Setting off on your catamaran is a dream, for sure, but not a dream which as inaccessible as it might be…
Today there are many solutions which allow you go cruising and discover the world, without having to be a multimillionaire…
If we conducted a survey of our readers, there’s little doubt that the percentage who dream of living aboard and discovering the world for a little while would be close to 99%... At least that’s the percentage among those who call the magazine, or whom we talk to at boat shows or at anchorages where we met. But if everyone is dreaming about it, there’s only a small number who realize that dream: And yet, the “desire” to do it is probably already the “potential”, so why can’t you?
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Publié le
06/02/2017
Par
Jean-Christophe Guillaumin
Numéro :
138
Parution :
Nov.
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Dec.
2014
BUYING A CATAMARAN - the most popular solution
Whether new or second-hand, buying a catamaran which is going to be with you for the years ahead is the most logical solution (see the following pages for the choice between new, second hand or a catamaran at the end of a management term). All that remains is to finance it. And in this instance there is a “magic” product which in some situations can make for substantial savings, and that is leasing or LPO. The Lease with Purchase Option financing is available to residents of the European Community and Switzerland. You can buy a new catamaran through leasing, but it is equally possible to buy a second-hand catamaran with this type of financing, on condition that not all of the VAT (tax) has been paid. For this, it means that the purchased boat belongs to a company (for professional use), or that is already in a leasing program. In theory the LPO can only be applied to a catamaran equipped for offshore sailing. If you are a European or Swiss resident and your catamaran is available in French waters, the French tax authorities allow, within the framework of the LPO, VAT to be charged at 10% instead of the normal 20% on rental. But note that this allowance is only relevant to the charter income, and not the purchase of the catamaran. To buy a catamaran without VAT you will have to set up a company, and therefore make the catamaran “work”… Getting back to our purchaser: there’s going to be a company which will buy the catamaran of his dreams, and then rent it to him for x number of years (on average between 8 and 12 years, as would be the case with Capitole Finance-Tofinso or Groupe Caisse d’Epargne, for example). If the plan is to head far away and see coconut groves, and the catamaran is leaving European territorial waters, the rental can be completely exempted from VAT. The LPO has other advantages, as explained to us by Frédérique Desarnauts of Capitole Finance Tofinso: “the lending company is the owner of the catamaran, and also its value is not taken into account for the chaterer’s ISF tax base (ISF is a tax on wealth, for French residents with assets over €1.3M)… Finally, leasing is easily terminated, with the agreement of the lender, and this greatly simplifies the resale of the catamaran. The LPO is therefore a flexible product, financially and fiscally advantageous, even if you are not immediately the owner of your catamaran. But isn’t the most important thing to be able to enjoy and sail your catamaran!? This system is so advantageous that today almost 100% of new catamarans go through leasing, and provided that a second-hand catamaran belongs to a company, it is also by leasing that it will be financed… Vendors are wise to this situation, and systematically suggest it. Nevertheless, legislation continues to evolve in this area, so it would be prudent to get advice from a financial firm specializing in the maritime field. Moreover, their expertise could help you optimize your purchase, by suggesting a package tailored to your circumstances.
CHARTER A CATAMARAN, an up and coming option It’s already fairly easy to charter a catamaran for several months, or even a year. “Chartering presents a big advantage”, says Eric Vasse, manager of Punch Croisieres, ” notably that of not having to manage all the hassle of preparing the catamaran, and not forgetting everything you have to do to get it ready to sell afterwards.” Corinne and Thierry of Wahoo (producers of the nice film “La Jolie Boucle”, a must-see!) chartered their Nautitech 40 catamaran from Antilles Sail in Guadeloupe. The reasons for their choice were above all budgetary, notably so that they didn’t have their capital tied up, “and it would have been for two years” they say, “as you need to buy the catamaran six months before setting off, sail for a year, then sell it again, which takes an average of six months”. Not having the money, they would have had to borrow, “for a second-hand catamaran of €150,000 (or more!) the interest alone and the insurance would have been €12,000 (4% per year).” An amount which would have to be added to the maintenance costs: “All the catamaran owners we have come across say they have spent around €10,000, with getting the catamaran ready (solar panels, fittings, motors, haul-out…), insurance, berthing before and after your sabbatical year”, say the crew of Wahoo, without taking account of the potential reduction in value of the catamaran, even if it is sometimes nothing, but often a lot: “We estimate a decrease in value of between 5 and 10 %, making €10,000.” So they chartered Wahoo for a year, “for a sum less than we estimate it would have cost us if we had bought the catamaran, with the ability to hand back the keys at the end, without having to worry about the resale, which is not always easy 8,000 km from home”.
