January 16th, 2023
With a record 1,024 superyachts under construction or on order in 2022*, it’s clear that the siren song of the high seas is more inviting than ever.
Our founder and namesake at J.P. Morgan, knew the call well, regularly retreating to his beloved 165-foot long yacht, Corsair, as a respite from the outsized role he played in the late 1800s/early 1900s as America’s foremost banker. He also used the Corsair to settle several deals, and disputes, as the vessel sailed leisurely around Manhattan or Long Island.
If joining the grand tradition of yachting is your passion, J.P. Morgan is pleased to help you make this major purchase with your head, as well as your heart. There are several options for venturing out to the sea. Each should, and can, align with your broader financial goals, and it is here that some thoughtful planning can make a big difference.
The first step is to define how you plan to use your yacht. How many people is it for? Where is it going? How often do you plan to use it? Our answers will help you decide to build new, buy pre-owned or to charter. Luxury yachts that are privately owned and crewed start at about $2 million, while superyachts (at least 79 feet long) can run into the hundreds of millions. Wait times for a custom superyacht are now three to five years, and demand may push prices even higher.
Of course, the purchase price is only one aspect of a major purchase like this. At J.P. Morgan, we’re also able to help clients plan for annual costs to maintain and operate a private yacht, including crew, dockage, and maintenance — that will amount to at least 10% of the purchase price. And there is always fuel, insurance or security costs, too. We also see many purchasers faced with a payment schedule, often in a foreign currency like euros. Our Advisors can help you consider ways to mitigate some of the risks that come with foreign exchange volatility during these transactions.
Whatever your decision, it’s wise to consider how these options might affect your overall lifestyle and other financial goals, as each comes with different cash-flow implications and trade-offs.
If you are looking to set sail immediately, chartering can be a good option and would likely cost you less and give you access sooner. On the other hand, if you build, you can customize amenities and have unfettered access- and then charter while your yacht is being built. You could also choose to own a relatively modest yacht and charter a superyacht every year for an extended family-and-friends vacation.
At J.P. Morgan, we can help you think through all your options so that you might ensure this new commitment is incorporated into your family and financial plans. Even if you are able to afford to purchase the yacht outright – about 50% of the contract price is typically required as down payment – it could be more efficient to borrow against your assets. Or financing could be secured by the yacht itself. There are additional planning issues you might want to keep in mind, too, such as family ground rules, protecting your personal finances from liability, and accounting for it in your will.
Ultimately, we can help you make sure your liquidity and lifestyle buckets are funded and invested to help support your adventures on the high seas. J.P. Morgan himself would have it no other way.
*Source: Boat International’s 2022 Global Order Book
For more information, visit https://www.jpmorgan.com/global
“J.P. Morgan Private Bank” is a brand name for private banking business conducted by JPMorgan Chase & Co. and its subsidiaries worldwide. JPMorgan Chase Bank, N.A. and its affiliates (collectively “JPMCB”) offer investment products, which may include bank-managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC (“JPMS”), a member of FINRA and SIPC. JPMCB and JPMS are affiliated companies under the common control of JPMorgan Chase & Co