# Buy or finance? Thinking aloud



## serpa4 (Aug 2, 2015)

I have 3 years still till retirement. My boat savings account will have about $600,000 (I have a pension also). However, I had always planned to have my investments growth/div make my boat payment of ~$2500. I will be shopping for a boat in the $350k range. However, now I'm wondering if I should pay cash? 

Cash and a paid off boat: Not subject to stock market declines and unpredictable drops as well as growth. I'd hate to not make a payment if the market under performs. I won't have interest on a boat loan. I can choose not to have insurance. When I quit sailing, I can sell the boat at a sizeable loss due to age and loss in resell value. It will not be enough to buy a retirement home. If I have $250K left over after purchase, then this will hopefully grow or almost double (assumption) in that 15/16 years.

Finance. My investments have "always" made more on their returns than the expected interest rates on boat loans. I.e. if my investments return 7% or more and boat loan is ~5%, then I feel I'd be throwing out 2% of $350k. I don't want to pull out money that is growing and put it into a boat that is dropping in value every year. When I retire, I will still have the investment income after the boat is sold. The investment income will allow me to purchase and make payments on a retirement home. Investments will likely cease to grow since interest/dividends will be pulled monthly to make payments.

Plan to sail for 10-15 years on a cat that will be about 7 years old.


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## Minnewaska (Feb 21, 2010)

My perspective on debt changes at retirement. When you have the ability to work and add resources, the market risk is more manageable. I'm a big fan of no debt in retirement, for the reasons you noted. You may not have the time to recover from a bad market, or lose your boat, if you can't make the payments. What if a health issue eats up capital, etc. 

Over the long term, markets should earn more than the current cost of debt. However, one massive down year can take a long time to recover (we are at all time market highs right now). In retirement, you can't know if you have that long. If you have an adequate margin to withstand a big decline or guaranteed pensions or annuities, debt can be slightly more viable. I still say avoid it in retirement.

As to depreciation, that's going to happen either way. You need to have the wealth to take the hit. Not a factor in cash vs. debt.


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## colemj (Jul 10, 2003)

We also had a similar decision/plans. Some things to consider: 

You will have to have full insurance if you have a loan. I don't know any lender that wouldn't require this. You also may be limited by the lender in where you can take the boat, since some of them want their assets easily recoverable. Credit cards and other small debt instruments may be more difficult to get or keep because your credit rating will be grossly distorted when you no longer have a job because of the way the rating agencies score debt and income. If/when you decide to throw it all in and move back to land, this might bite you also.

The point above is a good one - we left cruising at a market high before the great crash. Went to the uninhabited parts of the Bahamas for 6 months and never had any internet or other communications. Came back out and found that we had lost over half our investments. It took 5 years to break even again.

What we did: 
Took a low interest loan on the boat while we were working for the next 5 years and our investments were returning more than the loan interest. Just before casting off, we paid off the boat loan. It continues to have been the correct decision for us.

Mark


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## capecodda (Oct 6, 2009)

If you have a way of delivering 7% at no risk, I'll pay you 1% to manage my retirement investment . First I'm checking that your first name isn't Bernie .

IMHO, buy a more modest boat for cash. 

Good luck, hope your retirement dreams come true!


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## 4arch (Jul 7, 2009)

The insurance issue seems to be a bit of a red herring. Would you really ever drop coverage on a $350K boat? And how many marinas - especially of the variety that accommodate $350K cats - allow uninsured boats anymore?


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## denverd0n (Jun 20, 2008)

capecodda said:


> If you have a way of delivering 7% at no risk, I'll pay you 1% to manage my retirement investment . First I'm checking that your first name isn't Bernie .


I'm hoping his name is Warren!


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## denverd0n (Jun 20, 2008)

To the OP, I think you have the issues pretty well defined. The only thing you didn't note is that a boat can qualify as a residence, and so the mortgage interest can be deductible. Now it is just a matter of deciding what your priorities and preferences are.

My wife and I are in the same camp as Minnewaska. I understand all of the math, but for us there is real value in owning our home and being debt free. Hence, when we buy our next boat it will be with cash, or perhaps a very small loan that we will pay off before we head out over the horizon.

Good luck.


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## joebeach (Aug 16, 2011)

Good points made above, especially on debt-free retirement. As Minnewaska notes, the markets are at/near all-time highs now. Might be a good time to take some profits and to buy in cash with net proceeds.


