Why would I choose a 40-Year depreciation instead of the standard 27.5-Year?
There are specific cases where you are required to use ADS: Required use of ADS.   You must use ADS for the following property. Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property. Any tangible property used predominantly outside the United States during the year. Any tax-exempt use property. Any tax-exempt bond-financed property. All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the   uniform capitalization rules to certain farming costs is in effect. Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade   restrictions or engages in other discriminatory acts. See publication 946. If none of those apply to your property - you may elect ADS. Why would you elect ADS when you're not required to use it? If you can't think of a reason, then don't elect it. For most people the shorter the depreciation period - the more they can deduct (or accumulate in passive losses) each year, and that is usually the desirable case. If you plan on selling in 10 years, keep in mind the depreciation recapture and consider whether the passive losses (offsetting regular income) are worth the extra tax in this case.
My assumption here is that you paid nearly 32K, but also financed about 2500 in taxes/fees.  At 13.5% the numbers come out pretty close.  Close enough for discussion. On the positive side, you see the foolishness of your decision however you probably signed a paper that stated the true cost of the car loan.  The truth in lending documents clearly state, in bold numbers, that you would pay nearly 15K in interest.  If you pay the loan back early, or make larger principle payments that number can be greatly reduced. On top of the interest charge you will also suffer depreciation of the car.  If someone offered you 31K for the car, you be pretty lucky to get it.  If you keep it for 4 years you will probably lose about 40% of the value, about 13K. This is why it is foolish for most people to purchase a new vehicle.  Not many have enough wealth to absorb a loss of this size.  In the book A Millionaire Next Door the author debunks the assumption that most millionaires drive new cars.  They tend to drive cars that are pretty standard and a couple of years old.  They pay cash for their cars. The bottom line is you singed documents indicating that you knew exactly what you were getting into.  Failing any other circumstances the car is yours.  Talking to a lawyer would probably confirm this. You can attempt to sell it and minimize your losses, or you can pay off the loan early so you are not suffering from finance charges. "A lease is a rental plain and simple.  You borrow money to finance the expected depreciation over the course of the lease term.  This arrangement will almost always cost more over time of your ""ownership.""  That does not mean that a lease is always a worse ""deal.""   Cars are almost always a losing proposition; save for the oddball Porsche or Ferrari that is too scarce relative to demand.  You accept ownership of a car and it starts to lose value.  New cars lose value faster than used cars.  Typically, if you were to purchase the car, then sell it after 3 years, the total cost over those three years will work out to less total money than the equivalent 36 month lease.  But, you will have to come up with a lot more money down, or a higher monthly payment, and/or sell the car after 36 months (assuming the pretty standard 36 month lease).  With this in mind, some cars lease better than others because the projected depreciation is more favorable than other brands or models.   Personally, I bought a slightly used car certified pre-owned with a agreeable factory warranty extension.  My next car I may lease.  Late model cars are getting so unbelievably expensive to maintain that more and more I feel like a long term rental has merit. Just understand that for the convenience, for the freeing up of your cash flow, for the unlikelihood of maintenance, to not bother with resale or trading the car in, a lease will cost a premium over a purchase over the same time frame." "1. Interest rates What you should know is that the longer the ""term"" of a bond fund, the more it will be affected by interest rates. So a short-term bond fund will not be subject to large gains or losses due to rate changes, an intermediate-term bond fund will be subject to moderate gains or losses, and a long-term bond fund will be subject to the largest gains or losses. When a book or financial planner says to buy ""bonds"" with no other qualification, they almost always mean investment-grade intermediate-term bond funds (or for individual bonds, the equivalent would be a bond ladder averaging an intermediate term). If you want technical details, look at the ""average duration"" or ""average maturity"" of the bond fund; as a rough guide, if the duration is 10, then a 1% change in interest rates would be a 10% gain or loss on the fund. Another thing you can do is look at long-term (10 years or ideally longer) performance history on some short, intermediate, and long term bond index funds, and you can see how the long term funds bounced around more. Non-investment-grade bonds (aka junk bonds or high yield bonds) are more affected by factors other than interest rates, including some of the same factors (economic booms or recessions) that affect stocks. As a result, they aren't as good for diversifying a portfolio that otherwise consists of stocks. (Having stocks, investment grade bonds, and also a little bit in high-yield bonds can add diversification, though. Just don't replace your bond allocation with high-yield bonds.) A variety of ""complicated"" bonds exist (convertible bonds are an example) and these are tough to analyze. There are also ""floating rate"" bonds (bank loan funds), these have minimal interest rate sensitivity because the rate goes up to offset rate rises. These funds still have credit risks, in the credit crisis some of them lost a lot of money. 