Always had a dream of hobnobbing with the elites? The 1% of the 1%? Maybe you're fantasizing about pulling up in your superyacht with a crew of dozens. You're wearing one of those hats that the rich mariners wear, along with the perfectly tailored and pressed navy blazer.

We don’t want to take the wind out of your sails, so to speak, but even a mountain of money won't necessarily have you swimming with the truly wealthy fish. You need an Everest. Tiger Woods purchased his 155-foot yacht Privacy for $20 million—and that’s cheap by swanky yacht standards. And that’s just the tip of the iceberg. The average annual cost of operating your floating symbol of eliteness is 10% of the purchase price. That means that Tiger Woods is putting something on the order of $2 million per year into keeping his Privacy.

As of 2018, the most expensive yacht is the History Supreme, sporting a $4.5 billion price tag.

What About You?

The word yacht is about as clearly defined as a financial advisor, and you’ll get wildly different answers on what size boat earns that title, depending on whom you ask. By some lights, you can still be a yacht owner with a 20-foot boat, and you can join a yacht club and spend your weekends exchanging sea stories with your fellow yacht owners.

But we still have an important question to answer: How much yacht can you afford if you plan to buy?

The Calculations

Assuming you’re going to take out a boat loan, it won’t be easy to qualify for one. Unless your debt-to-income ratio is below 40%, you’re not likely to hear a resounding yes from the loan officer. Plan to put at least 10% down on your yacht and pay somewhere around 5% APR for 10 years. That $100,000 entry-level yacht (a used one would be around 30–35 feet long) is going to incur monthly payments of nearly $1,000 after you make your $10,000 down payment.

There’s also another $1,000 to $1,500 (or more) to spend on life jackets and other necessary equipment when you purchase a yacht. Then there's the question of who drives it. Are you qualified to operate a larger boat? If not, you’ll have to pay for a captain’s license or hire somebody to operate it for you. In addition, yacht insurance will be north of $600, and a slip rental will set you back a couple of thousand per year. And don’t forget about the annual maintenance costs that amount to 10% of the yacht’s purchase price, which would be around $10,000 on a $100,000 yacht.

To know what you can spend, do the math in reverse: You need to have 55% to 60% of your income available for other needs outside of your yacht. The rest is the absolute max you can blow on your obsession.

The Cheaper Way to Go Yachting

Maybe buying a superyacht just isn’t in the cards for you. And let’s face it, in the luxury yacht world, $100,000 isn’t that much money. If you don’t want a smaller recreational boat, you may want to consider a bareboat charter. It’s like a lease, and just like with a car, you won’t be the owner but you can rent the yacht for a certain period of time. This could be very short-term—for a yachting vacation—or long-term. For higher-priced vessels, splitting the costs among multiple people could make the price more reasonable. You as the charterer are responsible for nearly all fees, including fuel, insurance, port fees, and everything else.

There are also shared leasing arrangements. In these situations, you pay a monthly fee to a boat club and gain the use of any vessel in the fleet. You still have to pay for fuel and some costs, but the pricing is much more reasonable than trying to purchase the yacht on your own. Some clubs offer an initiation fee that can go well into the thousands, as well as a monthly fee of a couple of hundred dollars.

The Bottom Line

Owning a luxury yacht takes truly serious money. But for those who earn a higher-than-average income, renting or leasing a vessel, teaming up with friends, or joining a boat or yacht club can make the price comparatively reasonable. As with any equipment-heavy hobby, the costs are often higher than you think, so you’ll want an emergency fund in place for those unexpected expenses.