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Yield on ship investments


Is the yield on ship investments worthwhile?

The yield on ship investments can indeed be worthwhile. The prerequisite for this is, however, that you take a few important points into account when making an investment and that you are well informed beforehand.

The journeys of such famous explorers as Christopher Columbus or Vasco da Gama were already financed and many others by the money of the rulers but also by private investors.

The prospect of return on ships was given at that time just as it is today, only that the risks in the 21st century are much better to be overlooked than in the early modern era.

What yield can be achieved on ships?

It is difficult to make a precise statement about the expected return on ships.

One could compare this kind of investment a little with shares, which are also subject to price fluctuations and offer accordingly a clear plus at chances in relation to an investment in time deposits. Those who opt for digital maritime investments invest at a fixed interest rate of six and a half or seven percent.

The speech is of concrete and temporally limited projects, with which with amounts starting from 500 euro upward money can be deposited. What is usually involved is an investment in a concrete ship that is modernised in a sustainable and environmentally friendly way in order to comply with the increasingly stringent international regulations.

The return on a ship as part of a digital maritime investment is distributed over a period of around five years, in the form of a subordinated loan granted to the shipping company or shipowner. It should be noted, of course, that there are also risks, as this is an entrepreneurial act.

How do maritime investments work?

Maritime investments are an opportunity to participate in the performance of a ship.

As a rule, long-term freight orders already exist so that regular income can be generated. Of course, the ships are in first-class technical condition and are operated by renowned and experienced shipping companies.

Both the steel value of the ship and its possible sale value exist as security for the loan amount, which consists of the shares of many smaller investments.

What are the alternatives?

In theory, a yield on investment in ships can also be achieved in another way.

If you wish, you can buy a ship directly, but this has the disadvantage that you need the necessary know-how to operate it. Elsewhere, ship funds are offered again and again which have been structured as “closed alternative investment funds” by the German Investment Act (KAGB) since 2013.

The advantage, however, which does not only arise here, lies in the special form of taxation, in which not the entire “profit from business operations” has to be recognised on a pro rata basis, but only a flat-rate value which is based on the freight volume of the ship.

In the case of ship funds, the return on ships is usually estimated at five to eight percent annually, although fluctuations can also occur here. A total loss is also theoretically possible.


New opportunities in sight

Particularly in the context of the current modernisation of the ship market, there are many opportunities to generate returns through cleverly placed investments. In 2022, new regulations concerning ballast water will also come into force, requiring entrepreneurial action on the part of shipping companies and ship owners.

Considering that a proud 90 percent of global trade takes place by sea and that this is a branch of the economy that is both rich in tradition and continuing to grow, investments can naturally be worthwhile.

It should be noted that the ships differ from each other and can therefore be invested in container ships as well as in megaboxers, tankers and bulk carriers. Some fleet funds also exist, under whose “umbrella” several ship types are combined.

Low interest rates remain

Experts expect that the policy of low interest rates will also be maintained under ECB President Christine Lagarde. Accordingly, it is not worth hoarding money on the savings account or making fixed-term deposits.

In concrete terms, these forms of investment are simply measures to reduce one’s own capital, which is usually “eaten up” by inflation at no more than one percent.

The bottom line is therefore a minus. The same applies to life insurance policies, which are also no longer worthwhile.

The return on ships is correspondingly attractive in direct comparison and can be worthwhile above all due to the long-term nature of the investment. However – as with all other forms of investment – care must be taken that not all money flows into one and the same product. Where opportunities exist, risks also exist, so that a clever diversification is necessary.

In other words, maritime investments should always be seen only as an admixture and not as the sole backbone of an investment strategy or even retirement provision. Especially exciting are products that are placed via the Internet in the form of a crowdinvestment, as a maximum degree of transparency is achieved and a great deal of information about the ships is also obtained.

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