Opportunity Cost: My $159,900 Car?

My First Car

In January 2013, The Frugal Doctor bought their very first car for $23,800. I paid cash for it. I delayed the buying of the car by a whole year. During internship, I used to get around by public transport or get lifts from my colleagues. When the internship rotations were over, I had to travel to the next country town. I used buses, trains, or taxis. I carried all my possessions in an extra-large suitcase. Fortunately, once at the next hospital, intern accommodation was not too far from the hospital.

Delayed Gratification

I knew not to buy a new car. However, having delayed gratification, I figured I could get exactly what I wanted. At that time, I liked that the new Corolla had reverse cameras, a touchscreen, Bluetooth, and was more fuel-efficient. I had said to myself I was not going to buy another car until I had run this one down.

I bought a brand-new black Toyota Corolla, hatchback, sports transmission, with tinted windows. Was $23,800 a frugal purchase? I haggled at the car dealership. At the end of the negotiations, the car dealer asked if I worked in sales. He also thought I should consider a job in sales. The invoice contained the following:

What If I Had Invested?

The Frugal Doctor had a smile on their face when they saw the dealer discount. I do not like paying full price. The $23,800 spent in 2013 is equivalent to $32,795 in 2025. This is according to the official inflation numbers from the Reserve Bank of Australia.

It is 2025, and I still own that same Toyota Corolla. At the last insurance renewal in 2024, it is insured for an agreed value of $16,000. 2013 was also the year I started investing in the stock market. Unfortunately, I did not know about exchange-traded funds (ETFs) or index funds. I was investing in individual companies on the Australian Stock Exchange at that time.

If instead, I had taken the $23,800 and invested in ETFs or index funds, it would be worth the following, assuming dividends are re-invested:
* iShares S&P 500 ETF (IVV) = $159,900
* Vanguard US Total Market Shares Index ETF (VTS) = $153,800
* Vanguard International Shares Index Fund = $80,900
* Vanguard Australian Shares Index ETF (VAS) = $39,800

Twelve Years Later

Fortunately, buying the car new did not set me back financially. I was also able to focus on my other goals of investing, saving for a house deposit, and travel. I knew the car was a depreciating liability; it was a necessary evil.

Twelve years later, I have stayed true to my word. I still own that same car. It has travelled 134,000 km. There is no plan to update it anytime soon. If I had invested the $23,800 in IVV, I would have an extra $159,900 in my share portfolio.

I could have bought a second-hand car for less. Who knows? If I had done so, I would have probably needed to upgrade the car by now. At the end of the day, it is all what-ifs. There will always be trade-offs and opportunity costs.