Best Cruiser's Bank Account

[GreyDawn]

Hi,
I'm about to start a life of cruising and wonder which account you might recommend for ease of use and high interest returns.
Planning to have one account that will remain untouched for at least 2 years with about 80,000 US in it. Another account will have 30,000 in it and will be the one that we attack whenever funds run low.
I've been told that First Direct is good but research has shown that HSBC might be the way to go too.
We are not rich, just young and stupid and hoping to live off the meagre interest made on the more static account, and will try to top up our savings with the odd charter and salvaging of jewels.
Any advice most gratefully received.
By the way, I'm a long-term ex-pat in Japan who is of British origin.

[boredinthecity]

This is a very interesting question (no pun intended) and is as simple as finding the perfect boat!

ood luck

Reards Paul

[GreyDawn]

It's not that complicated!
Just wanted to hear what other cruisers use.
Thanks anyway.

[ssullivan]

Hi,

We are also young and stupid and we're going cruising too. However, we financed our boat are and doing some chartering and other work to pay it off - so we are starting in a worse position that you are. As we accumulate more funds in savings, I am looking at doing a lot more with it than live off the interest.

I would suggest you look into the financial side of things with a lot of scrutiny, since like us, you will be going cruising during your prime earning years. I mean if you are simply looking to stash $80K in an account and live off the interest, you aren't going to get very far at all. Accounting for inflation, you will actually be losing money over many years or crusing. You would have to work like a dog prior to retiring to catch up.

What you need to do is find a low-risk investment scenario that will at least outpace inflation. Personally, I'm playing it a little more high-risk and participating in small businesses, and a few stocks. If you need something low-maintenance, go for a no-load mutual fund or something so you can at least have a fighting chance of keeping up with inflation. Sure, it will drop drastically at times of economic crisis, but you should be able to maintain pace with inflation in that type of investment vehicle.

Best of luck, and just remember - $80K in 2005 will be worth approx $45K in 2025 if you are not growing it at least at the pace of inflation. (assuming inflation rises as it did over the past 20 years)

PS: Talk to a financial advisor, but be careful... they will try to sell you all kinds of great things and will probably not highlight all the money you have to pay them in fees. Still, you might be able to get some good direction from them.

Sean

[Greg B]

If you are cruising around long term, then you won't be able to monitor your investments and respond quickly enough for the stock markets to be a viable alternative. Your best bet might be to find an investment counselor and discuss this with him. If I recall, there are one or two who hang out on this board or another I frequent. Perhaps they'll chime in here. Personally, I'm not sure that your ROI on 80K US will fund much more than a meager subsistance for a year. Good luck tho
Greg

[ssullivan]

Greg is right... playing the markets will not work out for you. You will need to only look at long-term investments. When I said "stocks" above, I was referring to some industry sectors I play in where there is a general macro economic trend to follow. These trends tend to take place over a few years, and don't really have the ups and downs of short term investing, where you need a lot of data continually to make the right decisions.

[jemsea]

We have been using American Funds Growth and Income fund since the late nineties to build our boat account. The worst return that we have had in that period is a minus 2% and last year it was over 16% return.

It is a very conservative fund that has the main goal of capital preservation while giving a better return than a typical CD or savings account.

We can call our financial advisor and have money transferred to any bank account easily.

When we bought our Cal 22 we wrote the check and then called and had the money transferred. It took about 2 days for the funds to transfer which we had arranged with the seller.

Works for us...


John

[GreyDawn]

Thank you very much for all the info. Yes, I see the point that the 80k will depreciate in value. I own a flat in South Africa that is fully-paid for and so this will be somewhat of a nestegg for me if I make it to retirement.
The interest on 80k works out at around 200 bucks a month - plus around 300 bucks coming in from flat. We intend to be frugal, non-marina cruisers and have always lived life way below the normal budget.
I'll let you know what we decide on. Oh yeah, for the first year or so we will have 30k that we'd intend to keep in a more accessible account. So I doubt we'd need to touch the 80k for a while. Still, it would be good to invest it.
Thanks again.

[Sunspot Baby]

We are not young and stupid, we are old. Unfortunately, at today’s interest rates you will not live on the interest of $80,000. Also, few if any investment advisors or mutual funds beat the general market. Additionally, they take some of your money in the process.

One option is to buy the broader market in an instrument such as SPDR commonly called spiders. Each share trades for about 1/10th of the S&P Index and you are actually buying shares in all 500 companies in the index. As those companies pay dividends, you receive your share.

Now as to the question of being off shore and unable to watch the market and get out should it drop. If you trade through an on-line company (mine is Schwab but there are many others) you can manage your account from anywhere with internet access, and that grows every day. Place a “Stop Loss” order so if the market starts to fall, you automatically sell. If for example, the SPDR is trading at $120 per share, you can place a stop loss at $110. If it falls to there, your shares will automatically sell. You might not get exactly $110 if the market is falling fast but you should be close.

