Understanding risk, time horizons, and how to get started
Investing can feel overwhelming at first. so our FCA regulated Advisors, Insight, has provided a guide to help you understand the fundamentals and feel more confident about your next steps.
Life on yachts can be financially rewarding but can also be unpredictable. Rotational work, changing contracts, and periods between trips mean that saving your money while you’re earning is crucial. Investing can play a big part in that, but only if you understand the basics first.
Below is a simple guide to help you build a foundation before taking your first steps into investing.
Time horizons: short term vs long term
One of the first things to think about when investing is time. How long can you realistically leave your money untouched?
While markets have historically grown over the long term, they can move up and down significantly in the short term. If you need access to your money within a few years, you risk having to sell your assets when markets are down.
Understanding risk levels
All investments involve risk. The key is making sure the level of risk you take is one you’re genuinely comfortable with, especially given the unique nature of yachting income.
Risk is generally linked to both:
– How much you could gain
– How much you could lose
Common risk profiles include:
Cautious
- You prefer to protect what you already have
- Big ups and downs make you uncomfortable
- You’re okay with smaller, steadier returns
Balanced
- You want a both growth + stability
- You can handle some market ups and downs
- You’re thinking long-term, steady progress
Adventurous
- You’re aiming for higher long-term growth
- You’re comfortable with significant ups and downs
- You understand losses can happen along the way
Getting started: questions to ask yourself
Before investing, take a step back and consider:
How much can I invest?
Look at what you can afford to invest now and, just as importantly, whether you can contribute regularly while working.
How much could I afford to lose?
Investments can fall in value. Ask yourself how much loss you could tolerate without it affecting your lifestyle, career choices, or mental wellbeing. Generally speaking, in an equivalent earning land-based role, you would be spending at least 28% of your income on National Insurance and income tax. We therefore suggest investing a minimum of 28% of your salary each month.
How should I invest?
Your tax status matters. For example, UK tax residents may consider:
- ISAs, which allow tax-free growth and withdrawals.
- You can contribute a maximum of £20,000 per year across your Cash, Stocks and Shares, and Lifetime ISAs.
- Any income earned from these ISAs, such as interest, dividends, capital gains, etc are exempt from tax.
- SIPPs, which are long-term retirement vehicles offering basic rate tax relief on contributions (even if you benefit from the Seafarers’ Earnings Deduction). This relief is capped at £720 if your only income is exempt from tax due to the SED, and you have no other relevant UK earnings
The right structure depends on your residency status, future plans, and how long you can leave funds invested.
Why independent financial advice matters
Yacht crew often face more complex financial decisions than shore-based workers; multiple jurisdictions, irregular income, and time away from home can all complicate things.
Speaking with an independent financial adviser who understands yacht crew can help you:
- Choose investments that match your goals and risk tolerance
- Avoid costly mistakes early on
- Structure investments tax-efficiently
- Build a long-term plan that works whether you stay in yachting or move ashore
If you’re unsure where to start, now is the perfect time to seek independent financial advice. A short conversation could make a meaningful difference to your long-term financial future.
To be put in touch with an advisor, please reach out to CrewFO via:
- Email: hello@crewfo.com
- Phone: https://calendly.com/hello-crewfo/crewfocall
Insight Financial Associates ltd is authorised and regulated by the Financial Conduct
Authority 458421.
Company registration number – 05054886.