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Investment Advice About Boat Buying

Published on September 28th, 2015

by Barry Ritholtz, The Washington Post
“A boat is a hole in the water you throw money into.”

“The two happiest days in a sailor’s life are the day he buys a boat and the day he sells it.”

I have a somewhat unique perspective on dispensing financial advice. I run an asset management firm. We hear all manner of terrible advice that our prospective clients have received elsewhere. (No, owning physical gold and the SPDR Gold ETF does not mean you are diversified.) Conflicted advice, thoughtless portfolio constructions, high-risk low-return bets and debunked financial myths are just the tip of the iceberg.

I also write about investing. Hence, a natural tension exists: Good investing is boring and long-term, while good writing tends to be emotionally appealing and punchy. It’s a trade-off, and I understand how nuance and subtlety can be lost in the media’s hunt for clicks.

This came to mind recently when I read an intriguing column headlined “Never buy a boat.” As a boat owner and lover of the seas, I found it an amusing discussion. But as a financial adviser, I was sorely disappointed.

I am sure you have seen many other such “lessons:” Houses are money pits. Don’t drink expensive lattes. Never install a pool. Don’t go to college. Golf is an expensive hobby. Don’t invest in a 401(k). Never buy a high-end sports car.

Merely saying “no” is not financial advice; it is a form of blind risk avoidance. The problem with such advice is twofold. First, it misunderstands the purpose of money. Second, it fundamentally misses out on the best way to make intelligent financial decisions.

Money, for all its glory and the trouble the blind pursuit of it has caused, is misunderstood by many. No, money is not the root of all evil. The problem is people and how they behave around it.

Money is merely a tool, a medium of exchange. Its value is that it allows its owners the freedom to make decisions that those without it cannot.

At its most basic level, money allows sustenance and security: Food, housing, clothes, medical care and transportation. Get a little more of it and you can pay for your kids’ education, and take a vacation now and again. Freedom from worry is a nice benefit of having enough to cover the above. If you’re fortunate to have more than enough, then other choices emerge: philanthropy, entertainment, hobbies, travel, whatever indulgences catch your fancy.

Which brings us back to our boat: Assuming you have enough cash and/or credit, using some of it to buy a boat is simply an option, one that should be considered intelligently. – The Washington Post, full story

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