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## capta (Jun 27, 2011)

I've always figured that if I couldn't pay cash for something, I couldn't afford it.
We owe no money to anyone, not even a cc company. Our debit card works equally well out here to purchase things or get cash.
Upon retirement I liquidated all my assets and bought an annuity so that I would have a minimum fixed income for the rest of my life. The payments go into two accounts; one for living expenses and the other is for emergencies.
With the remainder of my assets I bought this boat and paid for the upgrades I wanted to do to it.
We fell into a niche charter business, but it's much less about the income than sailing. It's so easy to fall into the 'sitting around in lovely tropical anchorages" mode down here and my wife wanted to do more sailing, so the chartering seemed a good way to do it. The charter income covers the more costly charter insurance and added wear and tear on the boat.
A lot of our friends are constantly on the edge, needing the charter income to pay their boat mortgage, which is a lot of added pressure. We can and do refuse charters we don't feel will be successful, which is a big plus in this industry. If someone's very first contact with us, through the website, is more about needing gallons of fresh milk every day (a rare item down this way) than about the sailing, we know this person would not be happy sailing with us.
If one of us should become ill and we were forced to stop chartering, we would not lose our boat (home) because of a lack of income. As mentioned above, should one be relying on their investments to support their cruising, a downturn could be disastrous.
However, unlike the OP, we have no intention of selling this vessel to purchase a house, anytime in the future. After all, a house is just a poorly built boat that won't go anywhere, and we don't want one of those!


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## colemj (Jul 10, 2003)

denverd0n said:


> The only thing you didn't note is that a boat can qualify as a residence, and so the mortgage interest can be deductible.


Yes, this is a good point I forgot to make when describing how we approached the issue. The mortgage deduction when our taxes were high made the boat loan almost free.

Mark


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## Yamsailor (Jun 7, 2006)

Why would anyone drop $350,000 in cash on a boat and not insure it? That makes no sense to me unless your network is in the 100s of millions.

AS to financing---If you can afford not to finance--don't finance. New Boat loans for a $350,000 boat for 20 years are running 5%. If the boat is older add 0.25% per every 7 years. You will be required to put at least 15-20% down. So you are looking at a $280,000 loan over 20 years. That is roughly $1900/month. If you are using it as a first or second home the mortgage interest is deductible (for now).

So you are looking at roughly $180,000 in total interest on a $280,000 loan for 20 years.

How long have you been sailing?



4arch said:


> The insurance issue seems to be a bit of a red herring. Would you really ever drop coverage on a $350K boat? And how many marinas - especially of the variety that accommodate $350K cats - allow uninsured boats anymore?


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## colemj (Jul 10, 2003)

Let's say the OP has $350,000 in savings/investments and, after living expenses, still has $1,900/month left over for a boat loan.

At the end of the loan period, he would have paid $530,000 for his boat, like you point out. BUT, his initial savings at 5% return will have netted him $930,000 after this time.

If instead he buys the boat outright with his savings and invested the $1900 he isn't paying on a boat loan each month at 5% return, he will have $780,000 at the end of the 20yrs. 

He will have $150,000 LESS at the end of 20yrs if he buys the boat outright than if he finances it. This is the same reason all businesses use borrowed money and their cash flow to expand or acquire capital rather than deplete their own cash reserves or assets.

Of course, the above assumes a lot and doesn't take into account a myriad of unknowables. The OP's decision isn't a general economic or financially cut and dry one - there are a lot of subtleties that are unique to one's specific situation and time in life.

The only universally true thing economically about buying a boat is that doing so is financially stupid. Makes no financial sense at all, and one is always better off financially not buying a boat.

But everyone here already knows that, and are working on the assumption that they will buy a boat anyway. Now the question is how to make the best of a bad financial decision. 

BTW, I read 4arch's sentence "would you really ever drop coverage…" to mean the same thing as you express in your first sentence, only using the word "drop" differently (ie, "drop" meaning remove coverage, not add it).

