Bank to finance - older boat

[boatpoker]

Originally Posted by outbound_308

So I will be in a similar situation when I retire. Let's say I have 500,000 saved up. I have that invested in a couple of dividend paying mutual funds that pay for 9% to 11% monthly. so that's a little under 5000 a month income from my investment, never touching my savings.


I feel like it would be very safe to lend me money and I would much rather pay for a boat out of the money my money makes vs my principal. Is this just not a possibility ?

9-11% MONTHLY ! ... Can you manage my money ?

[Cadence]

If you can find a local bank, these days, try their home office with a financial statement in hand. Well dressed. You said you paid off a mortgage and equity loan would work, providing you still own the property.
Financing a boat, new or old, is a losing proposition. JMHO

[outbound_308]

What is your question boatpoker? are you saying I'm not getting enough dividend out of my investment? That's not interest, it's a fund designed to provide income over the past 5 years it has increased by 5%, but it pays a 11% dividend.


ticker is qyld
couple of other ones acp and psec

[C420sailor]

Originally Posted by C420sailor

It all depends on the rate.

I could’ve put a ton down on my house and had a nice low monthly payment. Instead, I chose to put down the minimum and invest the rest. With a fixed interest rate at 2.75%, it made sense. I’ve been averaging at least 10-12% in this market, closer to 17% this past year. It was a solid decision.

In some situations, it makes more sense to use your own money at a low rate than to pay cash.

That said, a loan on an old boat is going to have a high rate.

Can’t edit. I meant “use the bank’s money at a low rate”

[Cadence]

Originally Posted by boatpoker

9-11% MONTHLY ! ... Can you manage my money ?

That is pure BS!

[outbound_308]

sorry I meant 9-11% compounded annually but it's paid out monthly

[Polar Opposite]

I was able to borrow from my retirement savings plan. The interest rate was very low (2-3%) and interestingly, the interest went to...me. As long as I paid it back in the required time, it wasn't considered a taxable distribution, and no IRS fees for early withdrawal applied.

[shimari]

Originally Posted by outbound_308

The collateral will be the hard part as I plan on selling everything and moving aboard. I just don't need stuff being a single person. Not sure if I can count investments as collateral and still receive a dividend from them.


I apologize, I know this is all first world problems, please realize I will be doing this at 57 and not 27, so how I do it may be different. The point is we all want to go do it and everyone has their own situation.

The link to the schwab program is here - https://www.schwab.com/pledged-asset-line

SOFR rate is around .05% I believe so add to the appropriate margin rate. You still get the dividend and interest from any pledged assets. You can't use retirement assets. If the assets drop below a certain percentage, they can make a margin call.

It's a great deal if you've lots of assets. Perhaps not so much if not.

[outbound_308]

Yeah that was another rout I was looking at, just borrow it from my 401k but at my age I'd be paying out of another source just to have my 401k still be there when I die.



I would rather move my 401k to a dividend paying account and then just use the dividend to make the payments. Still have my principal 401k amount, plus I don't need to spend from my other income streams to basically make the boat payment, or pay back money "borrowed" from my 401k.


the other option would be to take dispersments from my 401k to cover the payments and hope that the growth will keep up with it. Given the rates over the past 20 years it should.

[Cadence]

Originally Posted by outbound_308

sorry I meant 9-11% compounded annually but it's paid out monthly

Even at that you can finance our money. Take that to the bank on your financial statement, A loan may be about the same rate so you would brake even.

[sail sfbay]

Several years ago I got a boat loan on a 28 year old 56 ft powerboat. Suggest going to a marine loan broker.

[Artey]

Originally Posted by outbound_308

sorry I meant 9-11% compounded annually but it's paid out monthly

How many years have you succeeded with this rate on those tickers? I've looked at dividend stock/etf as a long term strategy but I feel like it takes so much capital to make it work that its better to build in index/mutual funds and then switch over and rebalance to dividend stocks later if you are worried about digging into your principal.

Either way if you follow the recommended rate of 4% draw down you shouldn't ever dip into your principal given market averages over its life.

[gonesail]

I would be surprised if you can even find a bank to loan money on a 20 or 30 year old boat. maybe if you bought a new one

[outbound_308]

Artey,
I haven't yet, there are three funds I'm looking at now that have done that for at least five years, posted earlier. Yes you are correct, that it takes a lot of capitol or what I would consider to be a lot of capitol. If you have capitol I feel like this looks like a good option.


The recommended rate of 4% draw down is for a fund that is being used for retirement I believe, if this is not correct please let me know.



This for me this is strictly a boat fund. This is not the money I will be living off of or money that pays the nursing home bills heaven forbid, however I would rather pay for the boat with the money that the account makes vs the principle. That money then could be left to a charity or something like that when I do expire.

[Artey]

Gotcha I thought we were talking retirement funds here, good clarificaiton. - QYLD isn't a long term play in my opinion, when the average is 2-3% annually for a dividend portfolio and they are churning out double digits, something feels amiss and they are likely very risky but I'll try not to derail your thread any longer.

I totally agree with the questions your asking - better to use someone else's money if you can and out invest the interest rate. Just doesn't seem plausible unless the boat is new and even then its a stretch for a low interest rate loan.