My New Hobby, Investing (to Sail/Cruise)
- Thread starter CloudDiver
- Start date
It takes money to cruise... it takes a good investment strategy to cruise and not run out of money. Plenty of other threads about prepping the vessel, polishing skills, selecting equipment, etc... This thread is about building a financial base to support all of that.
BTW, saving and investing are two different things. Many people do the former and never really grasp the importance of or learn the power of the latter.
At what age do you plan on retiring and setting sail? and what age do you think you will stop cruising? I ask these because it sounds like you are planning for 10+ years of cruising.
Most cruisers start at 65/6/7 and finish at 70/1/2. Most start thinking of an exit plan about 70 as the body starts saying "no more" (cruising is harder than you think). Second, about that time the excitement, glory, desire to explore has faded; cruising becomes just life. It is at this time the excitement of moving onto something else builds much the same way the excitement, curiosity and desire built when thinking about setting sail to see the world.
If your boat is refitted, a total refit before you leave and you have plenty of spares for everything that wears out, then cruising really isn't that expensive for 2-3 years. It is when you get into the many years range is where it gets expensive, having to fix things in foreign lands and replacing things like rigging. Example: in the past 3 years I have spent about $3,000 on parts and another $3,000 on shipping to get them to me.
Most cruisers start at 65/6/7 and finish at 70/1/2. Most start thinking of an exit plan about 70 as the body starts saying "no more" (cruising is harder than you think). Second, about that time the excitement, glory, desire to explore has faded; cruising becomes just life. It is at this time the excitement of moving onto something else builds much the same way the excitement, curiosity and desire built when thinking about setting sail to see the world.
If your boat is refitted, a total refit before you leave and you have plenty of spares for everything that wears out, then cruising really isn't that expensive for 2-3 years. It is when you get into the many years range is where it gets expensive, having to fix things in foreign lands and replacing things like rigging. Example: in the past 3 years I have spent about $3,000 on parts and another $3,000 on shipping to get them to me.
CloudDiver, Franklin is saying some interesting things. I don't think it has to be true that cruising gets expensive over the long term, but it sure can be. I'm sure that's your point. Another investment, depending on the type and extent of the cruising you want to do, is a busking skill. Learn the guitar, the harmonica, the concertina. I have seen a number of "Young, Dumb, and Broke" kids, to quote Elmer Fudd, who were making their way around the oceans quite happily by busking and selling crafts from their boats.
I love this thread and am really eating it up. Just thought, I throw a non traditional idea our there.
- Will (Dragonfly)
I love this thread and am really eating it up. Just thought, I throw a non traditional idea our there.
- Will (Dragonfly)
No no no ! You are supposed to panhandle via patreon, with click bait photos of some girls in bikinis, while usually showing off a lack of common sense and skill, and living the "Lifestyle" (that word, more and more, makes me want to barf)
You have the right idea IMO, inspite of starting late on the long term financial planning.
Invest and plan your finances.
(Unlike many people today, you have more than enough skill to DIY to save money AND make money while you cruise)
Get a boat that is just big enough for your NEEDS, with the gear you NEED, for the places you want to go.
(Based on what I've seen, you are a perfectionist, That can, in some cases, be a pointlessly expensive "vice". Due to that same affliction, I turned a 2 week, "refresh" of my wife's truck, into a multiyear, expensive, frame off restoration, with her complaining she just wants to go drive it)
Keep your expenses down while investing/saving, but don't suffer because of it.
In regards to getting rid of stuff... it cannot only recoup some money, but it can also help you into a frame of mind that analyses everything you have. A good mindset if you spend time on a boat for long periods.
Minimalism is liberating. Stuff not only costs money to acquire, but has "hidden" financial/time/effort costs too.
George Carlin's "Stuff" comedy routine hit it on the head.
