McLaren Life banner

What's your net worth (denominated roughly in USD (k in 1000s, M in 1,000,000s and B in 3 commas!))?

  • 0-499k

  • 500k-999k

  • 1M-1.999M

  • 2M-4.999M

  • 5M-9.999M

  • 10M-19.999M

  • 20M-49.999M

  • 50M-99.999M

  • 100M-199M

  • 200M-499M

  • 500M-999M

  • 1B-1.999B (3 commas baby!)

  • 2B-4.999B

  • 5B-9.999B

  • 10B-19.999B

  • 20B-49.999B

  • 50B-99.999B

  • 100+B (so you're Elon Musk, Bezos, Gates, etc.)

1 - 20 of 256 Posts

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #1 · (Edited)
Somewhat of a tradition here. It's always interesting to see some of the demographics. I wish the polling here was a bit more refined to ask more questions.

I have no idea what the owners of the website or 3 letter government agencies can see, but the poll is set to not reveal names, i.e., it's anonymous so be honest. Only share if you're comfortable sharing.

But if you want to see the results you got to vote!

We had other such polls in the past, here's the previous one:

One question that's been debated in the past is what do you think your net worth should be to buy a McLaren? Some rules of thumb in the past have been suggested. For example, that your net worth should be 20x the cost of a car. Always, curious to see people's thoughts on such things.
 

·
Registered
Joined
·
260 Posts
So I'l followup my own post and suggest, that 10-20x your net worth is a decent place to be to buy a car. So if you're buying a $300k car, your net worth should be $3-6M. What do you guys think is a reasonable range?
I'm at the slightly below 10x number but the growth is quite rapid. I don't know if I would put a limit on it, but I would think 10x is a good starting point to say its blowing some money without ruining your future. Priorities can be very different.
 

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #5 ·
I wonder, for 20x, do you guys think that's linear? So if you have $6M net worth it's ok to buy $300k car, but if you want to buy a $1M car, you should have $20M net worth?

I think there may actually be a wacky curve going on because scale matters.
 

·
Premium Member
Joined
·
568 Posts
Circumstances vary very very wildly. Some pretty rich folks end up “cash poor” and over leveraged with too much house and vacations and private schools. A lot of folks don’t do a good job factoring opportunity cost into their financing cost evaluation. The only pay cash crowd. That cash that government taxed and no longer returns dividends. But if they reduced their leverage to their “sleeping point” then I can’t really fault them. Although their preaching is pretty annoying. Other folks have businesses to run leases.

no toy is worth life anxiety.
 

·
Registered
Joined
·
260 Posts
I wonder, for 20x, do you guys think that's linear? So if you have $6M net worth it's ok to buy $300k car, but if you want to buy a $1M car, you should have $20M net worth?

I think there may actually be a wacky curve going on because scale matters.
It depends on the rest of the lifestyle but for me, after $10M the share of car collection would drastically increase because the rest of my life would be much more taken care of. If I assume a $3M house (varies wildly on where you live) and $6M of investments, I would probably have $1M in cars already at that time. From there up 50% of my net worth above $10M could be in more cars. All depends on what you want to spend on.
 

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #8 ·
Agreed with all of that.

But I sense if you're net worth is $6M, there is a weird scale effect going on. If you live in one of the big cities, there's a decent chance near half is in your home. You have the other half in some net investments. Then there is life to deal with in the mean time, as you say, kids, school, etc.

All those things do not scale linearly, I don't think, as time goes on, and net worth goes up. There is a decent chance that investments eclipse the home's value over that time.

So in fact, there was only say 10x the money over investments (not including the home), but as the home becomes a more marginal asset, you get close to the 20x in investments. But these things vary so much, as you note. Some people probably do scale up their homes along with their net worth.

So I guess these gross rules of thumb are the best we can do as a generalization touchstone.
 

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #9 ·
It depends on the rest of the lifestyle but for me, after $10M the share of car collection would drastically increase because the rest of my life would be much more taken care of. If I assume a $3M house (varies wildly on where you live) and $6M of investments, I would probably have $1M in cars already at that time. From there up 50% of my net worth above $10M could be in more cars. All depends on what you want to spend on.
Agreed, this is highly variable. One variable being, you REALLY love cars! :D
 

·
Premium Member
Joined
·
568 Posts
I wonder, for 20x, do you guys think that's linear? So if you have $6M net worth it's ok to buy $300k car, but if you want to buy a $1M car, you should have $20M net worth?

