A Yachtie's Guide to Personal Finance

Part 2 – Could you end up broke if you left yachting?

If you are new and haven’t read part 1, don’t worry, it isn’t essential for the understanding of this article but I would suggest reading it.

Here, we continue the theme of taking control and being proactive with your finances.

Account accessibility 

Continuing the theme of being proactive with your finances comes the ability to access your investment account. 

Much to my surprise, there have been several moneydock readers who are unable to assess their own investment accounts. 

Their accounts are run by investment providers but these individuals/yachties are so far removed from their money.

They literally don’t even know how to log in. Or know how much money is in there. Or how much their paying the advisor. Wake up people.

I imagine you would know your Facebook/Instagram log in details at any given time! Yet it seems investment account details have gone astray.

If you do know your account details, when was the last time you logged in and checked it? Come on people, be proactive and take control of your money.

Call to action – find out your credentials for your investment account.

What are your contributions and can you afford them?

Although seemingly unavoidable many people are being locked into long-term contracts which they cannot afford.  

Through no fault of their own, some yacht crew do not understand the importance or consequences of these contracts. 

Some financial advisors play their part in this as well due to their lack of contract explanations and breakdowns in a way the client (you) understands. 

Two real life examples of lock in contracts from my readers:

  • A EUR1000 a month 10 year contract
  • A EUR750 a month 5 year contract 

Why might these contracts be issue for yacht crew?

  • Yachting is a fickle industry and jobs come and go quickly 
  • Will you be able to afford these contributions if you left yachting?
  • 10 years in any industry is a long time, let alone yachting!
  • Things change, will you still want this investment in 10 years?

The last point inspires another brief yet very important discussion point.  

  • What are your penalty fees (called surrender fees) if you decided to break the contract?
  • Do the contract break fees change the further into the contract you get?
  • How much would you lose if you were to leave now?

Call to action – find out the terms of your contract by contacting your investment provider. 

I hope the above points make it clear that taking a second look at your current investments is a good idea.  

Last but not least, what are your returns?

First, for those who are unsure, returns is the money you receive from your investments.

Historically, an index fund returns around 6-8% per year, which is very hard to beat. 

Last year I received 8.62% on my investments. 

It is essential to be aware of your returns, otherwise, how do you know if your investments are even successful?

Think about this, to receive an 8% return you need to actually make 12% and minus 4% for the advisor.

In my case of a 8.62% return, my fees were 0.30% which meant I actually returned 8.92%. Whereas, if my fees were 4% my return would have only been 4.62%… see the importance of fees?  

Call to action – Find out your returns by contacting your investment provider. 

Ok, phew, we’re finished.  Find some time and space, get a drink, a smoke, a protein bar or whatever you like and read and re-read part 1 & 2 and follow the calls to action. 

If you do no understand the information/contracts your financial advisors give you, feel free to send it to me and I am more than happy to take a look and break it down for you.

Remember, be proactive and take control of your finances, no one cares about your money as much as you do.

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