The Windy Abacos
I wanted to post a quick update. It has been one of the windiest winters here in the Abacos in many years. The temperature has also been lower than average. Winds have been 20 to 30 knots on many days. Daytime highs have often been about 70 degrees and night time lows have been as low as 60 degrees. These temperatures have been about 5 to 7 degrees lower than usual.
I know some people reading this who reside in the US may think we are not suffering as the US has been setting record low temperatures and snowfall in many areas. That is true; we are not suffering like some areas of the US. But this much wind has an impact on cruisers as they cannot move their boats around as much. Frankly it has been a good winter to be land-based as I think we would have only left the harbor about 7 or 8 days in the last 2 months.
Sailboat race outside of Fry’s Mangrove
But this is one of the reasons cruising the Abacos is a great cruising area. First, the Abacos has about 7 or 8 all-weather harbors that boaters can hide out in when the weather is bad. Another reason the Abacos is a good cruising area is there are a lot of activities happening all winter long. Some are community oriented and many are just groups of friends getting together.
In the last 2 months we have been to several Christmas parties, the Hope Town School Christmas play, decorating the Hope Town lighthouse with Christmas decorations, an Abaco fire and rescue fund raiser, the Nashville Country Songwriters concerts, the Man-O-War flea market. This is in addition to attending about a dozen potlucks, happy hours, card games, and parties at friend’s homes and at the Hope Town Marina sponsored by cruisers. There is never a shortage of things to do here in the Abacos if the weather does not cooperate.
Friends at the Man-O-War Flea market
Some Retirement Planning Thoughts
Every year in January I re-evaluate our retirement assets including our real estate investments. Many times over the last 10 to 12 years I thought about selling one or more of our investment properties and pocket the profit. With the current interest rate environment, I am very glad I did not. One of the things that have become evident since we retired 4 years ago is each year a greater share of our retirement income is coming from our investment properties.
We bought the first property in 1992, the second in 1999, and the 3rd one in 2012 for cash after we sold our primary home in Annapolis, MD. These three properties provide net income that is higher than any other investments we have. The net income from the properties is about a 5% return on our current equity positions. For the properties we purchased in the 1990s, the income is over 10% on our original purchase prices. If we had sold these properties 5 years ago just before retirement, we would have put a lot of this equity into financial assets, (i.e., cash, bonds, and stock investments) which would be yielding between 1% and 3%. Now I am really glad that we did not do that. Our rental properties are not only yielding more, but the income has been increasing about 5% per year.
Another beautiful Bahamas Sunset
Our financial portfolio has also grown in value. Our stock portfolio is yielding about 3% which also increases every year but our stock portfolio is only about 25% of our net worth. Our real estate investment portfolio is about 50% of our net worth. So we are getting a 5% yield on 50% of our net worth, 3% portfolio on 25%, and about 1% on the last 25% which is mostly short-term bonds and cash investments.
One other point on the living expenses side. Now that we do not have any home costs or boat costs, I did a detailed analysis on our current living costs. I did not realize when you don’t have any boat or home costs, how much money it frees up for other things such as traveling. We are taking another 3 month trip to Italy this spring. I thought this trip would take a big bite out of our retirement assets. We have pre-paid much of the trip. I did a detailed analysis on the cost of this Italy trip and, on a prorated basis; this 3-month trip is going to cost less than our living costs if we still had our mortgage free home and our sailboat.
We are still planning to buy another sailboat this summer, but this analysis is making me re-think about how much we spend on it.
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