How much is enough??

[Charlie]

I'm with David M on this one. But I also want the house paid for. I came back from cruising at the age of 28 and started buying/building Real Estate. My criteria has always been not to buy anything unless I got a 6% to 8% cash on cash return. From there I also made equity in two ways 1) increase in value; appreciation and 2) paydown of principle on the loan. Real Estate has a built in inflation protection as rents go up in a similar fashion to inflation. Mind you it is pretty hard to find a property where you can make 6% to 8% cash on cash; but the market is coming back towards reality. In a few years I think it will be back to investing in RE rather than speculating on it. Alot of my ideas for investing were things I thought up as I invested but if you want a good synopsis of the ideas read "Rich Dad Poor DAd" Basic tennet is you'll never get rich working for someone else you need to invest. Problem with my investment strategy is that it takes time in my case 17 years.

[seafox]

I have also studied the retirement aspect and find that playing the "you need more because of inflation card" to be a red herring

tell that to the people who can't afford property now because inflation has taken it out of their reach.

Why has my berth doubled in four years....inflation.

[cat man do]

Originally Posted by waterworldly

I. I have done quite nicely on a 5.25-5.6% return buying plain vanilla CD's, not fees, no muss, no fuss. !

Surely you can get better than that sticking it in the bank.

7.7% here at ING
ING DIRECT Australia - Our Products - Term Deposits

7.6% at RABO
RaboPlus: Term deposits

Dave

[cat man do]

Originally Posted by Charlie

My criteria has always been not to buy anything unless I got a 6% to 8% cash on cash return. .

Just to clarify, does this mean if you have $100k, you make 6% to $8k in equity ???

Dave

[cat man do]

I was thinking more of selling my PPOR and putting the cash into something like this.

Welcome to NavraInvest Limited - Funds Management





Dave

[waterworldly]

Originally Posted by cat man do

Surely you can get better than that sticking it in the bank.

7.7% here at ING
ING DIRECT Australia - Our Products - Term Deposits

7.6% at RABO
RaboPlus: Term deposits

Dave

NO risk is the key term here. ING offers a LOW risk product. My investment is NO risk, in that the entire government would have to collapse to loose my money via FDIC guaranttees. Granted, it takes a bit more captial to get the necessary funds to be out cruising without money worries, but at the end of the day, it is a totally safe investment, and no management fees, and can be managed via the net from anywhere in the world. Even those pesky taxes can be done and paid/refunded via your account from anywhere in the world. I have made this part of crusing as simple as possible, but it WORKS.

[GordMay]

ING DIRECT (Canada) Investment Savings Account (ISA) Rate = 3.75%.
ING Bank of Canada is a member of Canada Deposit Insurance Corporation, which means your deposits of up to $100,000 are eligible for CDIC deposit insurance.
ING DIRECT Canada: Save Your Money!

[ess105]

Originally Posted by waterworldly

NO risk is the key term here.

Unless you've set up term CDSs that mature in phases for your entire cruising future, this strategy is not risk free. Let's say you're rolling over a mix of up to 2 year CDS, you need to consider what happens in 2 years if interest rates are significantly lower than they are today. Your biggest risk is a sustained period of depressed interest rates in the near future. It can happen.

[s/v Breakaway]

I agree with Gord and some others that you can't expect to make the kinds of returns a few folks here have proposed. History shows drawing about 4% per year will make your assets last 30+ years. On a related note about being wary of investment advisors as they are in the business to make money for themselves: take a look at Paul Merriman's websites including FundAdvice.com - Suggested Portfolios

He gives you the exact portfolio mixes for relatively hassle-free investments in Fidelity, Vanguard, Rydex, Schwab, etc, and Dimensional Fund Advisors if you want active investment management for a fee. He shows you 30 years of historical returns, different mixes, etc - great resource.

[Tspringer]

So from reading through this thread, it would appear that inflation will destroy the return on any investments you have, no amount of money is really enough to cover true expenses, a boat that is up to the task cannot be had for under $200K and if you do not have enough funds invested to provide at least $5K per month at a 2% return on investment then you doomed to despair and failure. Also, those who cruise without $1m + in the bank are doomed to an old age where they say "Welcome to Walmart" many times each day.

