Experiment: Investing $8k and using earnings to pay for FSD subscription

lol I’m doing something somewhat similar but for my actual car payments 😂, obviously a more “aggressive” approach from my end

Absolutely.  Love it. As you should.

Smart idea I would like to know how this goes

Same here. HYA is actually making more than the monthly payment. 0.99% APR helps a ton.

2017 gang. Bought the dip and paid for the Car with the gains.

Awww... That:s so cute. I bought. With the gains already from my investments. Which cover all my expenses. And still have loads left to keep increasing the net worth. It feels like a cheat code for life.

Bought model 3 in 2019 with FSD, and wish I could have my money back!

You think FSD is going to be $100/mo forever? 🤣 that’s so cute! And dumb. It’ll be $200/mo before you know it. Then it’ll have ads unless you go for $300/mo. Then it’ll have tokens and you’ll only get so many tokens per month unless you go for the $350/mo plan. Have you never seen how subscription models work?

🤣🤣🤣🤣🤣🤣🤣 how aggressive

Early adopters often pay dearly. Nonetheless, I find the Tesla driving experience to be superb, taking advantage of the relatively low resale value to buy a used 2022 as well as lease a 2018 M3 for my business. No regrets.

Except, they are ahead only by a few years, but not a decade, for consumer vehicle driver assistance in many regions. Many owners aren’t interested, especially at 100+ per month. The elasticity and eventual competition will check the price. True unsupervised, if and when, I expect will be higher than supervised. I’d bet supervised stays at or below 100, maybe even down a bit. Unsupervised, up to 2x, provided your insurance keeps responsibility (more if Tesla insures).

Ohhh, ok. I see now. I know some of these words. 👀

Yup, at 0.99% interest on the loan it made sense for me to leave the money in the market and make payments.

$100 per month for 12 months is $1200. For you to earn $1200 every year on your $8000 investment you'd have to be earning \~15% on your investment AFTER taxes, so \~20%. Thats not gonna happen consistently in a safe manner (otherwise literally no-one would every work :P)

I made a similar decision when I bought my car. I used the $10,000 I received from trading in my old car. I had the remaining cash to pay, but I decided to invest in TSLA stock instead and took a loan. My gamble paid off, and the money almost doubled in a year as TSLA’s stock price rose from $220 to $400. I sold the stocks, paid off my loan, and it was a risky bet, but I was willing to hold TSLA for a long time.

Given 10 million target, I suspect supervised fsd will get cheaper while unsupervised (if it ever happens) will be lot higher due to additional liability cost for Tesla.

Take a look at one of the online annuity calculators (Fidelity, Schwab). A 10 year annuity generating $100 a month would cost about $10k.

So… you give them $10k today… and over a 10 year period, they Pay you $100/month or $12k total. So over 10 years you earn $2k off initial $10k. A rate of return of like 3.75% per year. Why?

that’s not quite right! The 10% return you mentioned is actually an annual return, not over 10 years. In 10 years, your return would be 100%. This is just an estimate, but it’s been the average annual return for the S&P 500 over the past 50 years. Also, keep in mind that you’ll lose an annual range of 2% due to inflation.

It’s easy, actually. Just go find a mutual fund that has earned 15%+ the last few years and has a statement of “past results indicate future performance”, and you’re set!

Unless I’m misunderstanding, that can’t be correct. It’s an annuity, so the $1200/year includes a return of principal. At the end of 10 years, you have $0 left; you don’t get the $1200/year AND the initial $10k back. You give them $10k, and they give you back that same $10k, plus an additional 2k, spread over the 10 years of payments. Where’s the 10% or 100% rate of return figure coming from?

It’s a guaranteed income stream. You have to pay to remove the risk.

Buy a 10-year treasury. Current rate is over 4% (more than the annuity example you gave) and tax free at the state level. And annuity growth is ordinary income vs cap gains/interest. Bad deal all around my friend

Only gains are taxed on an annuity, unless you used your IRA to fund it. 10 year note pays out every 6 months, so it’s not as liquid. But yeah, you’re super smart. Have fun.

I mean yeah I didn’t say the full 12k was taxed. You brought up an annuity which is an objectively dumb idea in this scenario, and the numbers you used are literally shitter than a treasury. And taxed more (again, yes only the gain but same in both cases; annuities are taxed as ordinary income). Why do I get the feeling you sell annuities bro ha. Enjoy man have fun in shitty financial product land

It might work, if the price never increases. Really, the biggest advantage though is that when you get a new car in a few years, you’ll really be ahead price wise. 4 years at $99/mo is a little under $4,800. Way less than the 8 grand.

Haha exactly, OP and many posters here just don't get it :P Edit: they didnt even catch your sarcasm :P

Its not, those numbers are not real, the poster is misinformed

This is completely wrong.

OP is not talking about an annuity where it gets paid down and you have $0 at the end, he's wondering if he can invest in something that pays $100/month and he still has his full $8k at the end - which doesn't exist

I’m talking about investing to SP500. This is from google: The S&P 500 has a long-term historical average annual return of approximately 10% to 11% (including dividend reinvestment) since its expansion to 500 stocks in 1957. While the nominal average is roughly 10.4% to 11.9% since 1928, inflation-adjusted (real) returns are closer to 7%–8%. Note that annual returns are rarely average, with significant volatility, and returns over the last 10-15 years have often exceeded this long-term average.

ECCU 7.75% preferreds will help you on this journey. Not financial advice and I work in structured products. Good luck.

No one was talking about the S&P your comments are entirely irrelevant my man. Like beyond irrelevant because you’re trying to justify a point no one was even discussing

Cool story. Now try that with your mortgage, Netflix/amazon subscriptions, groceries etc. You can then safely retire :)

You are correct but you are missing the point,  I will be using FSD for 6 or 7 months first year, only neeed half the return (~9% to ~10%). With the hopes of anything more go towards growing original $8,000. Bottom line use less FSD initially and grow your funds, to the point you can cover all 12 months, although I probably won't do that, I will stop at 8 or 9 months.

It's possible although unlikely in the near term.  Also, my plan to earn more than $100 over time,  so if FSD goes to $200, rinse and repeat, use less,  grow funds to cover etc. Also, If Tesla can charge $200 to $300 for subscription, they will not allow FSD transfer,  which means I would have to get Subscription anyway.  I am not going to keep this car forever.  Either way I will come out ahead.

That makes sense - good luck!

I hope so but where are you getting your idea? The CEO said publicly it WILL go up as it gets better. WILL. I mean… that’s from the horse’s mouth.

Yeah that lack of transfer is a huge downer. What happens if the car gets totaled? Replacement won’t have it and insurance doesn’t even cover the cost as it isn’t seen as valuable added. It’s definitely a risk buying up front.

Ok. He's 100% credible on past statements. I don't doubt he expects this. Market reality is quite strong. Clearly, I'm not certain, just my outlook on it. I do think an 'unsupervised' version, if/when, would be priced premium to unsupervised.

Why not just Uber the car for several times a month instead? You get to use the car, the FSD, and spend 8K on crack.

Would it not make more sense to be on the annual plan, so that even less comes out per year ($200 savings)?

good point. If you can afford to spend $1,000 yes that would make sense. For me, initially i am going with only 6 or 7 months to build equity. I may go to $1,000, if i have built enough equity using SPYi, QQQi etc..