MANAGEMENT, for the cunning… A new option, which is attracting more and more potential owners, is management. Ultimately it’s fairly simple: You buy a catamaran and leave it under the management of a recognized catamaran charter company. All as if for a “standard” purchase, the financing is by leasing (see above). Each month the catamaran charter company transfers payment to you, and offers you the opportunity to sail several weeks a year on your catamaran or on an equivalent catamaran in the charter fleet. In general, standard contracts allow up to 12 weeks a year, but it is possible to find an arrangement giving more (or less) time on your catamaran…
How does it work? We asked Dream Yacht Charter to provide us with a simulation of one of their flagship products. This contract is 100% guaranteed. You buy a catamaran through leasing, and Dream Yacht guarantees you an income which can represent up to 9% per year of the cost of the catamaran. Taking the example of a catamaran purchased for €220,000 ex-tax and put in charter in Greece at one of the company’s bases. You pay nothing other than your leasing. Everything else linked to the catamaran is paid for by Dream Yacht. The income guaranteed here is €1,466 per month on a fixed charter of 66 months. By the end of the charter, you will have earned €96,756, not far off half what you invested. You only have to sell the catamaran, via the Dream Yacht Charter service, and you have sailed for up twelve weeks a year at one of the company’s 34 bases, for an entirely reasonable sum.
Of course there are several possible variations to this contract, such as where you only invest 25% of the cost of catamaran, but for which you don’t receive any income (so no income tax to be paid), but thanks to this investment you can still sail up to 8 weeks per year, still from any one of the 34 bases in some of the world’s most beautiful locations. At the end of the contract you have to reduce the value of the re-purchase by 30% of the initial price, but which, with the resale of the catamaran, would still have allowed you to sail your catamaran all those years for a reasonable sum. Note that this contract, called Dream Easy, is very straightforward, as you don’t even need to put any financing in place.
With Sunsail / Moorings the principal is the same. For a Sunsail 444catamaran (the Leopard 44 catamaran) the charter company offers two options. The first provides a guaranteed income (€3,113 per month) and allows you to benefit from a discounted price on the catamaran (€415,000 excluding tax, delivered to the Caribbean next winter, instead of €455,000 ex-tax). The management period is for five years. During this time you can use your catamaran, or an equivalent catamaran, at one of the company’s 20 charter bases for up to 12 weeks each year. And, of course, there are no management or maintenance fees for your catamaran. At the end of the management period, the catamaran is returned to you at the charter base, or can be sold through the charter company’s brokerage department or even taken in exchange against the purchase of a new catamaran model.