Mark


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## Yamsailor (Jun 7, 2006)

Interesting points. Additional Points;

1) You didn't take depreciation of the boat into your calculus;
2) 5% return is not Guaranteed. There is a risk of losing capital with your analytical approach;
3) You did not take into account the reduced taxes due to interest on the loan nor the taxes on the 5% return on the invested money;

therefore, in my opinion (which admittedly is not worth a cent), what you are suggesting is a big risk for someone who is retired.



colemj said:


> Let's say the OP has $350,000 in savings/investments and, after living expenses, still has $1,900/month left over for a boat loan.
> 
> At the end of the loan period, he would have paid $530,000 for his boat, like you point out. BUT, his initial savings at 5% return will have netted him $930,000 after this time.
> 
> ...


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## colemj (Jul 10, 2003)

Yamsailor said:


> Interesting points. Additional Points;
> 
> 1) You didn't take depreciation of the boat into your calculus;
> 2) 5% return is not Guaranteed. There is a risk of losing capital with your analytical approach;
> ...


Yes, I agree and thought I was making those points by saying there were a myriad of unknowables and a lot of assumptions. Also that things are different at different points in life and financial situations.

But I don't think depreciation of the boat matters when considering how to finance it - it depreciates the same regardless.

And I didn't suggest or recommend any approach - just pointing out the differences.

Like I mentioned earlier, we did a mixture of finance and cash - we financed the boat while we were still working and had a lot of cash flow, while letting our existing investments earn more than we were paying in loan, while taking the tax deduction afforded by the loan. Then we paid off the loan just before we retired, making sure the tax hit on realizing investment profits used to pay the loan off fell into a year where our high income had gone away and the resulting taxes were zero. Overall, this strategy was more lucrative than buying the boat outright from the start. In hindsight, it also worked out to be the better decision financially than keeping the boat loan because the market crashed soon after we retired and our existing investments were worth half of their previous value. So we got lucky and were on the better ends of both sides of that equation.

Mark


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## serpa4 (Aug 2, 2015)

Thanks everyone. Good reading. I do have a pension to live off of. I solely plan to use investments to purchase or finance the boat. However, my pension is also sufficient to make the boat payment. This would prevent me from loosing the boat on bad market years. I'd have to see what can be done to reduce my cost of living significantly to live off the tanked investments. I would believe I could reduce my cost of living in many ways, postpone maintenance big maintenance for a year or two i.e. don't need sails replace every 7 year, maybe 9 if they can make it, don't eat out, drink less beer, etc. I would thus allow my investment performance to dictate how I live, but not the fact of having a boat or not. I'm not sure if that is smart either.
I have been sailing for about 2 years. I have 3 years left to retire. I plane to circumnavigate and make very minimal use of marinas. I can do most repairs myself, electronics, engine, etc.
I have not researched the topic yet, but perhaps catastrophic insurance vice full coverage if the boat is own vice financed. I have 3 years to figure it out. My only current concern is the market always has it big drops. It's at a high now. If it tanks again by 30+ percent, in the 3 years I have remaining...that will push me out 5+ years, ugh, could leave now, but owe the company 1.5 years and son is still living at home for the next year or so.


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## colemj (Jul 10, 2003)

serpa4 said:


> ...drink less beer...


Good god, man, if you have to live like an animal, you should reconsider buying a boat&#8230;

Mark


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## gonecrusin (Aug 23, 2016)

We echo what others here have said, buy a less expensive boat for cash and let your assets to grow. If the market takes a dive you won't care, you're living on your paid for boat. Like you we have sizable assets and incomes (we can afford a new 60 foot cat) but we are happy with our 40 year old boat. It's a very comforting not to worry about money.


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## colemj (Jul 10, 2003)

gonecrusin said:


> We echo what others here have said, buy a less expensive boat for cash and let your assets to grow. If the market takes a dive you won't care, you're living on your paid for boat. Like you we have sizable assets and incomes (we can afford a new 60 foot cat) but we are happy with our 40 year old boat. It's a very comforting not to worry about money.


Only one person said to buy a less expensive boat for cash. The rest of us were discussing the options around financing or cash purchase of a $350,000 catamaran - like the OP requested.

I agree that it is comforting to not worry about money, but that is a very relative thing. Some may stop worrying when they have millions of extra dollars they have no idea how to spend, while others may stop worrying when they have enough beer money for happy hour.

The correct answer is up to the OP to decide.

Mark


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## John Casey (Mar 3, 2014)

We're going through the same decision at the moment, and have come to the conclusion that our best option is likely financing while letting our dividends pay for the monthly payment. 

