– By Karin Maloney Stifler
With Cues from Detroit
The 2015 North American International Auto Show opened this past weekend. It’s the annual gala for car and truck enthusiasts to check out major auto manufacturers’ latest engineering creations. What a great opportunity for car buyers to educate themselves by literally kicking the tires and comparing options side by side.
Imagine if there was a similar event for investors. Unfortunately, no such investment gala exists for consumers. However, buying a car has a lot in common with making investment decisions. Check out five best practices that apply to both.
- Research is required to make a good decision. It’s essential to do the homework to make a wise car and investment decision. Make the effort to understand the nuances of a car/investment vehicle’s functionality, performance, safety and maintenance records, and try not to be overly swayed by the latest gadgetry or dazzling style.
- Seek advice from independent experts, not salespeople. The good news is that there is a multitude of car and investment options from which to choose. The bad news is that too many choices make it difficult to decide what to buy. To narrow the field, look to independent ratings experts, such as your fiduciary advisor or third party researchers, like Morningstar for investments, and Consumer Reports for cars.
- Let your goals and needs drive the decision, not emotions. Investors and drivers have unique preferences for safety, practicality, comfort, and thrills. The right car and investment cater to what you need most. If your highest priorities are safety, reliability, and comfortable ride for your family, a racy Porsche Carrera or emerging markets stock fund won’t be a good fit. Instead, try an all-weather vehicle, such as an all-wheel drive SUV or steady balanced fund. Focus on needs first, then wants.
- Insist on full disclosure of costs. The car buying experience can make you squirm. Why? Because there’s a lack of transparency, and it’s unclear who or what to trust. Unfortunately, the same can be said of the investment world. Ask the tough questions to get to the truth about upfront and ongoing costs.
- Go for a test drive. The only way to really know if you’re making a good car and investment decision is to experience it. Just as it’s common practice to get behind the wheel of a car before you buy it, test the investment by dollar cost averaging.
Follow these steps to make a purchase that you’ll be happy with for years to come.