The 2nd option is also very interesting, since it allows you to pay only €249,000 ex-tax for the same catamaran (Sunsail 444 catamaran). With this option you do not receive any income from the charter. Again, you can use a catamaran for up to 12 weeks at one of their bases and at the end of the management period, the boat is returned to you under the same conditions as in option 1… Finally, Moorings is also offering an innovative option called “Variable Moorings”. You sail whenever you want on your catamaran with no restrictions and you can even fit the boat out with your choice of equipment. The catamaran is chartered out when you are not using it, and you earn 60% of the income…
This system of management is ideal for those who want to sail often, every year, but whose personal and professional lives might prevent them from setting off “for real”. And we have readers who, with this system, have chartered their way round some of the world’s most beautiful anchorages…
But management needn’t prohibit a sabbatical year. Kiriacoulis offers a cunning system aimed at those who want to set off on their boats. The management principal here is still the same: you put up 62% of the cost of the complete ready-to-sail catamaran, and the company finances the remainder, covering that by the charter. You then have the right to 10 weeks per year, amounting to 70 weeks over the course of the 7 seasons of the management contract. The idea of the company is to take these 70 weeks all in one go, so as you can actually realize the dream of your year’s sabbatical. So you set off with your new catamaran, and after your trip you leave the boat at one of Kiriacoulis’ bases (Caribbean, Greece, France, Italy, Turkey, Malta, etc.) They then physically take charge of the catamaran to recoup their 38% which they financed (by the terms of your contract) a year earlier… You still retain the right to use an equivalent catamaran at one of their bases under the last-minute principle (catamarans which have not been rented) by which you are entitled to a 40% reduction on the charter. And if you want to recover your capital, you can decide to sell the boat, as it is possible to leave this management option after a year without penalties. A very cunning system…
FINANCING A YEAR WITH NO WINTER
Geoffrey de Bouillane completed an Atlantic circuit on an Outremer 45 catamaran with his family, and is the author of a book, “Un temps pour un rêve” (A time for a dream), a best-seller among our readers for ten years now. But Geoffrey is also a wealth management consultant. Below he shares his experiences both personally as a sailor, and professionally, on how to succeed in financing a year’s sabbatical on a catamaran… Of course, you talk about it regularly with your partner, your friends, people you don’t know that have done it, digressing in a conversation, over dinner or at a show…. About what? About going! To set off for a while, not fleeing, but just to make sure the Earth is round, that your children are growing up, that you’ve only got one life and that you don’t want to come back one day and say “I almost did it, I so almost did!” So, what do you do to finance your great escape, this voyage to discover yourself, your adventure? There is the boat, your home, which is important; but today even with a budget of less than €50K - a little more for a catamaran - you’ll find the shoe which fits. All you have to add is a little elbow grease, and there’s plenty of that for sale. Next is the monthly income, indispensable so that your departing doesn’t become a nightmare because you can’t afford to maintain or even live on your boat. You would come back with your tail between your legs, compromise your dream and do your best to rebuild your life. But coming back is a time you must envisage, and so prepare for. It’s rare to set off on a boat forever, many things bring you back - family, health… Look at veterans of this, they all put their bags down one day. So your objective is to find products which give you a return (your salary), without depleting the capital which you have spent so long amassing (your retirement). Some set off on their adventure in the hope of working some place when they stop, but this isn’t a given for every profession, and don’t count on those on the dock to hire you - things are swapped and traded, things done by mutual work or voluntary help… and it’s this which makes the beauty and charm of this type of trip. Don’t rely either on the countries you visit, their inhabitants are often poorer than you…so take this kind of revenue as a supplement, and build yourself a real regular salary, stable and safe. This will allow you to free your mind, and that’s what you set out to do! When we left, in 2003, we rented out our house. This gave me an income in the order of €1,500 a month, which was ample for 5 of us to live on a new Outremer 45. Today people talk of budgets between €1,000 and €2,500 a month depending on the crew, the countries visited, your ability to waste money on the unnecessary, or to stock up with fish you catch, to live on local produce, or western goods, to stay on a dock and rent a car, or anchor and use your dinghy, to return home every couple of months or every year… Renting out your home, or a property is the most simple solution, but not necessarily the safest or most profitable. The risk of it being vacant, or a tenant who doesn’t pay has to be taken into account, because when you’re on the other side of the world, these problems are difficult to deal with, not to mention any tax issues arising because of your fiscal residence.
