How do you get your wife on board?

[kombat]

2 years ago, my wife and I joined a "wealth building club." Each month, we attend a club meeting which features an opportunity to invest in exclusive opportunities, usually related to real estate. Last night, for example, featured a presentation from Canyon Acquisitions, seeking investors for a resort property in Central America. He made a good pitch, saying the "worst case scenario" would be we'd get our money back, plus 7.5% interest/year, if the project fell through. If it goes through (and he saw no reason why it wouldn't), we would double our money in 2 years. The wealth building club leader stoked the audience's enthusiasm, asking things like "How does a 50% rate of return sound to you? And since you're buying land, you own a hard asset, so you're protected, unlike the stock market."

The audience was eating it up. The problem, unfortunately, and the reason for this post, is that my wife was, too.

It is clear to me that if this were really such a great deal, he wouldn't be pitching it to a bunch of financially-inexperienced baby boomers (my wife and I are among the younger members - the majority of the club is older folks). He'd be pitching it to Donald Trump, or people who make their fortunes via real estate. It is also clear to me that the promise of a "50% rate of return per year" is nonsense. But how do I convince my wife of this?

We never fight about money. We have the same goals and are in perfect agreement regarding how much we want to save for our future. This is the first time we are disgreeing on money issues. I strongly believe that we are well on our way to wealth already, and we don't need to risk money at these pie-in-the-sky investment deals. My wife, however, believes the presenter and club leader's promise that these kind of deals are safer than mutual funds, because they're protected by a "hard asset" (the land itself). I disagree. I have no idea how much that land is really worth. We could be buying swampland. I'd never heard of this company before (Canyon Acquisitions). How do I know they're not going to take my money, stick it in a bank in the Cayman Islands, and declare bankruptcy? On the other hand, I'm quite confident that TD Waterhouse is not going to abscond with our brokerage money. My investment approach is to invest in index funds. That's as risky as I'm willing to get, and it's more than enough to get us to our goals.

Last night, after our heated discussion in the car on the way home, she commented that maybe she should read some of the books I've been reading, so she can try and understand where I'm coming from. This was music to my ears - I'd love to be able to talk about this kind of stuff with her. I gave her "Still the Only Investment Guide You'll Ever Need" (by Andrew Tobias) to start her off, as I figured it's a quick, easy read that is pretty comprehensive.

How do I convince my wife that this guy is not being totally honest? How do I convince her that a promise of a "50% return with low risk" is nonsense, when these snake-oil salesmen make such a convincing case? The "wealth club leader" portrays these presentations as though he's vetted them out and is confident they will play a key role in helping us build wealth. I, on the other hand, am thoroughly convinced that these are little more than infomercials, and the presenters are paying a (probably hefty) fee to our "wealth club leader" to have a captive, pre-screened audience of inexperienced investors with substantial pots of money set aside, ready to invest. My wife thinks I'm being too cynical. I'm just trying to protect our money. I recognize that nobody cares more about our money than I do, and these guys are just trying to get a piece of my pie. How do I get my wife to understand my point of view?

 

[REWahoo]

How do I get my wife to understand my point of view?

The place to begin is to cancel your membership to this so called "wealth building club" and stop exposing yourselves to these sales pitches! The only wealth building that club will ever accomplish is for the shysters who blow sunshine up your ... and take your money.

 

[jIMOh]

Ask to see the resumes of the people running the resort. Ask for references. If you don't know the references, then move on.

 

[ChrisC]

How do I get my wife to understand my point of view?

Jewelry, roses and chocolate generally works for me. Take some of that money and buy her something really special, follow it up with a romantic dinner, and real good sex -- she'll see your way, unless she takes counter-measures to have you melt in her hands.

You'll find your balance, I'm sure.

 

[W2R]

Jewelry, roses and chocolate generally works for me. Take some of that money and buy her something really special, follow it up with a romantic dinner, and real good sex -- she'll see your way, unless she takes counter-measures to have you melt in her hands.

You'll find your balance, I'm sure.

Actually, this is really excellent advice. Even though it may not seem directly related to the immediate problem, a little romance can go a long way.

 

[brewer12345]

I think education is a great way to do this. Second the notion of dropping out of this "club." Sounds like a great way to get clubbed...

 

[kombat]

I think education is a great way to do this. Second the notion of dropping out of this "club." Sounds like a great way to get clubbed...

I agree, and I'd love to cut all ties with the club. However, we paid $4,000 to join. My wife is still determined to "get our money's worth." Except I keep roadblocking us from investing in the shenanigans they promote each month, hence the marital discontent.

 

[Leonidas]

The place to begin is to cancel your membership to this so called "wealth building club" and stop exposing yourselves to these sales pitches!

That, or find the member that invited the speaker and strike him repeatedly over the head with the "brick of knowledge" and remind him that the idea is to build the wealth of the membership and not that of some huckster.

Wahoo is right - quitting this club is the first step in protecting yourself and your wife from this sort of risk. Willingly exposing yourself to this sort of thing is the investing equivalent of rubbing yourself with bacon grease and jumping over the fence at the local junkyard to play "chase" with the Rottweilers. No matter how nimbly you dodge, or how fast you run, sooner or later you will be eaten.

