Investment

[BC Mike]

This is unfortunately my field of expertise. Think of cruising as similar to retirement. You are not working but you need some form of an income and income comes from only two sources: people at work or money at work. We all have the same ultimate problem. How you deal with it or not deal with it is up to you. Rental income can be okay just be aware of the costs, bond income can be okay and dividend income is alright. Also royalty income can be included. If you can live on 5% then take the safe route and get a term deposit. GIC or CD are other terms. Do the math you will see how much you need. $500,000- yields $25000- year B4 taxes. $400000- at 6% gets you $24000- same as $300000 at 8%. Where you gonna get the higher rates, higher risk bonds or good quality dividend funds. Some folks are afraid of buying funds given the fact that most went down over the last couple of years. It happens, two years does not make for a life time of investing. In my opinion a proven low risk dividend producing fund can be quite satisfactory. A fund with slightly less up and down motion would be an income fund though the yield could be lower during times of groath and profits. If you are Canadian you can send me a private e-mail and I can name some funds. Lastly check how different forms of income are taxed in your area and the tax bracket that you are in. If you do not have the money to invest then you will have to work, as the song goes, " Get a haircut and get a real job " and start putting money aside every month. BC Mike C

[billy]

oh my god are you all missing the boat
there is only one way to cruise...................
MARRY RICH.........................

[29cascadefixer]

I was in a restaurant once, in an area that in the last 10 years , has been DISCOVERED. Previous to this discovery, everyone, no matter their income level,seemed to be welcome. While I was there, I happened to eavesdrop on the recitationof the story of a ( to them ) difficult road trip on an adjoining table. The story teller kept referring to , "Poor 'Ol Rodnaaaaaaaaaaaaay" as the person who had to deal with the trials of driving 6 hours straight because HE was the only one capable of dealing with heavy traffic on the Interstate. Up to this point, I was dissapointed that the area would no longer accept me, but when I heard this, I decided that "Poor 'ol Rodnaaaaaaaaaaaay" could take his friends, family, area, and life style and -----well,----well, fade into the sunset. Poor 'ol Rodnaaaaaaaaaaaaaaaaay.

[Troubledour]

It was my grandaddy that apprenticed me in his own shop as a boy toolmaker, but that was just his way of being sure that I'd always be able to take care of myself. He actually had far higher hopes for me & regularly reommended that I move to Florida & do blue haired old ladies for a living.

Did I listen ?

Nooooooooooo, & after decades of toolmaking here I sit building assets the hard way. Some of us also learn the hard way.



Troubledour

[Sonosailor]

I never did this, but have an uncle who did very well at it in British Columbia. He tried hard to sell the concept to me but I was too conservative.

Uncle buys low and mid-range single family dwellings, fixes them up to the point where they can be lived in with appropriate pride, then rents to those people who would have a hard time making a down payment.

The deal to the renter is that if the renter doesn't miss the rent, a portion of the rent goes towards ownership, with the option to buy the mortgage at any time, and ultimately can own the unit.

Two ways of looking at this - 1. The renter now has hope, is motivated to keep the rent payments on time, and treats the unit like potentially his own, even to the point of regular maintenance and upgrade. 2. It could be abused by the landlord, with inappropriate rents charged to people who may never make it, and may give up after paying more than necessary.

I am hopeful my uncle stuck to the benefit of 1 without 2, but don't know. I do see the potential for mutual benefits, and an opportunity for liveaboard landlords. Comments?

[Troubledour]

What you're describing is a pretty standard land contract, or more specifically, a lease/option or lease/purchase. There are as many different variations on that theme as you can think of & then many more.

At it's best, it's a good deal for all concerned. The "tenants" find a route to home ownership & the "landlord" enjoys many of the benefits of renting while negating many of the hassles. At it's worst, of course, it's a rip off ... caveat emptor rules this roost.