The second option, financial products. They have the advantage of potentially significant returns, but have the terrible inconvenience of being highly volatile. I don’t have to show you stock market growth over the last 15 years to explain this, you will sell at the lowest point, when stress has got the better of you, in your little corner of paradise, and will buy at the highest when general economic euphoria has taken over your skepticism. Not that it’s recommended to put to sea to dabble on the stock exchange, and I know what I’m talking about, the internet bubble in the early 2000s gave rise to my big trip. If you want to avoid even the slightest risk, your return will be Lilliputian, and you will need two or three times the capital to provide the same monthly income. John D. Rockefeller often said “To be wealthy, is to live with the interest of your interests”. I suggest that to live with the interest from your capital, is more on our level…
Third option, financial return products. You will find some at your bank, in specialist publications or websites, and they’re different in every country. You have to be very careful, and mustn’t favor the fiscal side or the return at any cost, but more what’s underlying, that is to say, in what you are going to invest, of what you are going to become owner, for how long and what the associated costs are… The crisis we have just gone through, or which we are still going through, has cooled off the banks, who only lend with big guarantees. So investors and other wealth-makers are looking for capital for their projects and, by this new financial power, obtain the leverage effect for a bank loan to follow their entrepreneurial adventure… As a wealth management advisor I regularly suggest a supplementary income for a tight pension. Not exotic, but they are based on the banks’ credit squeeze and low levels of lending. Properly preparing for your trip is essential to avoid transforming your dream into insomnia. Such as the financing and buying of your boat, as well as the trip itself. Diversifying your income streams is a good rule of wealth management. We left on a sabbatical for two years, only one had been planned when we set off, and I had three financial stresses during this period: a rise in our insurance premium of 30% when we were in the Bahamas - not easy to contest, the non-payment of rent in the September of the second year - the tenant had forgotten to extend his automatic transfers, and the tenant prematurely giving notice - thankfully I had negotiated a three month notice period, and we would be back after that, but we were not far from bankruptcy… Let’s talk specifics: how does it work? As we still are not in a fiscal and financial Europe, I can only speak about France. For others, contact a specialist bank or wealth management advisors in your country, there will be equivalent solutions… Let’s look at a specific example: if you need an extra €500 a month income, you need to invest around €100,000 in financial return products (see above). For five years you’ll receive about €500 a month, and at the end of the five years you’ll get your initial investment back. The minimum term is usually five years, and that’s the inconvenience of this type of product. Once again, you have to know the product you’re investing in, and evaluate the risk you are taking, even though it may be small. A catamaran for comfort at sea, and a stable income for financial security are the main ingredients which will contribute to the success of your trip.
Bon voyage!
Whether new or second-hand, buying a catamaran which is going to be with you for the years ahead is the most logical solution (see the following pages for the choice between new, second hand or a catamaran at the end of a management term). All that remains is to finance it. And in this instance there is a “magic” product which in some situations can make for substantial savings, and that is leasing or LPO. The Lease with Purchase Option financing is available to residents of the European Community and Switzerland. You can buy a new catamaran through leasing, but it is equally possible to buy a second-hand catamaran with this type of financing, on condition that not all of the VAT (tax) has been paid. For this, it means that the purchased boat belongs to a company (for professional use), or that is already in a leasing program. In theory the LPO can only be applied to a catamaran equipped for offshore sailing. If you are a European or Swiss resident and your catamaran is available in French waters, the French tax authorities allow, within the framework of the LPO, VAT to be charged at 10% instead of the normal 20% on rental. But note that this allowance is only relevant to the charter income, and not the purchase of the catamaran. To buy a catamaran without VAT you will have to set up a company, and therefore make the catamaran “work”… Getting back to our purchaser: there’s going to be a company which will buy the catamaran of his dreams, and then rent it to him for x number of years (on average between 8 and 12 years, as would be the case with Capitole Finance-Tofinso or Groupe Caisse d’Epargne, for example). If the plan is to head far away and see coconut groves, and the catamaran is leaving European territorial waters, the rental can be completely exempted from VAT. The LPO has other advantages, as explained to us by Frédérique Desarnauts of Capitole Finance Tofinso: “the lending company is the owner of the catamaran, and also its value is not taken into account for the chaterer’s ISF tax base (ISF is a tax on wealth, for French residents with assets over €1.3M)… Finally, leasing is easily terminated, with the agreement of the lender, and this greatly simplifies the resale of the catamaran. The LPO is therefore a flexible product, financially and fiscally advantageous, even if you are not immediately the owner of your catamaran. But isn’t the most important thing to be able to enjoy and sail your catamaran!? This system is so advantageous that today almost 100% of new catamarans go through leasing, and provided that a second-hand catamaran belongs to a company, it is also by leasing that it will be financed… Vendors are wise to this situation, and systematically suggest it. Nevertheless, legislation continues to evolve in this area, so it would be prudent to get advice from a financial firm specializing in the maritime field. Moreover, their expertise could help you optimize your purchase, by suggesting a package tailored to your circumstances.