Last edited:
I agree 100% but I would only change on word... What makes me want to barf; sub 'lifestyle' with "Living the Dream"... Every time I hear that I see someone who has no idea how hard living at sea really is. What I see is a failed 'dream' as soon as the initial shine has worn off and a good chunk of money is gone.No no no ! You are supposed to panhandle via patreon, with click bait photos of some girls in bikinis, while usually showing off a lack of common sense and skill, and living the "Lifestyle" (that word, more and more, makes me want to barf)
Thanks for you thoughts, they are quite important to this discussion. I actually plan on starting to cruise much earlier than 65. Hopefully no later than 50 but if I am incredibly aggressive and with no small amount of luck, by 45. Not kidding... I'm pretty sure I can do it. It's not just wishful thinking, its the math that backs it up. I keep a pretty complex spreadsheet with multiple tabs, it tracks my expenses, income, investments, everything. It calculates my current net worth and helps with planning. My primary goal is to build my dividend income portfolio over the next 6 to 10 years so that it produces enough monthly income to replace my employment income. Now that is a really big number (not bragging, but it takes a significant portfolio balance to replace a regular job income, even if you only make an average blue-collar salary). One important factor to keep in mind is that my monthly expenses and lifestyle in general will have a significantly lower cost... less than half of what I spend now if I plan correctly. This isn't hard to do when you don't have any debt, don't buy cars and have to maintain them, don't pay a mortgage and insurance/maintenance on a home, etc. Now there will be a boat obviously and that is no small expense, but with proper planning it will be accounted for with a generous safety margin. Essentially, while I will need less monthly income than I make now to support my life the other primary goal is to actually continue funding my 401K and Roth IRA as I normally would have while working between the ages of 45 to 50 on to 65. So I want to build investment income that will be reinvested into my 'normal' retirement accounts for another 15 to 20 years. Cray? Maybe. Impossible? Hold my beer....
jssailem
SBO Weather and Forecasting Forum Jim & John
- Oct 22, 2014
- 23,034
This can be done if you have a job or business that creates taxable earned income.
You need taxable income to fund a tax qualified retirement fund. (401K or RothIRA). The IRS does not look favorably on investment income being used for this purpose. You of course can have a minimal paying job (that covers your immediate needs) and use the investment dollars to fund the ROTH IRA, but the amount you can fund the account is based on the amount of "EARNED" income you have in the tax year.
The 401K would require you to work for the business entity that is sponsoring the account. Or you could establish your own business and create a 401K account with you as an employed member. The challenge is the 401K accounts all have management fees that include the required annual reporting which are being paid by the employer. You may find that such a plan is more costly than other options.
Never plan on selling your primary home as a source of income. Terrible idea
Also, whenever you can, shoot the middlemen. Mutual funds, full service stock brokers, annuities, reverse mortgages, wives, etc all take a bite out of your future. A little common sense stock picking and you know exactly what you own and your success of failure depends on no one but yourself.
Never plan on selling your primary home as a source of income. Terrible idea. Pay off your home over time since mortgage rates on homes are usually the cheapest money you'll find. Then when it's finally paid off, you'll get a nice raise and have a place to live. Unless you've lived on a sailboat before, it can be quite cramped. Even a large sailboat is no bigger than a small condo. You may think about short term renting (AirB&B, VRBO) while you cruise.
Also, whenever you can, shoot the middlemen. Mutual funds, full service stock brokers, annuities, reverse mortgages, wives, etc all take a bite out of your future. A little common sense stock picking and you know exactly what you own and your success of failure depends on no one but yourself.
I've recently learn that social security benefits are based upon earning from the last 5 years before applying. This means, if you have cut back on hours or taken a more modest job before retirement, you won't get back what you've been paying all your life. Quitting work early my net you no SS income when you reach retirement years.
- Will (Dragonfly)
We all need a good life plan. However, let us remember the words of a very wise man (Jimmy Buffett), "...I'd rather die while I'm living, than live when I'm dead..."
I'm sorry... but this is way to much analysis for someone who simply wants to go cruising. Either you have the calling or you don't. If you do you get out there. If you don't you do what rich people do... buy a fantastic boat, hire a captain to take care of it and deliver it to your chosen cruising area.. then fly there with your family and friends and enjoy. When you aren't using it.. you charter out the boat and crew.
Seems to me you could use a financial consultant and a set of final goals to trigger your cruising departure.
Many cruisers are young and naïve, full of dreams, learning as they go, making things work out. Others are retired with secure income and decent experience to know what to expect.. i.e. stay within their limits. And a very few are hard core adventure junkies who will do anything to sail.
