Quote:
Originally Posted by wparsons
Everyone claiming that self insurance is better financially obviously hasn't had to go to court after an accident. Hurt someone bad in a crash (including yourself) and you'll be paying far more than what insurance premiums for life would have cost you.
Even forgetting that, if you have a good financial planner (or smart with investments on your own) it's a bad financial decision unless insurance is insane where you are.
If you have to keep $40k/car liquid enough to get at any time that's $40k you can't have invested anywhere. Invest that $40k and you can be making more than what insurance would cost you every year. Even a 5% annual return is more than enough to cover my insurance, and that's not a fantastic return.
Same argument against buying cars in cash. If the interest rate on the loan is less than what I'm making on the investment where the money currently resides the loan makes way more sense.
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I somewhat agree with this. Although lately I have been just paying my mortgage down because 4.25% guaranteed is just easier than stressing out all year to make a slightly better 6% in stocks. I'm also really busy flying jets now though and I do have lots of insurance just because I don't have the money to self insure anyway. I think if I had a cool mil sitting around though paying an insurance company may not be worth it. I mean you could still make interest on that money while not paying the insurance company. Plus thinking about diversification it's not a bad call since you can always start insurance whenever and use the money for something else. 99% of the people on this forum, myself included, I don't think are in a position to self insure anyway. It's not worth it if you have EXACTLY $40k but if you have $400k cash in your asset pool of $4 mil using 10% to self insure might not be terrible while it sits in a (low) interest generating account. That's a different world than most people live in though. Most of the people I know who have the money to self insure don't drive much themselves anyway. They have some fancy cars but don't really use them much.
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