CHARTER A CATAMARAN, an up and coming option It’s already fairly easy to charter a catamaran for several months, or even a year. “Chartering presents a big advantage”, says Eric Vasse, manager of Punch Croisieres, ” notably that of not having to manage all the hassle of preparing the catamaran, and not forgetting everything you have to do to get it ready to sell afterwards.” Corinne and Thierry of Wahoo (producers of the nice film “La Jolie Boucle”, a must-see!) chartered their Nautitech 40 catamaran from Antilles Sail in Guadeloupe. The reasons for their choice were above all budgetary, notably so that they didn’t have their capital tied up, “and it would have been for two years” they say, “as you need to buy the catamaran six months before setting off, sail for a year, then sell it again, which takes an average of six months”. Not having the money, they would have had to borrow, “for a second-hand catamaran of €150,000 (or more!) the interest alone and the insurance would have been €12,000 (4% per year).” An amount which would have to be added to the maintenance costs: “All the catamaran owners we have come across say they have spent around €10,000, with getting the catamaran ready (solar panels, fittings, motors, haul-out…), insurance, berthing before and after your sabbatical year”, say the crew of Wahoo, without taking account of the potential reduction in value of the catamaran, even if it is sometimes nothing, but often a lot: “We estimate a decrease in value of between 5 and 10 %, making €10,000.” So they chartered Wahoo for a year, “for a sum less than we estimate it would have cost us if we had bought the catamaran, with the ability to hand back the keys at the end, without having to worry about the resale, which is not always easy 8,000 km from home”.
MANAGEMENT, for the cunning… A new option, which is attracting more and more potential owners, is management. Ultimately it’s fairly simple: You buy a catamaran and leave it under the management of a recognized catamaran charter company. All as if for a “standard” purchase, the financing is by leasing (see above). Each month the catamaran charter company transfers payment to you, and offers you the opportunity to sail several weeks a year on your catamaran or on an equivalent catamaran in the charter fleet. In general, standard contracts allow up to 12 weeks a year, but it is possible to find an arrangement giving more (or less) time on your catamaran…
How does it work? We asked Dream Yacht Charter to provide us with a simulation of one of their flagship products. This contract is 100% guaranteed. You buy a catamaran through leasing, and Dream Yacht guarantees you an income which can represent up to 9% per year of the cost of the catamaran. Taking the example of a catamaran purchased for €220,000 ex-tax and put in charter in Greece at one of the company’s bases. You pay nothing other than your leasing. Everything else linked to the catamaran is paid for by Dream Yacht. The income guaranteed here is €1,466 per month on a fixed charter of 66 months. By the end of the charter, you will have earned €96,756, not far off half what you invested. You only have to sell the catamaran, via the Dream Yacht Charter service, and you have sailed for up twelve weeks a year at one of the company’s 34 bases, for an entirely reasonable sum.
Of course there are several possible variations to this contract, such as where you only invest 25% of the cost of catamaran, but for which you don’t receive any income (so no income tax to be paid), but thanks to this investment you can still sail up to 8 weeks per year, still from any one of the 34 bases in some of the world’s most beautiful locations. At the end of the contract you have to reduce the value of the re-purchase by 30% of the initial price, but which, with the resale of the catamaran, would still have allowed you to sail your catamaran all those years for a reasonable sum. Note that this contract, called Dream Easy, is very straightforward, as you don’t even need to put any financing in place.
