Many people stare out of the office window on a beautiful sunny day wishing they could be out there, soaking up sun and enjoying the outdoors. For a lot of folks this looks like getting on a boat, either leisurely floating along, powering up the motor to feel the wind in your hair, or even trying your hand at sailing. Once you’ve retired, you can now make that dream a reality, but should you?
While many people find genuine enjoyment in boat ownership, others have found it to be a frustration. Steve, an HCM client and boat owner, said “Boats are relatively expensive and can be costly to operate and maintain. However, the boat will get you out of the house and on the water. You will have fun times in good weather and bad. Learn new skills. Make new friends. And perhaps see new places and have an adventure or two. Boats are a monetary investment with a social return.”
With that in mind, what can you do to optimize your Social Return on Investment?
Benefits of Boat Ownership
The ideal image of boat ownership is freedom: loading onto the boat with family and friends, pushing off into the water, and enjoying life. It could be a leisurely float, a dedicated adventure, a chance to commune with nature, engage in high-speed sports and games, and much more. With the proper towing equipment, you could be in a major river one day, a quiet lake the next, and exploring new waters shortly thereafter. Spending time on the water can have positive effects on physical and mental health. The fresh air, physical activity involved in boating, and the mental stimulation of navigation can contribute to a healthier, more active retirement. Boat ownership allows for not only making great memories with loved ones, but also finding a new community with whom you can enjoy and explore your new hobby. Finding a community and purpose in life has been shown to improve quality of life and overall health, and an active community of people who enjoy travelling and being outdoors is a great place to find that community and purpose.
Downsides to Boat Ownership
As we know, there is no such thing as a free lunch. In the context of owning a boat, the costs of acquisition, maintenance, and upkeep can be substantial.
The initial cost of purchasing a boat, whether new or used, can be significant. In addition to the sticker price, it’s important to also account for other expenditures when thinking of this purchase, such as insurance, maintenance, mooring fees, fuel, and storage charges. Boat ownership can add up to an expensive endeavor due to these and other recurring costs. In addition, boats lose value over time, much like any other vehicle. Depreciation is an important factor to consider when investing in a boat. Taking care of a boat takes a lot of dedicated time and work. Your vessel needs regular cleaning, service, and maintenance to stay in good shape. Winterization and seasonal storage can also be time-consuming and add to the cost of ownership overall. This is an important element to consider when thinking of the financial and physical investment of boat ownership.
Considerations when Shopping for a Boat
If you are interested in pursuing boat ownership, we’ve assembled a few tips to keep in mind when shopping. Obviously, these are not one-size-fits-all, and you should talk with a financial professional or your HCM Wealth Advisor before making any large purchases.
- Consider the Type of Boating You’ll Do. There are many different types of boats in the sea, and determining how you’ll want to use your boat can help you narrow down your shopping list. If it’s your first boat, versatility can be a good attribute to look for in a boat. A boat that’s pretty good for partying, lounging, fishing, and wakesports is a safer option than a boat that’s ideal for one and subpar for the others, especially as you find out exactly what you enjoy doing on the water.
- Budget to Keep Maintenance Up to Date. For many of us, boating season is very short – only a few months. Because of this, you’ll want to make sure the boat is well-maintained. A lot maintenance can be done by the boat owner, but especially as you’re starting off, you’ll want to develop a relationship with a reliable marine service center and a skilled technician. In particular, you’ll want to keep an eye on battery maintenance and fuel quality, as those areas are notoriously troublesome when not maintained.
- Consider a Pre-Owned Boat. Boats, similar to cars, are a depreciating asset, with a significant percentage of the depreciation happening in the first year. To avoid losing that value, shop for a pre-owned boat that’s already gone through this depreciation. This needs to be balanced with the previous note of keeping the boat well maintained, as an older boat is likely to have more maintenance issues sooner.
- Could You Make Money with Your Boat? Although you probably won’t buy a boat purely as a commercial venture, there are opportunities to help defray the costs of ownership by putting it to work. Common options include Peer-to-Peer Rentals, Charter Fishing, Operating Sight Seeing Tours, and Special Business Opportunities. Some of these could even be great ways to enjoy the boat yourself, spend some time with new friends who also enjoy boating, and make some money while doing it.
There’s the old joke that “the two best days of your life are the day you bought your boat and the day you sold your boat.” It’s our hope that, with some forethought and consideration, if you do decide to purchase a boat, you’re able to get the most enjoyment out of it while managing the costs so that, if you do decide to sell your boat, it will be bittersweet at most.