We do have a tax accountant lined up to confirm our assumptions before we take any action. 

Our thoughts are as follows:

1. We are not spending our own money (principle) for the purchase of the boat;
2. We avoid the rather large capital gains/tax hit since we avoid selling our equities;
3. We are also looking at incorporating which will allow us to depreciate the boat over X years while we pay off the mortgage; 
4. While there is risk of another market crash, we are mainly in blue-chip stocks who are less likely to reduce their dividends following an adjustment or crash; 
5. We also have a large chunk of cash sitting in the account we may use for fixes/upgrades beyond the purchase price within the mortgage; and
6. We both have government defined benefit pensions that mitigates our risk with this potential plan.

Our situation is a bit different than yours as we are Canadian. This means that we can not deduct mortgage interest unless we can tie it into a business/income, although we can get mortgages as low as 2.2% at the moment while yours are substantially higher. 

The key for us will be if we want to get into generating income which allows us to depreciate "the asset" which will have a substantial impact on any 5 year cruising plan, and coincidentally a 5 year mortgage term. 

Good luck to you.


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## Minnewaska (Feb 21, 2010)

The unavoidable bottom line...... debt payments are guaranteed. Investment returns are not. No getting around it.


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## aeventyr60 (Jun 29, 2011)

Since you have some time before your departure and plenty of dosh, why not consider something like this:

https://www.sunsailyachtownership.com/intelligent-yacht-ownership


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## colemj (Jul 10, 2003)

Minnewaska said:


> The unavoidable bottom line...... debt payments are guaranteed. Investment returns are not. No getting around it.


That is a bit too simplistic of a view. While true in the absolute, it is somewhat meaningless because the entire world economy runs on debt payments and investment risk.

Following your logic to the end, one would never borrow money to buy a house, or car, or business, or education, or even use a credit card.

Of course, these things are being done all the time by pretty much most people with largely no ill effects.

The OP seems to fully understand his financial position and is only seeking advice/experience/opinion around a very narrow spectrum of cash flow and investment return options related to a specific asset over a specific time.

He doesn't appear to be selling the farm for a few magic beans, nor marching his children to medical research because he has over-extended himself in supporting an ill-conceived pipe dream.

Mark


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## gonecrusin (Aug 23, 2016)

While it's true the world runs on debt and investment we're not talking about that. We're talking about a retiree spending the majority of his savings on a depreciating asset and assuming the remaining savings will grow at a rate that gives him a nest egg at the end of 15 years or financing the purchase and hoping the savings grow while cruising. Let's layout a scenario, say he buys and finances, the market tanks, he has a medical issue that cancels the cruise, he has to liquidate the boat deeply discounted and his $600k has in two years become $150k with no yield since the market tanked. All that's left is a pension. At the age of 45 it's no big deal, there are more years to work, at 65 it's a different story. As we a age we become more risk averse for a reason but it's his money so good luck, hope it all works out.


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## Minnewaska (Feb 21, 2010)

colemj said:


> That is a bit too simplistic of a view. While true in the absolute, it is somewhat meaningless because the entire world economy runs on debt payments and investment risk.
> 
> Following your logic to the end, one would never borrow money to buy a house, or car, or business, or education, or even use a credit card........


You're conflating leverage in the world economy, which creates increased productivity and growth over the long term, with debt against a fixed retirement income, variable asset values and finite lifespan?

As I already said above, when you're working, you are generating additional resources and have flexibility with debt. You can continue to work to replace a downturn or setback. That's why debt for a house or car can make sense. In fact, I have debt on my boat of roughly 20% of her value, which I plan to pay off in the next couple of years, before I retire.

When retired, however, your days are numbered and the further you get from that retirement date, the more difficult it will be to fix a financial problem. One bubble burst can take several years to recover the loss and then catch up to where the market gains were projected to be. How many of one's remaining years in retirement would that be? No one knows. The global economy will move on, we won't.

As I've also said, if one's financial condition can withstand that downturn and still have enough resources, then fine. Risk v reward. But it is still a risk. What I read above is that a significant downturn was going to impact the beer line item in the OPs budget. That doesn't sound like sufficient resources to withstand a downturn to me.

To each their own. That's my advice and I'm sticking to it.


