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Financial success from yachting – the 10 basic rules
Pete Brooke
Posted: Wednesday, May 28, 2014 1:45 PM
Joined: 01/12/2008
Posts: 62


The following is from the 'Its your Money' section of the January edition of Dockwalk. Follow every one of these simple rules and you I am certain that you will get the most out of your yachting career…and will leave it feeling that it not only gave you great memories and friends but helped you look forward to a long and fruitful second career or retirement.  

This column often discusses various forms of individual investment, banking and insurance but I thought it a good idea to present what I believe to be the rules, which if stuck to throughout your yachting career, will maximise your chances of financial success. Some of these rules will help make more money, some will set you up with good financial habits and others will help save money...when put together they should all help you build wealth throughout your yachting life. 

1. Have a bank account in the same currency as your income.  

2. Have other currency bank accounts, if you spend considerable time in other currency jurisdictions.  

3. Use a currency broker account to move money between these accounts, this gives you control and saves money on the exchange rate and commissions.   

4. Clear debts as soon as you can – especially those with a high interest rate.  

5. Check the medical cover available to you from the yacht... offer to pay a small supplement if it doesn’t cover you during holidays or when you are not on board.  

6. Think in ‘pots’ – this can be in the same account but conceptually plan out your different financial pots:  

  • Emergency pot – at least 3 months’ salary in a bank account (preferably 6 months). 
  • Education pot – when & how much and is it for the next course you want to do? 
  • Spending money – limit yourself to a set amount each month... then stay in! 
  • Property purchase money – how much will you need for a deposit, and when? 
  • Long term money – this should be at least 25% of your salary.  

7. Understand your tax residency status – keep an accurate diary of where you spend your time. The places where you are most likely to be considered resident are:   

  •  Your country of citizenship
  • Where you own real estate 
  • Where you spend most time.  
  • Where your ‘dependent family’ are based (your home). 

8. Save at least 25% of your income for long term… you don’t pay any social security, if you worked on shore your salary would be at least 25% less due to this; put this aside for your life after yachting.  

9. Invest time in your own financial education – read this column every month, look at investment websites, learn about inflation, property leverage, risk and compound returns.  

10. If in doubt, take advice – understand your own limitations and build a team of trusted advisers in different fields; speak to other crew about what they do with their money (but don’t just follow one).  

When you get to the time when you want to leave yachting (be it after 5 years or 25) it is great to be able to do so because of the way you have managed your own resources… many people cannot leave the industry at the time they want to because they have not taken control of their futures.  

How many have you achieved?

 


Anonymous
Posted: Tuesday, June 3, 2014 8:20 PM

Pete-very good advice and I'm reaping the fruits of following most of what you have listed for the last 15 years. We are just about retired and will only take jobs that are perfect. It's the poop sandwich theory. If you have a lot of bread you don't have to taste the poop. 

Some things I could add

1. Set up an IRA or Retirement plan and fund that first.  You will never get out of yachting if you don't save

2. Have your own disability coverage, this can be part of a life insurance policy. We also have long term care that is much easier to get when your young.

3. Don't put all your eggs in one type of investment-spread it out with stock, bonds, real estate.

4. Have a good accountant familiar with yachting

5. If you clueless about this stuff just hire an advisor. 

6. For Americans Vanguard is the lowest fees and it's all self directed. If you have a large enough account you can get some advice for free.  Understand the front end and back end fees for your funds.

7. For Americans-the Roth IRA is the best-learn about them

8. A little know fact is a self directed IRA can hold real-estate. So you can buy land, rental property and investment property in an IRA but it's complicated but worth looking into.

I enjoy your column


Pete Brooke
Posted: Wednesday, June 4, 2014 12:22 PM
Joined: 01/12/2008
Posts: 62


Thanks so much for the reply and some great input. I love the 'poop sandwich' reference... excellent!

It appears to me that many younger crew are now really seeing this as a career and so we put these basic rules together as a 'minimum' guidance for everyone to save as they go through their careers. 

please continue to spread the word about starting to do this stuff from day one! 

glad you like the column

Pete


Pete Brooke
Posted: Thursday, July 31, 2014 12:39 PM
Joined: 01/12/2008
Posts: 62


Hi all

if this post has interested you we have actually now created a test you can do, for free, online to see how many of the 'RULES' you are following and how to fix the ones you aren't. 

www.my-horizons.com/finance-test/

I hope you find this a great resource, give it a try. 

 


 
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