End of Season Cash Tips – Saving or Investing
For those of you working private yachts you should find yourself with a healthy bank balance at the end of the season, but if you’ve been working charter yachts you may have collected a substantial bundle of cash tips.
So, what do you do with that cash?
If you’ve been saving the cash rather than spending it through the season, you’ll need to check whether you need to report that income (including tips) to the jurisdiction within which you’re residing, as you’ll need to pay tax on it.
It’s worth checking modern Common Reporting Standards and the Fair and Accurate Credit Transactions Act (FACTA) because it’s more than likely you reside in one country or another, so you’ll be liable to pay tax in that country.
It’s risky carrying large sums of cash though, if it gets lost or stolen, you’ll only be able to recoup a proportion through your insurance and remember cash will devalue over time (2% approx.) and you could be subjected to losses due to exchange rates.
If you’re planning to fly home with cash, you’ll need to let your airline know, there will be a maximum carry-on cash amount.
Most countries require you to declare cash over a certain amount as you enter the country, or you can organise a banker’s draft from one bank to another but there's a fee.
Because of anti-money laundering legislation, saving cash and investing can be tricky, unless you can prove where it came from. Some banks don’t like accepting large cash deposits and standard bank accounts attract zero interest.
Do think about investing some of your hard-earned cash though, enjoy some of it but if you set aside some for the future, your tips could afford you greater financial freedom long term, perhaps invest in an asset which is likely to appreciate. Investing from a bank account is easier than investing with cash.
Seek independent financial advice from someone you trust and know to be reputable, with either investing or saving, there will be fees involved so ask lots of questions. How will exchange rates affect you? What are the investment charges, management and transfer fees involved?
Make sure you understand the relevant risk factors ahead of time. Forearmed is forewarned and information is key!