Automobile resale value can be overrated

You sell your old car and discover that it’s worth next to nothing. You vow to do better next time you buy a car and look for one that’ll hold its value.

Or should you? Maybe the best deal is a car with lousy resale value.

After five years of service, the typical car has lost 65 percent of its value, Kelley Blue Book says. These 2005 models should lose only 50 percent, Kelley says: Acura TL, BMW 5 Series, Infinity G35 Coupe, Lexus GX 470, Mazda RX-8, Mercedes Benz CLK 320 Cabriolet, Mini Cooper, Nissan 350 Z, Porsche Cayenne, Volvo XC90.

In other words, buying a luxury car looks to be financially sound.

But some elementary arithmetic shows that’s not so. Buy a $50,000 car with high resale value and after five years you’ll have lost $25,000. Buy a $25,000 car that loses 65 percent of its value, and you’ll lose just $16,250.

Consider the higher insurance on the expensive car and the cost gap gets even wider. Not to mention lost investment return on the extra $25,000 tied up in the car.

A number of factors determine resale value. Cars that have big production runs, are common in rental fleets, or have high maintenance costs have poor resale value.

Power windows and door locks, tilt steering wheels, cruise control, fancy sound systems, automatic braking … all those boost resale value. Black, white and silver cars hold value better than green, purple, yellow and orange ones.

What cars are expected to have the greatest depreciation over the next five years? Pontiac Aztec, Chrysler Sebring Sedan, Jaguar X-Types, Mitsubishi Diamante, Mercury Sable and the Suzuki Vitara.

Not all assets are treated equally

Private banks and trust companies pride themselves on making all their wealthy clients feel special. Some wealthy clients, however, are becoming more special than others.

A growing number of wealth-management firms are creating new business groups to target the super-wealthy — clients with tens or even hundreds of millions in liquid assets. The result: Customers who once got top-tier treatment with $5 million to $10 million can suddenly find themselves on the bottom of the wealth ladder when it comes to services and products.

Northern Trust Corp., Citigroup Inc.’s Private Bank, Merrill Lynch & Co., Morgan Stanley and others have all created special divisions for the rich, richer and richest. Many are rolling out services and products reserved only for the VIP of the VIPs.

At the same time, financial institutions are reaching down to the “mass affluent,” or those with at least $100,000 in investable assets, a market that has grown rapidly during recent years. Mass-affluent clients are highly profitable since they pay rich fees in proportion to their assets.

Learn more about home-based businesses

Has the time come for you to abandon the 9-5 routine and become your own boss? Does working as a stay-at-home parent sound appealing? Starting a home-based business may hold the answer.

Several Web sites feature information about home-based businesses:

• Business Know-How; www.businessknowhow.com/bkhhomeoffice. htm; offers a range of home-based business insights.

• Home Based Business News; www.home-based-business-news.com; features library with articles on a variety of home business topics.

• Home Business Magazine; www.homebusinessmag.com; covers aspects of developing a home-based business.

• Internal Revenue Service; www.irs.gov/businesses/small/index.html; contains information on tax issues related to home-based businesses.

• SCORE; www.score.org/bp—10.html; provides basics for establishing a home-based business.