I have one friend (a brilliant, tree hugging, state-employed environmentalist) whose family owns two pawn shops & a couple of dozen residential & commercial units. They have several houses that they've "sold" several times over. They actually look for unqualified buyers, take a hefty down payment & default the contract with the very first (highly predictable) missed payment.

This is the dark side & as much as I enjoy my friend I wouldn't even consider doing business with his family. My landlord doesn't operate on this basis, I don't & won't & when my friend inherits very considerable wealth I'm sure that he won't either.

I'm currently working my own twist, I've bought several properties from my (ex) landlord (most of his local holdings, including my own residence) on a land contract with a 60 month balloon. This allowed us to side step traditional financing & the associated costs & delays. It's also allowing me time to tailor these holdings to meet my own needs prior to mortgaging anything.

If there's any potential glitch with this option it's that I'm fairly certain that interest rates have bottomed out & will soon start climbing back up. So, if I'm to take good advantage of the lowest rates of my lifetime & lock those rates in for the remainder of my lifetime, I have very little time to screw around with here & now. I'm not sure that I adequately considered what will happen with interest rates over the next five years but will adapt & make it work.

And there's the rub, you can invest in the market(s), tele-commute from your boat, breed canaries or run the risks of supply side white slavery. There's some old goat somewhere around Florida that goes by Capt. Stabbins & he's come up with a highly entertaining little profit center (& even if it makes no money, my bet is that he's having fun & deducting the costs of his boat as well). Whatever you elect to do should be something that you can do & do well. The difference between success & failure in any endeavor is in anticipating challenges, dealing with them & making it work.

Troubledour

[BC Mike]

Troubledour posted a lot of my thoughts on the rental idea. The rental plans can work but generaly you need to be around to oversee the operation. This is difficult to do if you are cruising around Tahiti. Water heaters blow up when you least expect it and the tenant has the right to demand it gets fixed today. There are other reasons why I suggested a good dividend fund and it has to do with the fact that you can do partial and systematic redemptions at a later date. This is good for income and tax purposes. It is difficult to partially sell a piece of property and you get the whole tax on the gain at once. There are many ways to make some money other than your regular income. They are worth exploring. BC Mike C

[Troubledour]

I'd be the last to suggest that what works for me would be an option for any other person. What I've done in prior posts has been essentially to describe the thinking process, the factors that exist here in my life & the conclusions & decisions that have resulted. This same process is what others need to pursue for themselves with results that will be appropriate for them.

As for real estate in particular, I certainly don't advocate that option for anybody but those that are prepared to deal with it. I think we have a sufficiency of amateur landlords & I certainly don't need to have additional investors sniffing about at opportunities that might interest me.

Further, I'll be the first to say that I have some very specific advantages here. I got a great deal from an investor that took a liking to me personally & happened to be ready to begin liquidating right at the point where I was interested in buying. I live in a small town where knowing the market is less than strenuous, where when I need a plumber, an electrician, an attorney, or any other tradesman or professional, I'll be talking to guys that I used to launch spitballs with in grade school (ok, so we still do that, but you get the point).

Additionally, I don't think that any one thing is likely to be a wise choice for many if any. I also tinker with NASDAQ, I also have a modest but professionally invested portfolio of widely diverse investments, I also own physical assets that will eventually be thinned for cash. I've also, after a bit of a hiatus, resumed earning income & could easily do what I do from a lounger in the middle of the Caribbean.

I also have plans for more schooling & a second career, one that will be a completely reasonable extension of the first & still do-able from that lounger in the Caribbean. Best yet, if I have my way about it, that second career will be more about remaining productive & creative & have very little if anything to do with generating required income.