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## aeventyr60 (Jun 29, 2011)

The other risk factor is that people don't last that long out here..best laid plans, a bit more difficult then you think, getting older and weaker. Economic down turns and your boat is not worth so much, double hit on the soft market and depreciation. Also quite a few older cats on the market now, prices coming down. Cost to out fit a factory delivered new boat is going to be another 50K, easy.


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## albrazzi (Oct 15, 2014)

Safe investment strategy, mostly fixed income in retirement years. Live off the Income from your money, that's your budget. Then you still have your money. Having a paid for Boat is nice for sure, remember personnel expense ratios will (in my case anyway) sometimes put the total cost of ownership only 20-30% paid with no Boat payment. Now a Crazy frugal high end Boater will have a different ratio but not that much.
Anyway I would prefer to be paid off and I am.


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## olson34 (Oct 13, 2000)

Way way better to go into retirement debt free. We paid off our house just before I retired and also our boat. While we could have bought a bit larger boat, we chose a "smaller" high quality boat that we can afford to maintain to a high standard. 
We only spend a month aboard at a time in the summer, so it's not a true like-to-like comparison. If we were cruising full time we would probably have chosen an Ericson 38.

To reiterate again, as the saying goes.... do not have debt in your retirement years. 

It's much more pleasant to have dividends, and if they falter at times, you can always eat more Mac N Cheese more often for a month.... while still having zero debt.


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## outbound (Dec 3, 2012)

My reality after building a new boat in 2013.
20% down
4.5% loan
6.5% after tax return using very conservative strategy.
Enough liquidity to buy boat from bank if necessary at short notice
And a tax credit which is one of the few I can find in retirement.

Math favors playing with other people's money predicated on the boat being a acceptable fraction of net worth. If not buy it. Then at least you will always have somewhere to live.
Calculus changes if tax law changes or in deflationary cycles.

In retrospect I'm comfortable with my decision. What ever you decide make sure you won't stress about it.


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## Minnewaska (Feb 21, 2010)

outbound said:


> My reality after building a new boat in 2013.
> 
> 6.5% after tax return using very conservative strategy.


Good to hear, but the market is up 57%, since the beginning of 2013. Pretty good market to make 6.5%, conservatively (even if annually). The issue for the OP is whether that's repeatable or reliable.



> Enough liquidity to buy boat from bank if necessary at short notice


This is key and allows for the risk. It also doesn't sound like the OP is in the same position.


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## RegisteredUser (Aug 16, 2010)

olson34 said:


> Way way better to go into retirement debt free.....


Yes, but....
We have to make ourselves afraid...of something.
We need to worry about things that may not yet be certain.
We build our own traps.
Many will never allow themselves become free.
Beware the dragons...and freedom....


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## chuck5499 (Aug 31, 2003)

I can only tell you what we did - we bought a brand new Jeanneau DS40 in 2003 and financed it and a lot of "toys" that we had added. It was a nice tax right off as it was our 2nd house. When we quit working in 2007 we sold the house and got rid of everything - we paid the boat off. 
We live on social security only - you can see our cost here - 8 years of cost data - Cruisers & Sailing Forums

and we have sailed a lot and seen a lot - now at age 72 and 70 we are still going and have not touched our investments - 
a lot of it depends on how you plan to cruise and where, your lifestyle, and you income from your pension -

as for insurance - you will have to carry at least liability - we carry full coverage and it is not that expensive relative speaking - ie if you lose the boat are you willing to lose everything you have invested in the boat

just what we did


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## colemj (Jul 10, 2003)

Minnewaska said:


> This is key and allows for the risk. It also doesn't sound like the OP is in the same position.


The way I read his post is that he has enough money right now to buy the boat outright, but is considering the options of financing it because he believes his invested money can make a better return.

If so, then he has the liquidity to buy the boat from the bank if necessary.

Mark


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## Minnewaska (Feb 21, 2010)

colemj said:


> The way I read his post is that he has enough money right now to buy the boat outright, but is considering the options of financing it because he believes his invested money can make a better return.
> 
> If so, then he has the liquidity to buy the boat from the bank if necessary.


If one is going to take their chances, I believe they should have sufficient liquidity to pay off the loan, in a downturn, and still have resources to maintain their lifestyle. Then it's just a question of risk tolerance, with excess assets. The OP said something like a downturn could affect their ability to buy beer. Sounds too thin to me.


