Wednesday 18 July 2012

Summer Break! - Luxury on the Cheap

The DIY Income Investor (and family) is going on holiday soon: 21 days of all-inclusive relaxation, away from the markets, with the portfolio on automatic pilot.

But the important point for today's post is the choice of holiday. One of the fundamental ideas behind the DIY Income Investor approach is to bear down hard on expenditure (whilst in parallel increasing income). Now, in extremis, this might mean putting off the holiday till the next year. But provided the budget allows it, at least get a holiday that is good value.

This year's choice (like last year's, and the one before) comes out at a total price that is less than that of a modest hotel room, but includes excellent food, comfortable accommodation, day-long entertainment and international travel.

The secret is cruising, of course. This year, for a total price of around £35 (around $55) per person per day, we are able to visit - in comfort - 15 different ports in 6 different Mediterranean countries/administrations. This price includes as much food as we can eat, maid-serviced lodging and day-long entertainment (but excludes parking at the port, insurance, optional tours, drinks and tips).

If you have cruised before, this will all be familiar; if you have never cruised, you may not be aware of what you are missing. We cannot think of any other holiday that has the same combination of benefits at anywhere like the cost available on many cruises. And the experience of being carried effortlessly overnight to a new port (often in a new country) - with no airports, bags to repack or (usually) immigration formalities - is a sheer pleasure.

Yes, the average age can be a bit elevated - but our teenage children have already found companions on board (via Facebook).

Finding the best price is an art - many cruises are (at first sight) eye-wateringly expensive. Over the last handful of years we have been gradually working down the average cost (measured per person per day - we filter out possible cruises using a 'maximum' of £50 pppd). The approach we have developed is as follows:
  • Never buy a cruise too far in advance (we usually have bought ours around 2 months before sailing time)
  • Go for an inside cabin (you really only sleep in the cabin) - if you are lucky you may even be upgraded
  • Use the internet and compare the specialist cruise sites (e.g.; cross-check with the cruise line's own website
  • For summer cruises (we are limited to school holidays), the best prices seem to appear in the UK around the May Bank Holiday
  • Alternatively, leave it until the very last moment

I know our approach is working because this cruise is not only cheaper (per person per day) but is also more highly rated (in terms of luxury) than last year's - we are on a favourable trend line over the last few years.

So, I'm looking forward to sitting in the panoramic bar, sipping a pina colada, whilst watching the sunset - knowing that I can relax, while my diversified portfolio is quietly (and automatically) working away, generating income to pay for the next cut-price cruise.

Cheers!  And thanks for all your comments on the blog over the last year - have a good break yourself!

I am not a financial advisor and the information provided does not constitute financial advice. You should always do your own research on top of what you learn here to ensure that it's right for your specific circumstances.


  1. Have you ever considered house swapping? Get your holiday accommodation for free, whilst also getting to stay in some genuinely unique places. Although, I have to admit to having the advantage of owning a Holiday Let. Allows me to swap the "hard to let weeks" for school holiday periods in others houses. Nb: Americans, Canadians, Australians and this year, Ecuadorians don't need to come to the UK in our school holidays.

  2. Hi Anonymous

    Yes - that is another route, although possibly less luxurious? (and obviously more static). Camping is cheap, too; but I'm not sure the missus would approve...

    I've never been interested in owning a holiday let, as I wouldn't like to be potentially tied to a single destination, although it obviously would represent another asset class for income generation and possibly capital appreciation.

  3. Hi Moneyman
    You would not believe how luxurious some of the house swaps I've been offered are. I've twice been offered the use of motor boats that came with their waterside properties. The key is to have a very desirable house to swap. However, desirability in house swapping is determined by location more than quality of house. In my case, Cornwall is the draw. Own a half decent house in reach of central London and the world is your oyster, because everyone visiting wants to avoid paying London hotel prices

    Owning a holiday let has several advantages:-
    1. Free holidays if it can generate enough income to cover its costs.
    2. No inheritance tax on a substantial asset as you can pass it on as an ongoing business.
    3. Income diversification. Bought mine in 2006, when it generated way less than I could get by leaving the money on deposit. However, come 2008 and the equation completely reversed.
    4. Prospect of capital gain - Maybe, but not anytime soon. Although Cornwall has held up well, so I would still make a small profit if I sold up now. However, if I do hit the jackpot (ie my area becomes the next Rock) then I only have to pay 10% CGT (Entrepreneurs Allowance).

  4. ClubMed can be surprisingly cheap if booked long enough in advance. Last year with our toddler we got eight nights all-inclusive in Portugal (all food, all drink, transfers etc.) for around £40 pppn.