What percentage of nest egg should be used on boat?

[letsgetsailing3]

Don't put any money in that you ever want to see again.


And set aside a reserve for planned expenses.



And set aside an additional reserve for "unexpected expenses".


As someone has said, don't spend more than you can walk away from with a smile on your face having had an adventure.

[a64pilot]

Originally Posted by letsgetsailing3

As someone has said, don't spend more than you can walk away from with a smile on your face having had an adventure.

I agree with this, but I disagree with the older the boat is, the more money you have to put into it, I’d say that often the opposite can be true.
How long does it take for electronics, sails and rigging to age out? About 10 years?
So a 10 year old boat is likely due have a whole lot of stuff replaced, where an older boat may or may not have had it all replaced, and may even have a new motor, so in my opinion it is going to be different from one boat to the next, I’m seen younger than 10 yr old boats coming off Charter to basically slap worn out, needing pretty much everything replaced to include the engines etc, and I have seen quite a few 30ish yr old boats that have been completely refit but due to health or other concerns have t be sold.

Of course the boats that are refit do cost more, but almost always you can buy one that has been refit for much less than you can buy one needing it and refit it, you don’t save anything with your labor in doing a refit.
The reason is of course the seller loses their behind, you spend $50K on a refit. Your doing good to get $10K more for the boat.

I’d also say if your certain you really want to do this and money is an object once you buy a boat only fix what is broken, do not buy stuff cause others tell you that need it, spend a year cruising and then decide what you need, almost all of the stuff your told that you must have or you will break in half, sink and die, you don’t really, sure most are nice to have, but a lot of it can also be a maintenance headache.
For instance, I bought a Diesel genset and installed it, last cruise I only ran it enough to just keep it exercised, We don’t really need it, a Honda fits our needs just fine and is a whole lot less money. That was at least $6,000 I didn’t need spend. And a whole lot of work, to say nothing of lost space and a heavier boat.

[Dogscout]

I know that you dont need an echo in here, but I'm on the side for never put money you ever want to see again (rely on) in a deprecating asset. Ann's point of exit strategy is the best I've heard.

[sailjumanji]

Note that no one ever replies that you don't have enough money to do what you are planning. You want a boat for a family of four to liveaboard. Have a total of 200k USD, CAD or AUD or other - we don't know as you didn't say. Don't know where you plan to cruise - some areas are not cheap. You have a pension of some amount? Do you have health insurance, because if not that could drain you? Any financial obligations associated with any of the four in the family, like college, etc?

Frankly at this point in time and with what you've said, I'd say you can afford to spend zero percentage of your nest egg on a boat. Or you tell me, what percent of your nest egg could you afford to lose completely and still maintain your health and standard of living? That's how much you can spend on your new plan, at most.

[kas_1611]

Remember a boat is "a hole in the water you pour money into"

A nest egg is something you've carefully husbanded over the years to give you a comfortable period later in life. Do you really want to pour that into a hole in the water? TBH I'd say put as little as you can into a comfortable boat but don't put more into it than you are happy to walk away from.

And despite what some might say about insurance think about it this way "would you buy a $100,000 car and insure it 3rd party?" or would you take house insurance without "all risks"? It is the same with your liveaboard boat, it is your home so ask yourself if you are willing to risk becoming homeless for the sake of comprehensive/all risks insurance.

[01kiwijohn]

First, take your family on a backpacking trip. That way, you'll learn what you can do without. Then, take a few trips on rented, small, boats, to get the hang of it.
Second; as JPCate says, buy something modest. That is, decide how much you can afford to pay cash for. Divide that in half; that's the price. Boats sail better without dragging a payment plan behind and, if you face losing it on a reef, you can buy another one. Insurance can be very costly and it sounds like you'd need the money for essentials.
Enjoy the voyage, it'll be fun.

[barnakiel]

If I had 200k in cash to spend plus any retirement coming on the immediate horizon,


I would spend about 20k on the boat, and additional 5k over the first year to adjust the boat to my cruising style.


If I were over 50, I would not touch the remaining 175k 'ever' and I would carry a med insurance at all times.


