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I live in Pakistan, have worked hard to save for a car but I have realized I have bigger financial troubles to deal with than just buying a car.

I live in my parent’s house and I need to buy my own house ASAP in like 3-4 years. I can live without a car.

Should I invest my money in a car or in a plot of land? The plot of land definitely is going to give better results in long term.

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  • Added the tag for Pakistan based on the user's profile. My research indicates buying land plots and building is fairly common there, but I don't have anywhere near enough info to provide an answer. – BobbyScon Sep 9 '16 at 21:32
  • @BobbyScoe:Yes. I live in Karachi, the biggest city and land prices are rising at very high speed here. People usually buy plots and sell them afterwords for a profit. – user4884 Sep 10 '16 at 6:52
  • What would you need the car for? Personal use or for a job? If having a car allows you to get a better paying job that might be a better investment than land. But in general, the second you buy an item like a car, it’s value goes down. The only exception to this rule is if you buy a rare, collectible car that you would rarely drive. But realistically, your car will not go up in value. It can only be used as a (literal) vehicle to help you get somewhere else where you can (maybe) make more money. – JakeGould Sep 10 '16 at 6:53
  • I need a car for my father. He is in his 60s. My father and I travel using motor bikes which aren't safe at all. – user4884 Sep 10 '16 at 6:57
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    "land prices are rising at very high speed here. People usually buy plots and sell them afterwords for a profit" Warning, that sounds like a bubble which is about to burst. If it bursts while you are holding land, then you have a huge problem. – Philipp Sep 18 '18 at 16:08
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Your question has an interesting mix of issues. ASAP and 3-4 years doesn't feel like the same thing. ASAP results in bad decisions made in haste. Four years of living very frugally can create a nice down payment on a house.

A car is only an investment for Uber drivers and those who are directly financially benefitting from a car's use. For everyone else, it's a necessary expense.

What I'd focus on is the decision of buying a plot of land. Unless this is a very common way to do it in your country, I don't recommend that order. Having land and then trying to finance the building of a house has far more complexity than most people need in their lives. In my opinion, the better way is to save the 20% down, and buy a new or existing home you can afford.

In the end, spending is a matter of priority. If you truly want to get out in the least time, I'd save every dime I can and start looking for a house that your income can support.

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In a comment you wrote:

land prices are rising at very high speed here. People usually buy plots and sell them afterwords for a profit

This sounds like there might be an investment bubble which is about to burst. If it bursts while you are holding land, then you have a huge problem. Signs which point that there is a bubble:

  • People trade plots of land but nobody actually uses these plots as a place to live or work?
  • People take loans to buy land hoping to sell it later. They assume the interest rate on the loan will be lower than the value gain.
  • The prices for buying real estate increase but the prices for renting real estate do not.
  • The population density in your region didn't increase much in the past 10 years.

If you notice that anything like that happens, then there is very likely a real estate bubble in your region. If it bursts while you own a plot of land, you are going to lose a lot of money. If you need a place to live in such a situation, then it is usually smarter to pay rent for now and buy a home after the crash.

On the other hand, it is also possible that the reason why real estate prices are raising in your region is because there are actually many people who want to move there. When your region is experiencing an economic boom in other sectors than real estate, and there is reason to believe that this economic growth is sustainable for a few decades, then it might be a smart move to buy land as early as possible.

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“The plot of land definitely is going to give better results in long term.”

Will it? Land is not guaranteed to go up in value. And a car can provide more employment opportunities for you.

You need to look at your specific situation—with specific numbers—rather than using rules of thumb as hard guidelines.

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I think that it's a good idea to buy a land plot rather the car coz we can slowly save more money that we be able to build our own house. If we have car and no house to put it in, it's such the headache matter. We can live without car but we cannot live without a house. Thank you.

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