definition

The purchase of a big ticket item, such as a business, a vacation home, an RV, or boat.

commentary

Financial success often hinges upon whether or not an investor purchases big ticket items, and whether the assets purchased are income producing, or whether they are personal assets which will depreciate in value.  Special care should be taken to thoroughly analyze the impact before making the decision to buy a personal asset such as an expensive vacation home, RV, boat, or other large asset.  The asset should be purchased only if future solvency is not threatened.

The source of funds for a purchase should also be carefully selected.  Lump sum withdrawals from IRAs or qualified plans is rarely a good idea.  Lump sums from non-qualified accounts are a better choice, and depending upon the terms of financing and the assumed rates of return, financing is viable option.