Each time you get to the internet, check your account, if the shares are increasing, you can cancel one stop loss order and place a new one at a higher price.

Most firms have a time limit on stop loss orders so you will need to get on every couple of months to renew or change it. Even for a world cruiser, you will be able to get to the internet that often.

Of course, the market hasn’t yielded the big returns of the 90’s but it regularly out performs any fixed interest rates you can get from a bank or other reputable institution.

Speaking of banks, a bank with on line banking also helps.

We are blessed with a daughter-in-law who keeps our check book. We forward all mail to her and if a bill comes in she pays it. She sends us regular emails on checks written. Again, dependence on the internet but it beats being dependent on international phone calls.

So there is my long winded humble opinion. Hope to see you on the water.

Sunspot Baby
www.stateham.com/sunspotbaby

[BC Mike]

Mostly I advise folks to go find where the money is being made, and buy the companies that are making it. This company will have price stability and will have paid a reliable divident. The growth days for the US are in holding pattern at the moment. The Dow is down about 1.5% on the year while England and Canada are up about 8%. So I am advising my clients to purchase a quality Canadian dividend fund. There are income funds available but you need to find out what type of income it is. Some funds are more conservative with bond income while others may have real estate trusts and gas and oil trusts. You can use the index as a guide but that also requires some review. Like what is the index made up of. You will likely be able to follow your investment on the internet and get $$ transferred via a phone call. Check your investing options available to you based on your domicile. US citizens are restricted with some off shore investing. A British or Canadian citizen could invest through the Isle of Man. A fund and manager that made it through 2001 unscathed and with a good track record, would be a valuable assett. Just some thoughts off the top.
Michael

[GreyDawn]

Thank you for that invaluable advice about the spider.
Will look into it.

[rubindj@gmail.com]

There are two separate issues that need to be considered here. First is your banking needs, then is your long term needs.

IMHO a bank is for generally short term investments and holding of money -- I keep 18 months worth of expected expenses in various bank accounts (CD's, Checking account, etc.) For this purpose I would probably use HSBC as they are the best represented bank in the Carribbean, are financially strong, and have a lot of international experience.

Investments are another issue. Being at sea is not the place to have investments that need monitoring more than quarterly.

There are many investment firms and banks who can handle this (investment's in stocks/bonds), and they don't have to be the same one as your bank -- although they could be.

My advise would be to talk to 2-3 financial advisors to get a better idea of what they can offer. You can also use someone in your home country if you can get a good referral.

[craigc]

BC Mike C once whispered in the wind:
Mostly I advise folks to go find where the money is being made, and buy the companies that are making it. This company will have price stability and will have paid a reliable divident. The growth days for the US are in holding pattern at the moment. The Dow is down about 1.5% on the year while England and Canada are up about 8%. So I am advising my clients to purchase a quality Canadian dividend fund. There are income funds available but you need to find out what type of income it is. Some funds are more conservative with bond income while others may have real estate trusts and gas and oil trusts. You can use the index as a guide but that also requires some review. Like what is the index made up of. You will likely be able to follow your investment on the internet and get $$ transferred via a phone call. Check your investing options available to you based on your domicile. US citizens are restricted with some off shore investing. A British or Canadian citizen could invest through the Isle of Man. A fund and manager that made it through 2001 unscathed and with a good track record, would be a valuable assett. Just some thoughts off the top.
Michael

Cool Micheal,
I see you are a senior member here and also have some financial advisor type capacity , so are you simply cruising and living off the equity your assets generate ? or are you still doing the 9-5 thing ?
Cheers
Craig

[BC Mike]

My day job is in the financial and insurance business. I also serve as a trust officer ( executor ) to settle estates. I have been doing this since 1986, prior to that I sold boats and B4 that boats and motorcycles. My other job is a blueberry and sheep farmer, however we have the farm for sale. My wife has gone to the dogs, er sorry, run off with the dogs. So we will split the assetts. I keep the boat. What is left would be enough to quit on, but not enough if I listen to my financial advisor. Put another way, if I did not know anything about the financial business I think I would have enough to quit. But I am 59 and can easily do my day job for a few more years. At 7% return the assetts will double in 10 years, 7 years at 10% and then I would have enough. In the meantime I will get my truck and trailer set up so I can take my current boat to the ocean during the summer months. This will get my butt out there again and I can check all systems so that when I am ready to go further, well I should be ready. The boat at 28 feet is a bit small but it is a joy in rough conditions. Any bigger and I could not get it from here to the coast with out spending a fortune. Meanwhile I sail every week March to November. I will probably make a trip to NZ maybe this winter, summer in NZ and look at boats and scratch my head and go sailing and look at boats.
Michael