Find a way to get as much as one can today out of the part of money not in this year budget.


Invest so that when inflation sets in you are protected from its pressure.


Cheers,
b.



Cheers,
b.

[thinwater]

With no mention of future income, while cruising or when you return to land (with no home) it is a trick question. Big income, you don't need a buffer. No or little income, $200,000 won't last very long. Hope no one gets sick and nothing expensive breaks. This is so far below the spending norm that only you can decide if you can live with it.



Better, find a career you actually enjoy. It sounds to me like that is what is missing.

[Dave22q]

Originally Posted by Dearmondfamily

Hello all, family of four about to start our adventure! Liveaboard, cruising. No set plan other than travel whenever and wherever.

Was just wanting to hear some thoughts on how much of your savings should be spent on the boat and how much should be held back for, upgrades/repairs.

I will be somewhere in the ballpark of 200,000 saved, along with a monthly retirement income.

I know there are a lot of variables to this but, what have most of you experienced as far as necessary repairs on a freshly purchased boat?

Any input would be greatly appreciated.

I would budget 25k max with an extra 25k for refit. That leaves you with 150k and at 6% or better (preferred stock or midstream partnerships) that is at least 1000 monthly on top of your pension, social security, etc. Live-a-board life style on 2k/month is not luxury but is feasible. Figure slip rental might be half of that.
You ability to generate returns on your money will be critical, in todays market I use 12% as a target with 33% margin.

[auskiwi]

Cant answer on how much, but you should always have some sort of dirt house you can fall back to.

[Enfant Du Vent]

First, I generally agree with all the previous posts about "on-going" annual costs.


But to target the specific point of what % of funds available-for-purchase should be spent on buying the boat itself, I and a number of friends have found 75% to be valid. That is, once you've purchased the boat, there will be almost immediate costs that can't / shouldn't be put off. Adequate anchors/rode/chain, fenders / dock lines, electronics, maybe even EPIRB and life raft. And I haven't even gotten into what new items it will take to placate your family--and thus avoid a mutiny.

With all these unavoidable costs, you'll very soon approach the 100% of funds available.


PS: If you're buying a "brand new from the builder" boat, you'll be shocked at what ISN'T covered in the listed price. For instance, my 'purchase from builder boat" showed sails as one of the "options" that could be added to quoted price!

[Ruso]

Originally Posted by Dearmondfamily

...family of four about to start our adventure! Liveaboard, cruising. No set plan other than travel whenever and wherever...

I will be somewhere in the ballpark of 200,000 saved, along with a monthly retirement income.

The family of four is unpredictable in first place...
A family of two is unpredictable enough.. but four?
I just can't imagine it.

[sailjumanji]

Not bragging, but we have a $450k boat. If we totally lost it tomorrow, it wouldn't affect our retirement or financial well-being. (Even if it wasn't fully insured.) Think about it in those terms. You should only spend as much as you can totally lose, and not affect your financial well being for the future.

My immediate thought is that given all of the uncertainty of four people, and a suitable boat for cruising, and your nest egg, you dont have enough disposable finances to pursue your dreams. And repair costs as a percentage of purchase price is an unstable metric. You could find a cheap boat and spend 2x to 3x the cost, to get it in open water crossing condition.

Oh, and I have dreams that are financially out of reach too.

[nuru05]

As others have already touched on I think the amount you can afford to spend is going to depend greatly on how much your retirement income is and what it is made up of (government pension compared to rental property for example have different levels of consistency).

If your retirement income is a military pension of $4k/month then you could comfortably spend or even finance a good chunk of your nest egg on a boat. If your pension is $1200 it will be a very different story.

[sailorboy1]

Originally Posted by Dearmondfamily

Any input would be greatly appreciated.

What did you decide was the answer for you? I don't really think you were asking the right questions because should beem "how much will cruising cost us".

So I hope the OP updates the thread as this basic question gets asked here couple times/week and the asker rarely gets a boat and goes cruising and/or never posts about how the answer worked out for them so the info later might someone else.