With Sunsail / Moorings the principal is the same. For a Sunsail 444catamaran (the Leopard 44 catamaran) the charter company offers two options. The first provides a guaranteed income (€3,113 per month) and allows you to benefit from a discounted price on the catamaran (€415,000 excluding tax, delivered to the Caribbean next winter, instead of €455,000 ex-tax). The management period is for five years. During this time you can use your catamaran, or an equivalent catamaran, at one of the company’s 20 charter bases for up to 12 weeks each year. And, of course, there are no management or maintenance fees for your catamaran. At the end of the management period, the catamaran is returned to you at the charter base, or can be sold through the charter company’s brokerage department or even taken in exchange against the purchase of a new catamaran model.
The 2nd option is also very interesting, since it allows you to pay only €249,000 ex-tax for the same catamaran (Sunsail 444 catamaran). With this option you do not receive any income from the charter. Again, you can use a catamaran for up to 12 weeks at one of their bases and at the end of the management period, the boat is returned to you under the same conditions as in option 1… Finally, Moorings is also offering an innovative option called “Variable Moorings”. You sail whenever you want on your catamaran with no restrictions and you can even fit the boat out with your choice of equipment. The catamaran is chartered out when you are not using it, and you earn 60% of the income…
This system of management is ideal for those who want to sail often, every year, but whose personal and professional lives might prevent them from setting off “for real”. And we have readers who, with this system, have chartered their way round some of the world’s most beautiful anchorages…
But management needn’t prohibit a sabbatical year. Kiriacoulis offers a cunning system aimed at those who want to set off on their boats. The management principal here is still the same: you put up 62% of the cost of the complete ready-to-sail catamaran, and the company finances the remainder, covering that by the charter. You then have the right to 10 weeks per year, amounting to 70 weeks over the course of the 7 seasons of the management contract. The idea of the company is to take these 70 weeks all in one go, so as you can actually realize the dream of your year’s sabbatical. So you set off with your new catamaran, and after your trip you leave the boat at one of Kiriacoulis’ bases (Caribbean, Greece, France, Italy, Turkey, Malta, etc.) They then physically take charge of the catamaran to recoup their 38% which they financed (by the terms of your contract) a year earlier… You still retain the right to use an equivalent catamaran at one of their bases under the last-minute principle (catamarans which have not been rented) by which you are entitled to a 40% reduction on the charter. And if you want to recover your capital, you can decide to sell the boat, as it is possible to leave this management option after a year without penalties. A very cunning system…
FINANCING A YEAR WITH NO WINTER
Geoffrey de Bouillane completed an Atlantic circuit on an Outremer 45 catamaran with his family, and is the author of a book, “Un temps pour un rêve” (A time for a dream), a best-seller among our readers for ten years now. But Geoffrey is also a wealth management consultant. Below he shares his experiences both personally as a sailor, and professionally, on how to succeed in financing a year’s sabbatical on a catamaran… Of course, you talk about it regularly with your partner, your friends, people you don’t know that have done it, digressing in a conversation, over dinner or at a show…. About what? About going! To set off for a while, not fleeing, but just to make sure the Earth is round, that your children are growing up, that you’ve only got one life and that you don’t want to come back one day and say “I almost did it, I so almost did!” So, what do you do to finance your great escape, this voyage to discover yourself, your adventure? There is the boat, your home, which is important; but today even with a budget of less than €50K - a little more for a catamaran - you’ll find the shoe which fits. All you have to add is a little elbow grease, and there’s plenty of that for sale. Next is the monthly income, indispensable so that your departing doesn’t become a nightmare because you can’t afford to maintain or even live on your boat. You would come back with your tail between your legs, compromise your dream and do your best to rebuild your life. But coming back is a time you must envisage, and so prepare for. It’s rare to set off on a boat forever, many things bring you back - family, health… Look at veterans of this, they all put their bags down one day. So your objective is to find products which give you a return (your salary), without depleting the capital which you have spent so long amassing (your retirement). Some set off on