I think there may actually be a wacky curve going on because scale matters.
i guess I’m not sure. I don’t think spending $1M on your car collection at $20M in net is out of bounds. maybe a pinch further than I’d push myself but yeah that seems not crazy. My biggest problem with a $1M car is I don’t know what I’d do with it to get $1M of enjoyment out of it. I’d rather have the cash. It’s not about can or can’t. But I wouldn’t sleep well driving a P1 to Starbucks. Maybe if I had another 0 to cover ”fuck it”

cost of living makes a big difference. $20M net in AZ is pretty different from LA or NYC.
 

·
Registered
Joined
·
260 Posts
Yes, net worth is truly the sum of all assets but I like to think of my working net worth as being the amount of my assets that can reliably grow and be reinvested. Currently my primary residence increased my NW by 10% as it is still leveraged by has appreciated. Most of my Net Worth is in producing assets, retirement brokerages, real estate, non retirement brokerage. Arguably, my 600LT is closer to a $60k non recoverable rather than a $325k car. Present used car market ignored for more traditional discussion.
 

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #12 ·
Yea, for some reason, having a $300k car with a $6M net worth, seems more reasonable than a $1M car with a $20M net worth. I can't articulate why it 'feels' that way, but it does for some reason. And I agree, seems like as you move up the scale, you should have a bigger (fuck it money) multiplier. So maybe $1M car is ok with a $50M net worth, or 50x multiplier.

Not sure that feeling is rational, but it 'feels' more right to me for some reason.
 

·
Premium Member
Joined
·
568 Posts
Yea, for some reason, having a $300k car with a $6M net worth, seems more reasonable than a $1M car with a $20M net worth. I can't articulate why it 'feels' that way, but it does for some reason. And I agree, seems like as you move up the scale, you should have a bigger (fuck it money) multiplier. So maybe $1M car is ok with a $50M net worth, or 50x multiplier.

Not sure that feeling is rational, but it 'feels' more right to me for some reason.
i’m not sure I can articulate it either. But I think there’s a gulf between a $1M collection with 2-4 outstanding cars and a single $1M hypercar or collectible. The former feels a lot more rational than the later. Insurance companies seem to agree :-D
 

·
Registered
Joined
·
1,346 Posts
If in 2015 your net worth was 4 million and you took 1.5 million and bought a La Ferrari, was that a dumb move?

If today your net worth was 10 million and you bought a Pagani for 2 million and that car is nowworth 3, dumb move?

Fact is you are probably safer buying a 2 million dollar car with a 10 million net worth than a 300k car with a 1.5 million net worth- both cars are 20% of your net worth but vastly different circumstances.

Frankly this poll should not be on net worth but liquid cash. Your net worth may by 20 million but it’s tied up in illiquid assets such as a business or non income producing real estate.
 

·
2012 MP4-12C
Joined
·
9,727 Posts
Discussion Starter · #15 ·
If in 2015 your net worth was 4 million and you took 1.5 million and bought a La Ferrari, was that a dumb move?
Considering how much the market went up since 2015, yes. If you put that same money in a S&P 500 index fund (S&P went from roughly 2100 to 4400, around 210%), you'd do better than the pagani appreciation, with less upkeep and headache.

That said, I get the spirit of your point and think it's a good one. The higher end tends to not depreciate as much. But McLaren P1 is not up that much, nor is the Senna or other ultimate cars. So, it's still risky stuff relative to just floating with the market.

But reasonable folks can see things differently, and I see your point.
 

·
Registered
Joined
·
1,346 Posts
The hyper cars, you are mostly just tying up money. Take senna for example. Assume it’s just gonna be flat for the next few years. If I had a million liquid or the ability to finance a million and the. I thought payments are not troublesome, I could own it for a few years and sell it and get all my money out. Maybe it goes down a bit but not much.

I know some folks who have 25k a month in car payments and that’s their comfort level. Me- I
a cash kinda guy but like you said- reasonable people can see this differently.
 

·
Premium Member
Joined
·
568 Posts
Frankly this poll should not be on net worth but liquid cash. Your net worth may by 20 million but it’s tied up in illiquid assets such as a business or non income producing real estate.
meh. Literal cash ? Marketable assets ? How tradeable ? This leads to some silly places. Illiquid assets have a higher uncertainty level and net worth is subject to radical change with the relevant market. So it goes.

yeah, I definitely don’t agree liquid cash is the correct measure for disposable income. There are a lot of ways to handle assets and free cash flow.
 

·
Registered
Joined
·
574 Posts
One should only purchase a $350000 or greater car in the following circumstances:

1. It will not negatively impact you or your family's lifestyle;
2. It will not cause any undue financial anxiety;
3. It will not cause you to focus on depreciation resulting in a negative impact on the enjoyment of the car.

Purchasing a regular production super car is not a prudent financial decision. These cars must be viewed as depreciating assets. A decision should be made with all these factors being considered.
Unfortunately, many purchase these cars due to emotion and then justified by logic.
 
1 - 20 of 256 Posts
Top