Sailing is not easy… Is it true? Well, actually it’s not that difficult. Starting is easy but to be able to keep sailing you have to have several things aligned.

1. You have to be healthy. Sailing is physically demanding and if you are sick, it would be very very difficult for you to be able to continue sailing.

2. You have to have a plan. It seems obvious but I have seen so many fellow sailors stop their journey because they lose focus. Even though the plan is not mandatory or even seems to make sailing boring – believe me, it’s good to have at least a general idea where are you going to sail this or even next year.

3. Keep your boat in good shape and try to be able to repair and maintain as much of the boat systems as you can. This one becomes especially important when you start sailing in destinations where technical help and spare parts are scarce or missing.

4. Be as financially stable and as independent as possible. This point is where I will focus for this post.

Everyone will tell you that sailing is expensive, there are so many jokes about the expensiveness of the boats and sailing in general. Although I don’t agree completely, I must say that you need enough money to keep your sailing dream afloat (pun intended). Of course, every single sailor has his or her own requirements and they spend their funds differently but one commonality we all have is that we need to finance our life without being too reliant on a stable job. I know several people that sail part time (while working during the other part of the year) but it’s not easy since many companies would prefer to have someone on their payroll to be permanently available. Also, if you follow this pattern, you have to find a reliable shipyard to store your boat for the duration of your off the boat time. Since Starlink has entered the communications scene, the sailing changed completely, now many people have the opportunity to work from their boats. Even with these opportunities though, it can be difficult because of the weather changes, power outages on the boat etc. Also, to work off your boat while on a longer passage is very difficult if maybe impossible. Sometimes, living with small children on the boat and working at the same time can be challenging because of the small area available for all the family members.

Anyway, as you can see I’m getting at the point where I would like to tell you that it’s very good to have some “passive” income. I know that maybe it sounds like a “old man” thinking but passive income is not suitable only for older men or women. Everyone can benefit from having passive income, even very young people just starting their professional careers.

I am not going to preach here about the power of the compounding interest, I think so many people spoke about it in the last 5-10 years that it’s already became a cliche. It’s not that it’s not working – no! It does work very very well, I just don’t want to insult my readers with stating the obvious. So, to keep the long story short, I am going to layout a very simple plan below that everybody can follow if he/she wants to and you can modify it as it pertains to your own personal style of living.

Let’s imagine that some young person starts their professional life and is wondering how to deal with her finances. In the beginning I’ll put some general rules and then we’ll continue with some more concrete details.

1. Start saving and investing as soon as possible. Here again the compounding interest comes in play since when you start investing early in your life, the “compounding” effect will become more visible earlier in your life. I would advise to save until you have approximately 6 months of your expenses as an emergency buffer and after that invest between 10 and 20% of your monthly expenses. No excuses! I know that to many people it sounds too much but mostly those are simple excuses not to be disciplined and serious about your own money. Again, there are literally hundreds of books written on the subject, I’ll write a separate post about this in my Books section.

2. Here comes the most important part where I differ with many of the financial advices you’ve been given. You have to decide when you want to STOP working depending on your and your family needs. It’s the so important “enough” concept. Please, put your financial goal on paper (or in Google sheet or whatever you want) and when you reach it just stop. I am not talking about looking at the sky and waiting for some extraterrestrial advice about when to stop. Your decision should be based on your yearly expenses (so, obviously you have to track them) and then the calculation is very simple. Let’s imagine that your annual expenses are around 40000 EUR. Then if you stop working and rely only on passive income (4% annual yield after taxes is universally accepted as achievable) then your invested amount should be around 1 million EUR. I know what you’re thinking – 4% is too low and you might be right, now there are many options available with higher annual returns. I’ll list some of them below if you want to explore them. Please, note that this invested amount is not spent, you live off your annual returns. Why is that? First of all, if you spend your invested amount your annual returns will diminish as the years go by. Also, if you keep most or all of your invested amount you’ll be better protected from the inflation because your investments will continue bringing new cash-flow over the years. Let’s imagine that you stop working when you’re 45 or 50 years old then if you spend your investments (and not living off your returns) then if you spend roughly 4% of the invested amount you’ll have enough funds for 25-30 years which with the average life expectancy of 80 years is just not enough. And believe me you don’t want to be penniless during your last years.

So, you might ask – what are my favorite investment vehicles? Nothing fancy I would say.

1. Real estate. Here I am only looking at rental cash-flow. I am definitely looking for more than 4% after taxes. It’s becoming more and more difficult at current market prices but now the world is completely open and if your local market does not offer attractive annual return, look elsewhere. Also, for the EU citizen there are now many more options to get investment exposure to real estate without actually buying the building or the apartment itself. I’ll talk about it in the option number 3 below.

2. Stock market. Well, it’s very well known now that investing in general stock market is universally available. Of course, if you’re more sophisticated investor or trader, you can trade any available financial instrument on the planet – be it futures, options, whatever but for the beginner investor I would recommend to invest every month a fixed amount of money no matter what – so called dollar averaging method. You can invest in low cost funds – avoid mutual funds, in my experience they have higher entry/exit cost and there are so many cheaper alternatives.

3. P2P platforms. These platforms in general allow the public to invest in loans and get part of the returns. They started as platforms for investing in personal loans but since then they have developed into so many other projects – like company loans, agricultural loans, real estate loans etc.

In the end I would like to tell you that it’s not necessary to rely only on passive income to continue sailing, it’s just easier. Many cruisers I know rely also on additional remote work, generally using Starlink now – like project management, software development, digital marketing, PR agencies, web design, Human Resources etc. Some of them also have successful YouTube channels and make some money off that. It all can be a fantastic way to add to your funds and will allow you to enjoy your sailing life!

In the next post I’ll share some links to platforms that I personally use and like and I’ll share some of the good and bad experiences I’ve had with them.