In another thread I read that on a $200K boat one needs to budget $65K per year for maintenance and upkeep.

Well... sign me up for financial suicide because our family of 4 leaves in less than 3 years and we will most certainly not have a million bucks in the bank. So what.

"Security" and particularly financial security is largely a myth. Nobody can tell the future and no investment is 100% safe. US entitlement programs are underfunded over the next 35 years by over 40 Trillion dollars. Does anyone really think that dollar denominated value of investments is not going to be eroded as this shortfall is financed through inflation of the currency?

We plan to diversify as best we can, cover our cruising expenses partly from the return on investments and partly by spending our capital and when funds run short we go back to work.

If I die penniless then I go out exactly the same as Warren Buffet... nobody gets out alive and we all go with exactly what we came in with: nothing.



Terry

[s/v Breakaway]

But I would like to add my 2 cents on the money needed: every time I read that you need $200k for a boat, I feel like smacking someone! Tell that to the thousands of folks out there having a blast on $20 - 30,000 boats. I wouldn't personally want to go long term cruising on a 25' boat, but more power to the folks who do. Read Don Casey's Sensible Cruising and "just go."

[waterworldly]

$65,000 per year upkeep . . . .hogwash! There is absolutely no validity in that statement. EVERY log I have ever read, and I have read lots and lots, don't even spend half that yearly on EVERYTHING.

[schoonerdog]

A 10 year refresh of all boat systems on a 10 year old 44 ft catamaran would be

10k for new sails
1k for running rigging
1k for revamped or new ground tackle
6k for new electronics
5k for new interior fabric
8k new cockpit enclosure
1k in electrical work
6k for refrigeration and freezer
------------------------------
38k for complete systems refresh plus whatever needs to be done for engines, which if they've been maintained well could be nothing at all.

Spend more than that every year?!

[ess105]

I think the results of this poll say it all. There is no single answer. What I find interesting is the prevalent "just go" advice which I believe is right. But not necessarily for the implied reasons. I don't see this as advice - more a filter. Once you've dealt with the personal ties to land, if you can't "just go" at that point, perhaps you never will. If "just going" is right for you then the answer to the question, "How much is enough?" is simply what you've got at the time. If I take anything from these financial discussions it's that the folks who go with $100,000 (say) have as much chance of success as the folks who go with $1,000,000 (say). Doesn't make either more right than the other.

[Charlie]

Originally Posted by cat man do

Just to clarify, does this mean if you have $100k, you make 6% to $8k in equity ???

Dave

To Clairfy what I mean is that if you put $100k down on a building you get a positive cash flow return of $6k to $8k on top of other benefits such as tax deductions and principal paydown.


ess105I think the results of this poll say it all. There is no single answer. What I find interesting is the prevalent "just go" advice which I believe is right. But not necessarily for the implied reasons. I don't see this as advice - more a filter. Once you've dealt with the personal ties to land, if you can't "just go" at that point, perhaps you never will. If "just going" is right for you then the answer to the question, "How much is enough?" is simply what you've got at the time. If I take anything from these financial discussions it's that the folks who go with $100,000 (say) have as much chance of success as the folks who go with $1,000,000 (say). Doesn't make either more right than the other.

I'll have to agree with this one. $100k or $1m if you don't decide to go and make it work then it doesn't matter how much you have.

I went cruising for 18 months when I was 26. I left with no wife no kids, $2400.00 in travelers cheques and came back from Oz with $3300. I didn't get to go where I wanted to go so I set up a plan to go cruisisng. Here I am 18 years later and I have a wife, kids, and $2400 won't even cover my monthly bills. Who's the richer -- me at 26 or 44. Its a balancing act I love my wife love my kids and would love to be at sea with them. I've got a paid for boat and a half paid for house and enough investments so that I could sail modestly for longer than I will live without touching the principle. In 2007 I got to sail for 10 weeks. 2008/9 I hope to ramp that up to 14 weeks and if I can increase the amount of time to 6 months on 6 months off well that would be great. But full time cruising and circumnavigating I don't know if they are in the cards b/c of the Admiral. It might happen but I don't know. So I'll take what I can get in the mean time.