If there's anything that I want to get across it's the idea that looking for problems & letting them stop you cold will do just that, stop you cold. Anything that anybody might choose to do with their life, whether or not it has anything at all to do with money, will have advantages & disadvantages. It's up to each of us to completely assess & choose the circumstances that we can personally live with. I can’t tell you how many people told me that I was nuts to even consider the real estate, I heard the same crap when I left school young, when I went back to school, when I started flying, racing, freelancing, etc. That’s fine, been there & done that many, many times & moved on while they kept what they themselves will readily admit that they hate … namely their existing lives & jobs.

My hope is that others have read my posts and started thinking about & pursuing their options. Get in there & try some things like I have NASDAQ. I've done enough trading myself to know that being a fulltime day trader just isn't for me but it was worth a try, I've had some fun with it, made some money & will make some more. Real estate just happens to be something that I've been in & out of at various levels for many years, I know how to make it work for me & have no doubt that there are similar, no doubt completely different but equally appropriate options for others.

Troubledour

[Boatman]

My wife just read all this and said I can go cruising while she works and sends money. I think that could work for a while.

[delmarrey]

Your joking, right!

Or she's got lots of income and she's trying to get rid of you? Nah!

And which Lake do you sail on?

.........................._/)

[Steve Rust]

One thing I have not seen mentioned yet is farmland. My wife inherited a farm in Iowa several years ago, no buildings just cropland. The renters are the same family that rented it from my wife's father for 20 years. The return is about 3.5 percent of the land value. Not great but when I consider the increasing value of the land it has been a great asset. We visit once a year, nothing to maintain or repair. There are alot of real estate investments that may give a better return but few as painless and easy as this one.

[lawiec]

Gordmay

A good joke on stocks. just thought i would post a follow up:

average annual return of the S&P 500

1920's: 19.2%
1930's: 0%
1940'2: 9.2%
1950's: 19.4%
1960's: 7.8%
1970's: 5.9%
1980's: 17.5%
19...you get the point.
source: ibbotson SBBI Yearbook

had you invested you invested your 1000 dollars in the market in 1920 you would now have around 250,000 dollars.

but lets look at your specific choice of stock. Had you invested your 1000 dollars in budweiser (Anheuser-Busch the stock) in 1999, you would have got around 28 shares, 35 dollars apeice (which is actually only $980, not $1000 so you would have already saved 20 bucks). your stock would have split 2 to 1 in late 2000 giving you 56 shares that would now be worth $60 a share or all togeather $2,910. This retirement program would have got you a 197% return. your retirement program however yeilds a -78% return. Maybe i should have just laughed at your joke.

who am i to talk? im a stupid 19 year old who invested in a sailboat which is definetly going to produce a negative return. the only $1000 i have to invest is going to be in a slip for this summer. I guess like your beer, the only return im looking for is good times and memories.

Good luck to all, hope to see you in the caribbean some day.
Chad
lawiec@yahoo.com

[BC Mike]

The average investor underperforms the S&P 500 because they do not stay put. They try and time the market and end up selling low and buying high. To get the returns you have to leave your money invested. Put $50- a month into a good fund and leave it there, when the $50- month stops hurting increase it to $75 or $100. The day the planes crashed I put $100- month into Canadian technology and did so for the next 25 months, so this was during the two wars and all the other goings on. The end result is that I now have $3100- . I switched the $100- month to China last month. You can do it. BC Mike C

[irwinsailor]

I bought property for 20 years. I am now selling it and going sailing. It offen takes time to make money with real estate. I have not come up with a very good way to keep my properties cash flowing while I cruise the Carebean for the next 15 years. So we are selling and investing in the market. So far so good.

[BC Mike]

The advantage the market has over real estate is the cash flow. You can do monthly partial withdrawals from the market but with real estate you usually have to sell all at once. A good fund will give you reasonable returns and pay out a rate of your choosing. If the payout is less than the amount made your fund will go up while the opposite may apply. The tax is less on partial withdrawals because the event ( sale ) does not happen all at once. The global market is in a current exspansion stage with not many negatives. Another war or oil crises could upset things but it should be smooth sailing going forward. Good luck. BC Mike C