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## hellosailor (Apr 11, 2006)

7% at no risk...Gee even the DOJ/FBI's Uniform Crime Statistics used to say that really big robberies (over a million dollars, used to be called "big") had a 95% rate of never being solved or caught. And of course, way more than a 7% return on investment.

I would suggest that anyone with 600k in a boat account, plus a pension, should really have a CPA or financial advisor who can look at their whole estate and crank out the really simple numbers for whether it pays to invest "elsewhere" or invest in paying cash for the boat.

You need to compare whatever you might put your money into (say, a market portfoli returning 8% annually, possibly tax free, if not, then efffectively 6%?) against what the finance will cost you, and that might be two points higher, making finance a net loss. Although, if the boat loan is recorded as a home MORTGAGE and the mortgage deductions shift the numbers again...The loan can make sense.

All very personal and dependent on your complete financial picture, and in that bracket you ought to have some professional advice, even if it means engaging a CPA to go over the financials with you for a couple of hours. (Which ain't gonna happen until the end of April now, at least in the US.)


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## colemj (Jul 10, 2003)

hellosailor said:


> All very personal and dependent on your complete financial picture


Yes, that is all I have been attempting to say, although many here think no debt is the only way. The advice about a CPA is good for someone who needs help in this area (since the OP is asking on a forum, perhaps it could be assumed he falls into this category). On the other hand, this can be pretty simple finance stuff if the investments aren't too complicated and the loan is a simple one.

One thing we noticed in the last couple of market crashes is that dividends survive pretty well. Yes, some companies cut dividends, but most of those companies started increasing them back up again as things got better. This means that while one may have lost half or more of their principle investments on paper, those investments that generated dividends still continued to provide pretty steady income regardless of stock price. This helped us through those times greatly because we never had to pull out principle at a loss to fund our lives. Now that the market is high again, our investment principle is back and greater.

Entering retirement cruising with no debt is only one of several valid ways to fund retirement cruising. This seems like a simple concept to me, so don't see why it is argued so much.

Mark


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## serpa4 (Aug 2, 2015)

"I would suggest that anyone with 600k in a boat account, plus a pension, should really have a CPA or financial advisor who can look at their whole estate and crank out the really simple numbers for whether it pays to invest "elsewhere" or invest in paying cash for the boat."

I do have an investor, but that is the limits of his profession; not a CPA. My retirement pension is about $3,000/month post taxes (at current rate still working). I do have a small additional amount from a couple rentals, but almost no equity in them. 
Although I do have enough in the kitty to pay off the boat (at retirement), but in a significant market downturn, that option may disappear. I only have about 600k to work with. If there is a 40% downturn, that would be pretty much gone and no ability to pay off the boat. My least favorite option is to work a couple years longer and pay down the boat by 80k or so. However, it seems one can always work longer, but then never leaves the docks; my wife and I are not getting any younger. My wife at retirement will be 57 and I will be 52. At 70 (only 13 years), not sure how much sailing we will be able to do by ourselves. Life is unpredictable and more so as we get older. 

I need to speak with my investor about how much I can "reliably, ha ha" expect from dividend paying stocks in a bad market. 

I'm leaning towards paying off a sizable amount. If the market tanks, I'll have a smaller loss, but the smaller mortgage might also be paid by my pension.

Seems the audience here is very split on cash/finance.


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## hellosailor (Apr 11, 2006)

An investment advisor could be all you need. The question being what his credentials are (TV commercial "But really I'm a DJ!") and whether he has a fiduciary duty to you. A CPA that is a "tax acocuntant" might know more about the tax consequences of your actions than just someone who is making the best pre-tax investments. Either way...The point is to get someone who can see your entire picture and the consequences of it.
There's no reason to take a bath in a 40% market adjustment. Set up the equities for an automatic warning or immediate sell if there's a 5% loss, or a 10% loss, whatever your threshold is. In the right accounts, you can get 50 trades a month for free, so that shouldn't cost you anything. In the wrong account you have to pay 2% for each acquisiiton and 2% more for each sale (which can really be 3-4% of the original amount if you've had good gains, double ouch).
So everything depends on your details.
Sometimes a holding may drop 5% in one day just based on the rumor mill and come back on the next. But if it hit 10%...personally I'd rather bail and and then evaluate whether to come back in the next day. Of course if you have to pay 4% combined to do that...the picture changes.
I suppose that's the siren call to buy something and put it in a charter fleet. The income may always tank, but the boat is bought and the "investment" gamble is on the charter business, not the market.
At least when you're in Vega, they comp you on the booze and room.(G)


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## Minnewaska (Feb 21, 2010)

Be sure your advisor has integrity. Likely they will be paid more, if you don't sell your investments.


