Is a Boat a Good Financial Investment?

money boat

Some people like to talk about their major life purchases as “investments,” financial boons that will benefit them at some point in the future. For example, most financial experts regard your primary home as an investment that will grow in value over time (if you choose the right area in which to live).

But what about buying a boat? Can you consider a boat to be a financial investment?

What Makes a Financial Investment “Good?”

On a literal level, you can think of a boat as an investment. After all, you’re paying money for an asset that you’ll come to own. But is buying a boat a “good” investment?

To answer that question, we first need to define what makes an investment “good.”

Usually, it boils down to three factors:

  • Value retention. Does this asset have the potential to retain its value? As a simple example, a gallon of milk will eventually lose value over time. The milk itself will expire and become inedible, thus negating any practical value the milk had in the first place. By contrast, a bar of gold will retain its properties and its value due to scarcity, regardless of how much time passes.
  • Appreciation or cash flow over time. Some investments are valuable because they have the possibility of growing in value over time or generating revenue. Stocks in the Dow Jones Industrial Average, for example, have increased in price relatively consistently, averaging out to annual growth exceeding 10 percent. You can also buy a business that makes passive revenue, and benefit from that ongoing profitability.
  • Additional value. Other investments are good because they lend some other value, and sometimes value that is not monetary. For example, if you invest in a bar to earn a portion of the profits, you might also get the opportunity to enjoy inexpensive drinks on a regular basis – and meet interesting people who can connect you to other professional opportunities.

Common Arguments Against Boat Ownership

Before we get any further, it’s important to acknowledge that there are some strong arguments against boat ownership as a solid investment strategy.

For example:

  • Depreciation of new boats. Before we start on this one, don’t forget that there are many benefits of buying new boats, which include access to the latest models, the prestige of owning a brand-new boat, usually the peace of mind of a warranty and knowing that you can use the boat right away without the need to carry out upgrades and repairs. But, it’s a sad but true fact that new boats depreciate quickly, starting from the moment they’re purchased. Even a few hours of use is enough to make the resale price of a new boat plummet, meaning it doesn’t have much value retention. The good news is that depreciation isn’t quite as bad for used boats; as long as you’re not buying new, boat depreciation isn’t nearly as big of a deal.
  • Secondary costs of ownership. Buying the actual boat is just one expense of boat ownership. While owning and using a boat, you’ll need to pay for fuel, oil changes, boat storage and docking fees, insurance, and other peripheral costs. Because of this, just retaining ownership of a vessel can be expensive.
  • Illiquidity. Boats are also somewhat illiquid. If you hold conventional financial assets like stocks or ETFs, you can sell them almost any time you want. But if you want to sell a boat, it could take weeks, or even months, to find a seller.

The Value of Owning a Boat

So what about the value of owning a boat?

There are many costs associated with boat ownership, but let’s not forget about the upsides:

  • Personal enjoyment. What’s the value of a nice, relaxing day on the water? How much would you pay to have more comforting memories with your friends and family? Most people buy boats so they can personally enjoy them – and that enjoyment is so valuable, it’s hard to put a price on it.
  • Bonding and personal relationships. Boating can also be a great way to meet new people, find new friends, and build stronger bonds with the friends already in your life.
  • Commercial potential. You might also be able to use your boat for cash flow or commercial purposes. For example, you might be able to take people on your boat for a tour, catch fish and sell them to local restaurants, or even rent your vessel to others.
  • Reasonable resale. Despite the depreciation problem with new boats, most vessels have a reasonable resale value. You can often make back close to what you originally paid, assuming you’ve kept the boat in good condition.

Depending on your definitions, these benefits can make a boat a “good” investment; if a few thousand dollars can give you enriched experiences and fond memories for years to come, most people would consider that a good trade.

Making Boats Into a Better Investment

There are also some steps you can take to make a boat a better financial investment overall:

  • Buy used. Buying a new boat is an appealing idea, but it doesn’t make much financial sense to some people. Instead, look for a used vessel. They’re almost as good as new (in many cases) but are much less expensive and suffer less depreciation.
  • Enjoy your time. The best value of boat ownership is enjoying your asset on a personal level. Take it out when you can and be grateful for your experiences.
  • Take good care of your boat. Boats have a much longer lifespan and a higher resale value when they’re cared for properly. Make sure you practice routine maintenance, store your boat properly, and take care of any issues that arise proactively.
  • Be smart when selling. Use savvy strategies when it’s time to sell your boat. Simple things, like cleaning and waxing the boat or listing it on the right channels, can help you boost your bottom-line sale price.

In many ways, buying a boat is not a good investment – at least when compared to assets like stocks, bonds, or real estate. But buying a boat can be incredibly valuable to you on a personal level, well worth the costs. Once you’ve prepared a budget and set some goals for your purchase, you can browse our wide selection of boats for sale at TheYachtMarket!

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