August 17, 2016
Interview with Jack Otter, author of the book Worth It … Not Worth It?: Simple & Profitable Answers to Life’s Tough Financial Questions
Mike Carruthers:
Some common financial questions may seem complicated but the answer is actually simple. For instance should you buy or lease a car?
Jack Otter:
Most people are much better off buying because, among other things, it’s a lot more straightforward.
Jack Otter, author of the book Worth It … Not Worth It…
When you buy a car you know exactly what the sticker price is, you know you’re getting it at the end of it you own the car. With leasing it’s a lot tougher to tell exactly how much you’re paying, what is interest and then finally it all depends on how many miles you drive. So leases for the most part assume you’re driving 10 to 15 thousand miles a year. If you drive far more than that you might get hit with a very steep penalty for those extra miles.
Should you buy individual stocks or mutual funds?
Academics have actually looked at it and shown that picking stocks is really a loser’s game even for the professionals. So the idea that you with a fulltime job can keep up with the stock market and actually beat the pros at their own game – it’s a real long shot – you‘re much better off owning cheap mutual funds.
And while owning a home is part of the American dream renting is still a better option for some.
Especially for a young person who might benefit from the flexibility of renting – you could get a job offer half way around the country and if you rent no problem. If you own you’ve got a tough decision there – so there’s a lot of reasons why I suggest to people don’t rush into buying unless you’re really settled down.
