation is needed to avoid any start from zero or worst negative situation if anything happen. Your friend is 28 yrs old and if that mishap happen on 38 yrs old which wipe off most of his fortune. That would be disastrous.

I don't know whether his wealth will grow anot, i have no idea what industry he is in, his career projection.. likewise your fren dunno whether he get retrenched, get accident, or financial loss...

We can only plan for the worst and hope for the best.. and car=1 year gross income is part of a safe financial planning guideline..

From what i guess, he is near to 340k gross income in a few more years, y dont he just wait it out?

His savings come from inheritance or his income?

530e for a 28 year old? Afraid people thought it's his father's car
28 with money better buy M3. 4 door with boot. Looks younger.

Tell him yolo..

We all know he can afford it so why not..

Your friend is very young, rich and has no commitment. I bet he is good looking too. Some people are just blessed. So he should buy whatever car he likes.

Side income collect rent from inherited props?

If yr house loan for own stay not generating income then yes, if u can generate income to cover house loan then no. Property in this era is liability cos price is too high, old days 50k house can generate 1k income while now u need min 300k unit to generate the same 1k.
If side income that good why dont go all in.....

he already has a big portion of his wealth for side income. sometimes ppl wanna enjoy a bit from their fruits of their labour. thus we have this discussion mah.


he doesnt have a rich family background, its not inheritance for sure. i do agree with you on waiting for maybe another 2 years, by then he should have stronger financial capabilities. i believe he is doing very well for someone his age, most would have just splurged with this kind of income. kinda amazing that he doesnt own anything with this level of savings.

but he has no love.
somehow when it comes to relationships....it always turn out sour
so he already gave up on that and focus on his family, who will never betray him.