Boat investment has become increasingly popular among high net worth individuals in recent years. However, the high purchasing and maintenance costs, as well as the time required to properly enjoy a boat, make it an investment that is not suitable for everyone. In this article, we will analyze the pros and cons of boat ownership and investigate whether a boat is a bad investment choice for most investors.
The high upfront cost of purchasing a boat
The first major disadvantage of boat investment is the extremely high upfront purchasing cost. New boats can easily cost hundreds of thousands or even millions of dollars depending on the size and features. Even used boats generally start at over $10,000 for smaller vessels and can go well over $100,000 for larger yachts. This high capital requirement makes boats unaffordable for most mainstream investors.
Ongoing maintenance and docking fees
In addition to the initial purchase price, boat owners need to pay for ongoing maintenance, repairs, insurance, docking fees and winter storage. These recurring costs can quickly add up to thousands of dollars per year. Boat maintenance also requires a lot of time and effort keeping the vessel seaworthy. These recurring expenses may be too much for investors without very high incomes.
Have to invest a lot of time to enjoy it
To fully enjoy the benefits of boat ownership, investors need to invest a significant amount of leisure time. Planning trips, performing maintenance, learning to operate the boat properly all take time. People with busy work schedules may not have the opportunity to use the boat enough to justify the high cost. As a passive investment, a boat provides little benefit.
Risk of depreciation
Unlike real estate or securities, boats provide little upside potential. And they depreciate in value over time – especially fast in the first 5 years. Reselling a used boat is very difficult. For most investors, a boat will be a sunk cost that slowly loses value over time. The money could be better invested elsewhere.
In summary, for mainstream investors boat ownership is often a bad investment due to the high upfront and ongoing costs, time requirements, and lack of appreciation. It can only be justified for high net worth individuals that have ample leisure time to enjoy the boat fully.