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## colemj (Jul 10, 2003)

hellosailor said:


> At least when you're in Vega, they comp you on the booze and room.(G)


After traveling 25 light years to get there, I darn well think they should&#8230;

Mark


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## aeventyr60 (Jun 29, 2011)

colemj said:


> After traveling 25 light years to get there, I darn well think they should&#8230;
> 
> Mark


If the OP buys a Lagoon it may well take him that long to get there...especially to weather.


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## serpa4 (Aug 2, 2015)

aeventyr60 said:


> If the OP buys a Lagoon it may well take him that long to get there...especially to weather.


Ya, each person has priorities. Ultimately, sailing is fun, but I'd rather be at anchor. The boat is a form of transportation and a house, and ultimately not entertainment for me. A performance boat just isn't in the cards for me. IMHO, someone may arrive a day earlier than me, but the next 8 months would be best served on a boat with a 26' beam. Comfort at anchor will come at some expense to speed and comfort underway.
And...I'm shopping at a price point. I don't have much to work with. All those Privileges, Gunboats, Outremer, and such.
Lots of great info in this thread. Thanks all.
I'll compose a list of pro/con based on this thread, taxes, write-offs, market, etc to take with me when I ask for advice.


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## Don L (Aug 8, 2008)

serpa4 said:


> Finance. My investments have "always" made more on their returns than the expected interest rates on boat loans. I.e. if my investments return 7% or more and boat loan is ~5%, then I feel I'd be throwing out 2% of $350k.


I stopped reading the replies after the first page.

Pay off the boat before leaving. You aren't losing 2%, you're gaining peace of mind knowing you don't have to worry about it while you continue to believe you can beat the market.


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## outbound (Dec 3, 2012)

Think hellosailor got it right.
Yes use a independent financial advisor. Paid by fixed % of assets in account. Bigger account more he gets paid. No in house kick backs. No churning to get transaction fees. Doesn't care if it's in stocks, bonds, alt investments etc. I have a pearl Went throughout several before getting the "right" one. He directs all the moving parts-market, real estate, estate planning and works hand in glove with accountant. She loves him. People forget when cruising with poor internet and no access to daily mail, notaries, gov't offices and poor phone service unless you have mega bucks allowing the KVH route you're going to have to trust someone. Most of us don't want to burden family wit his stuff. Most don't have family wither time or tools to deal with it. So before spitting up the anchor and dropping off the grid spend the time getting a good advisor. It's that rather than loan/no loan that allows worry free sleep. Yes we monitor him remotely (trust but verify). But however you do it set it up so that aspect of your life can run on autopilot. 
Computers are wonderful things. I posted worse case numbers. Even then the loan makes sense. We live conservatively. Means no fancy clothes and stern limitations on any pure luxury goods. Things are set up to be very risk aversive. Have dry powder for dips so can buy low/sell high. Forecasting included total loss of boat as an asset, extended skilled nursing care, living to 110, market crash and such. So I think "worrying " about this is like "worrying" about a jihad on the US killing all non Muslim citizens. Possible but so unlikely as to not interrupt sleep.


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## kd3pc (Oct 19, 2006)

serpa4 said:


> I need to speak with my investor about how much I can "reliably, ha ha" expect from dividend paying stocks in a bad market.
> 
> I'm leaning towards paying off a sizable amount. If the market tanks, I'll have a smaller loss, but the smaller mortgage might also be paid by my pension.
> 
> Seems the audience here is very split on cash/finance.


Ex Series 7, 63 broker...

"bad market" could be anything from a +2-3% return to a double digit loss...and then the "duration" of the "bad" period

This would force me to diversify or mitigate risk, on the front side.

I would use other people's money as much as possible, especially while interest rates are this low...eventually they will rise and you could offset market losses with this low rate loan. We used ladder CDs earning 10% on a regular basis. Where are those rates today?

20% down, and make the payments out of your brokerage account, paying 10-15% more principal every month while the market is PLUS and just the payment when the market adjusts.

No magic in this .


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