their adventure in the hope of working some place when they stop, but this isn’t a given for every profession, and don’t count on those on the dock to hire you - things are swapped and traded, things done by mutual work or voluntary help… and it’s this which makes the beauty and charm of this type of trip. Don’t rely either on the countries you visit, their inhabitants are often poorer than you…so take this kind of revenue as a supplement, and build yourself a real regular salary, stable and safe. This will allow you to free your mind, and that’s what you set out to do! When we left, in 2003, we rented out our house. This gave me an income in the order of €1,500 a month, which was ample for 5 of us to live on a new Outremer 45. Today people talk of budgets between €1,000 and €2,500 a month depending on the crew, the countries visited, your ability to waste money on the unnecessary, or to stock up with fish you catch, to live on local produce, or western goods, to stay on a dock and rent a car, or anchor and use your dinghy, to return home every couple of months or every year… Renting out your home, or a property is the most simple solution, but not necessarily the safest or most profitable. The risk of it being vacant, or a tenant who doesn’t pay has to be taken into account, because when you’re on the other side of the world, these problems are difficult to deal with, not to mention any tax issues arising because of your fiscal residence.
The second option, financial products. They have the advantage of potentially significant returns, but have the terrible inconvenience of being highly volatile. I don’t have to show you stock market growth over the last 15 years to explain this, you will sell at the lowest point, when stress has got the better of you, in your little corner of paradise, and will buy at the highest when general economic euphoria has taken over your skepticism. Not that it’s recommended to put to sea to dabble on the stock exchange, and I know what I’m talking about, the internet bubble in the early 2000s gave rise to my big trip. If you want to avoid even the slightest risk, your return will be Lilliputian, and you will need two or three times the capital to provide the same monthly income. John D. Rockefeller often said “To be wealthy, is to live with the interest of your interests”. I suggest that to live with the interest from your capital, is more on our level…
Third option, financial return products. You will find some at your bank, in specialist publications or websites, and they’re different in every country. You have to be very careful, and mustn’t favor the fiscal side or the return at any cost, but more what’s underlying, that is to say, in what you are going to invest, of what you are going to become owner, for how long and what the associated costs are… The crisis we have just gone through, or which we are still going through, has cooled off the banks, who only lend with big guarantees. So investors and other wealth-makers are looking for capital for their projects and, by this new financial power, obtain the leverage effect for a bank loan to follow their entrepreneurial adventure… As a wealth management advisor I regularly suggest a supplementary income for a tight pension. Not exotic, but they are based on the banks’ credit squeeze and low levels of lending. Properly preparing for your trip is essential to avoid transforming your dream into insomnia. Such as the financing and buying of your boat, as well as the trip itself. Diversifying your income streams is a good rule of wealth management. We left on a sabbatical for two years, only one had been planned when we set off, and I had three financial stresses during this period: a rise in our insurance premium of 30% when we were in the Bahamas - not easy to contest, the non-payment of rent in the September of the second year - the tenant had forgotten to extend his automatic transfers, and the tenant prematurely giving notice - thankfully I had negotiated a three month notice period, and we would be back after that, but we were not far from bankruptcy… Let’s talk specifics: how does it work? As we still are not in a fiscal and financial Europe, I can only speak about France. For others, contact a specialist bank or wealth management advisors in your country, there will be equivalent solutions… Let’s look at a specific example: if you need an extra €500 a month income, you need to invest around €100,000 in financial return products (see above). For five years you’ll receive about €500 a month, and at the end of the five years you’ll get your initial investment back. The minimum term is usually five years, and that’s the inconvenience of this type of product. Once again, you have to know the product you’re investing in, and evaluate the risk you are taking, even though it may be small. A catamaran for comfort at sea, and a stable income for financial security are the main ingredients which will contribute to the success of your trip.
Bon voyage!