2. Diversification The purpose of diversification is risk control. Your non-bond funds will outperform in many years, but in other years (say the -37% S&P 500 drop in 2008) they may not. You will not know in advance which year you'll get. You get risk control in at least a few ways. There's also an academic Modern Portfolio Theory explanation for why you should diversify among risky assets (aka stocks), something like: for a given desired risk/return ratio, it's better to leverage up a diverse portfolio than to use a non-diverse portfolio, because risk that can be eliminated through diversification is not compensated by increased returns. The theory also goes that you should choose your diversification between risk assets and the risk-free asset according to your risk tolerance (i.e. select the highest return with tolerable risk). See http://en.wikipedia.org/wiki/Modern_portfolio_theory for excruciating detail. The translation of the MPT stuff to practical steps is typically, put as much in stock index funds as you can tolerate over your time horizon, and put the rest in (intermediate-term investment-grade) bond index funds. That's probably what your planner is asking you to do. My personal view, which is not the standard view, is that you should take as much risk as you need to take, not as much as you think you can tolerate: http://blog.ometer.com/2010/11/10/take-risks-in-life-for-savings-choose-a-balanced-fund/ But almost everyone else will say to do the 80/20 if you have decades to retirement and feel you can tolerate the risk, so my view that 60/40 is the max desirable allocation to stocks is not mainstream. Your planner's 80/20 advice is the standard advice. Before doing 100% stocks I'd give you at least a couple cautions: See also:" "Welcome to Money.SE. Please forgive what might sound like a cliche, ""How well do you sleep at night?"" I mean, specific to the mortgage. There are those who are in a group who consider debt, at any rate, to be inherently bad, and would not take on a 2% mortgage even if a different bank were offering 4% CDs. You just need to understand the risk.  Your mortgage cost after taxes may be 2.625% (if you are in the 25% bracket) therefore, your break even is 3.09% for long term investments. The recent ""lost decade"" had a return of -9.5% for the full 10 year period. This is just about the worst decade in modern history. The average 10 year return is a cumulative 183% gain, with a standard deviation of 138%. If a perfect bell curve, this means that 1 10 year in 6 will give you a return under 45%. In fact, of the last 100 10 year periods, 15 had returns less than 45%, and just 8 were less than 30%, right in line with the bell curve stats. We always need to say ""past performance is no guarantee of future results,"" yet, when it comes to the market (I use the S&P for my numbers, by the way) we do have history to give us an idea of the kind of volatility we might see over the years. In my opinion, your approach is sound, and your returns very skewed to the positive, the median 10 year return being 138%, vs your cost of money of 40% or so for a decade.  It's pretty easy to pull S&P data into a spreadsheet and analyze as you wish." E&amp;P can be valid throug Net Present Value methods, on a field-by-field basis. As no field is ever-lasting, and there Are not an unlimited number of fields, perpetuity-formulaes Are shitty.  FCFF on a per-field basis with WC and Capex, with a definite lifetime.  Thank you for the compliment. You own the stock at $29.42 At $40, the stocks is called at $26. You can't add the call premium, as it's already accounted for. The trade is biased towards being bearish on the stock. (I edited and added the graph the evening I answered)  Not the pretiest graph, but you get the idea. With that $29.42 cost, you are in the money till about $30, then go negative until the most you lose is $3.42. They have a threshold limit at which point an actuary tells them that it's unprofitable to deal with a particular customer. The last time I read about it was a few years ago, but I think that I remember that the magic number then was around 40 returned or replaced items per year. Probably totally wrong about that number though. If it's a rental, you will write off the losses via Schedule E. You should read this document and its instructions to understand this fully. You will also take depreciation on the value of the building, not the land, over 27.5 years. If you don't understand this, search here, there are discussions that cover this.  If it's not a rental, but your home or second home, you take the interest and real estate tax off you tax via Schedule A, if you itemize. (I see the tag 'rental' but leave this line for sake of a complete answer.)