Making Your Yachting Income Work for You!

Today I want to talk about something that has been on my mind for a long time: money. More specifically, yachties making good money decisions!

At school, unless you chose to study economics or finance, we aren't really taught much about money, which is crazy given how central money is to our lives. Because of this lack of education, many people don't understand concepts like inflation or investing and as a result, they never really learn how to make their money work for them.

Before we continue, I need to say that this is not financial advice. My goal isn't to tell you what to invest in. Rather, it's to clear up a few concepts and encourage you to educate yourself or seek professional advice.

Many yachties don't invest a cent, even after working in the industry for years. They don't understand investments and are understandably nervous about putting money into something they don't fully understand. I actually think that's a sensible mindset. You should never invest in something you don't understand. I do, however, believe that everyone should be investing at least some portion of their disposable income, and here's why.

Inflation

Inflation is the gradual increase in the price of goods and services over time. There are many reasons for inflation, some valid and some less so, but we won't get into that here. The basic idea is simple: milk next year will probably cost more than milk this year. So will bread, fuel, clothing and countless other everyday items. If €5 can buy four litres of milk today but only three litres next year, then that €5 has lost purchasing power. That's inflation. 

Inflation is usually measured as a percentage and varies from country to country, but over the long term many developed economies have experienced inflation of roughly 2–3% per year.

The important takeaway is this: if your money is sitting in cash and earning little or no return, its purchasing power gradually declines over time.

The First Euro You Invest

The first euro you invest is the most important investment you'll ever make.

Don't let that statement scare you. Let it inspire you to get off your butt and start learning. Investing can seem like a complicated topic, which is why I see so many yacht crew avoid it altogether. Let me simplify it.

Because of inflation, money sitting idle in a bank account gradually loses purchasing power. Investing gives your money the opportunity to grow faster than inflation and build wealth over time.

The key isn't finding the perfect investment. The key is time. Time spent in the market is often more important than trying to perfectly time the market. That's why it's so important to start investing sooner rather than later. Don't wait until you're earning a Chief Officer's salary. Start learning and investing now.

Yachting's Hidden Financial Advantage

One of the biggest advantages of working in yachting is that our living expenses are often very low. Accommodation is provided. Meals are provided. Many crew don't own cars. During a busy season there often isn't much time to go out spending money anyway. This creates something incredibly powerful: a high savings rate.

Many people ashore earn good salaries but spend most of their income on rent, food, transport and other living expenses. Yacht crew are in a unique position to save and invest a significant portion of their income from a young age. That advantage should not be wasted.

The Power of Compound Growth

Let me give you an example:

Timmy joins his first yacht at 23 years old. He earns €2,500 per month and decides to invest €500 per month into a diversified fund that tracks the S&P 500, an index made up of 500 of the largest publicly listed companies in the United States. Historically, the S&P 500 has returned roughly 10% per year over the long term, although future returns are never guaranteed.

If Timmy invested €500 per month and achieved an average return of 10% per year:

After 10 years he would have approximately €102,000.

After 20 years he would have approximately €380,000.

After 30 years he would have approximately €1.13 million.

Timmy only invested €180,000 of his own money over those 30 years. The rest came from investment growth. Notice how the portfolio really begins to accelerate after the first decade. That's the power of compound growth, and that's why time matters so much.

Where Do You Start?

Many yachties gravitate towards property because it's an asset class they understand. There is nothing wrong with that. Property can be a great investment. But it's not the only way to build wealth, and it's worth taking the time to understand other investment options too.

I encourage you to start learning. Read books. Listen to podcasts. Speak to qualified financial advisers. Learn about investing, inflation, diversification and long-term wealth building.

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Conclusion

Yachting provides one of the greatest financial opportunities many of us will ever have: high earning potential combined with relatively low living expenses. Make the most of it.

The sooner you start, the more time your money has to work for you. One day you may decide to leave yachting. The money you invest today could be what gives you the freedom to do so on your own terms.