Instead, I feel that a little logic and a minute or two with a calculator will allow us to come up with a reasonable estimate:
First, let’s take a look at how much an island will set you back …
But, buying an island is not as simple as having $5m; take it from Mike, who says:
When you are in the middle of the ocean, separated from the nearest stores, schools, and hospitals, the price can reflect that. Also, to get to and from your island requires an expensive boat.
Wise words; maybe ‘Mike’ has bought an island or two, in his time?
So, it seems, to be able to buy a “decent island” you need to have enough net wealth to cover:
1. The cost of the island
2. It’s annual running costs
3. The cost of your own home
4. Your own annual (non-island) living costs
There’s no way to answer these questions accurately without making a whole host of assumptions, but I’ll take a stab, anyway:
i) If an island costs $5m, then the annual running costs should be estimated at between 10% and 20% of the purchase price. This is purely an educated guess. Let’s say $750k p.a.
ii) If you own a $5m island, I’m guessing that your own home/s will cost the same, let’s say another $5m
iii) If you can afford a $5m home and island, I would estimate that your minimum annual living costs will be another $500k – $1m p.a. Let’s say another $750k p.a.
Applying our Rule of 20 (i.e. you can retire when you have about 20 times your required annual living expenses in the bank) you will need ($750k + $750k) x 20 = $30 mill. (PLUS: $10m for the purchase price of your island plus your home/s).
There you have it:
I think you need at least $40m net worth before even considering buying a ‘cheap’ island.
I won’t be buying an island anytime soon, how about you?