Seems to me you could use a financial consultant and a set of final goals to trigger your cruising departure.
Many cruisers are young and naïve, full of dreams, learning as they go, making things work out. Others are retired with secure income and decent experience to know what to expect.. i.e. stay within their limits. And a very few are hard core adventure junkies who will do anything to sail.
I use the term 401K very loosely, only to identify my primary retirement account where the contributions are tax deductible. If I stop working I understand I won't be able to contribute capital gains into a 401k, Trad IRA or Roth IRA... but there are many, many , many tricks to this. The rich use these tax strategies all the time, they call it having the lowest 'Tax Liability', the regular working middle class usually call it being a tax cheat. People get angry about these strategies because they don't understand them and don't feel like they can take advantage of them, but they are completely legal... no matter how you may feel about the ethical implication and how much a Lobbyist paid off many members of Congress to get such tax rules into law, its still legal and the wealthy are going to exploit them. I'm done being angry about it myself, I'm learning and doing the same.
So essentially, I want to be semi-retired and have other passive income that will continue contributing to my primary retirement accounts until I fully retire between 62 and 65. True, my 401K will need to be rolled over into a different type of account. I may have to start a Simple IRSA, do Roth Ladders, of all kinds of other financial wizardry, but believe me when I say I have gotten a pretty good grasp of the possibilities as how to set these funds up, how much they need to be funded to grow, and what the tax liabilities are. FYI, right now the highest management fee I pay on any fund is 0.25%.
Not true... You need to log onto SSA.gov and get your SS report. It is based on the highest 5 years of your entire working career over 30 years. I have been working 25 years, but I can quit right now and my computation is locked in.
Respectfully disagree.... I've done the math. I can keep my home for another 20 years to go and I will end up with whatever the going rental rates are, and thats no small chunk of cash. BUT, I have already paid a hefty sum in interest over those years and I will being for maintenance and upgrades over that time etc... I can sell within the next 5 years (if real estate prices hold) and make $250K after the realtor's cut and invest that into my dividends income portfolio. The overall size and cash-flow generated from that portfolio at the same 20 year mark when my mortgage would be paid off will pay the same or more in dividends than the monthly rent I would be getting. I've saved myself a bundle in the long run on paying the bank total interest that dwarfs the original principal, bypassed thousands in home maintenance and upgrades, then don't have to worry about renters trashing my place. Now there is something to be said about the tax benefit of the mortgage interest deduction I will be giving up, but there are many other strategies available to replace the tax shelter of your primary residence.
On the second statement, yes I already go around the middle men. Any Index fund I have is through Vanguard or similar in expense ratio. I only buy dividend stocks, I'm interest in passive income (which is Drip invested right now), not risky growth stocks that shift with Wall St fears/rumors/hurt feelings.
That is welcome information, since my wife has left her administration position at a local hospital after 30 years and we are trying to build a homestead business for the next 5+ years. Our goal is to retire onto a cruising boat and travel. The last thing either of us wants to do is fall back into the world of office politics.
- Will (Dragonfly)
Joe... I AM a financial consultant. Well, not officially yet in the terms that you mean. I am going to be getting a certification in financial management planning this fall, currently I consult on multi-million dollar contract purchases for the DoD, different stuff but same fundamental skill set.
Anyway... I have to disagree and say that this level of analysis is exactly what is needed. I want to retire early, not wait until I'm 65. It can be done, and right now my current analysis (which is incredibly conservative) proves that I can. You all have to understand that my life situation is different... I don't have kids and will never have kids. I don't want to own things (except a boat, and I think its only fair if I give up everything else). I don't even care to own a house anymore, but it is a key factor in my overall plan so I don't regret buying it. My current savings rate (disposable income that I choose to invest rather than spend) is 30% of my total after tax income. I can actually reach over 40% in the next three years. I have only been able to figure out these possibilities and set goals by using some pretty powerful financial planning tools, and I will share those in an upcoming post. They are not secrets, no magic involved, no scams... just good old spreadsheets, simple math, and the effort to input the data down to the last penny.