Go to the websites of some consumer protection groups, your state attorney general, the local DA, BBB, etc., and you will probably find good info on some similar great offers that turned out to be complete frauds. Then find some examples of good old boring investments and explain the differences.

Then ask, why would anyone, in their right mind, sitting on a deal that could double their money at nearly no risk, say to themselves, "My God, I just have to share this with complete strangers?"

I agree, and I'd love to cut all ties with the club. However, we paid $4,000 to join.

That's not good. No flame intended, but your money would have been much better spent on some basic investment books. I think it's time to chalk this one up as a mistake and cut and run while your loss is limited to $4K.

 

[Moemg]

I agree, and I'd love to cut all ties with the club. However, we paid $4,000 to join. My wife is still determined to "get our money's worth." Except I keep roadblocking us from investing in the shenanigans they promote each month, hence the marital discontent.

You paid $4,000 to join this club ? I think it should be called Wealth takers . Walk away and consider it a $4,000 lesson.

 

[sarahsays]

Have any of the pitches made to the club been worthwhile? Or are they all these "50% of your money back guaranteed" types?

 

[kombat]

Have any of the pitches made to the club been worthwhile? Or are they all these "50% of your money back guaranteed" types?

Oh man, I could go on for pages and pages regarding our experiences with this club. I'll give you the extremely succinct version for now. You can let me know if you're interested in more details.

We've participated in 2 "ventures." The first one is a land-banking program with "S&D International." We've purchased 2 half-acre shares of a lot of farmland just outside of Edmonton. They've claimed we can expect 15% CAGR, doubling our money in 5 years. This was 2 years ago. We're still in the waiting stage with this one. We're in this one for about $80,000, and so far (according to the newsletters) they haven't started anything with our project yet. Sometime this fall, they expect to "approach the city to discuss how the land could best be developed." I'm still optimistic that this one might pan out.

The second venture was pretty shady. We "donated" $11,000 to a charity, and applied to be admitted as members of a trust. We were accepted, and donated our shares of the trust to the same charity, and received tax receipts for our $11,000 (real) donation, plus the $30,000 value of our donated trust shares. The income tax refund covered our original $11,000 donation, plus a few thousand extra.

Now, it turns out that the government is determined to close this loophole retroactively, and they're currently in the tail end of a court case that doesn't look good for us. We've already been subjected to scrutiny from the tax man, received scare-letters telling us that every single person who participates in programs like this will be audited and will have to pay the money back. However, to date, we haven't yet received a demand from CRA (Canada's IRS) to repay the tax refund. I've little doubt it's coming though. This was for tax year 2006. We elected not to participate again in 2007.

Oh, and the money for the land-banking program (the $80,000) came from our home equity. Under the club's advisement, we refinanced our mortgage to take out $98,000 in equity to participate in the program. In doing this, we incurred fees for breaking our mortgage early, as well as about $8,000 in CMHC insurance premiums (like the US's PMI), since the new loan-to-value ratio was consider "high." This also covered closing fees, lawyer expenses, and the $4,000 club membership. Throughout all of this, we were assured it would all be worth it when we doubled our money in 3-5 years. We'll see, I guess.

This was all 2 years ago. Since then, I've done a ton of reading and self-educating, and I now see that we're being taken for a ride. We've spent thousands and thousands of dollars we'll never get back, yet my wife doesn't see it that way. She still believes these guys are legit, and I'm just not being patient enough.

 

[sarahsays]

Now, it turns out that the government is determined to close this loophole retroactively, and they're currently in the tail end of a court case that doesn't look good for us. We've already been subjected to scrutiny from the tax man, received scare-letters telling us that every single person who participates in programs like this will be audited and will have to pay the money back. However, to date, we haven't yet received a demand from CRA (Canada's IRS) to repay the tax refund. I've little doubt it's coming though. This was for tax year 2006. We elected not to participate again in 2007.

Sounds like a lot of work for the government, since I'm sure there are other groups out there doing the same thing. Fingers crossed, it might never happen.

How did you find this investing group? Did a friend bring you in?

 

[Hamlet]

Yikes. These are not good stories. They send off the "SCAM, SCAM, SCAM" alerts in my head.

80k for an acre of farmland seems a little steep. I don't know anything about Edmonton real estate, but it sounds to me like somebody is doing pretty well buying a big farm and selling little lots to people like you. If the land is going to be worth more in a few years, what exactly was the reason they decided to sell it to you?

If your wife is big on real estate, buy a REIT index instead of this stuff. That has the same benefits (its backed by real land), it won't get you in trouble with the tax guys, and you'll be paying the same price as everyone else in the market. You may not get great returns, but you'll avoid getting taken to the cleaners.

Oh man, I could go on for pages and pages regarding our experiences with this club. I'll give you the extremely succinct version for now. You can let me know if you're interested in more details.

We've participated in 2 "ventures." The first one is a land-banking program with "S&D International." We've purchased 2 half-acre shares of a lot of farmland just outside of Edmonton. They've claimed we can expect 15% CAGR, doubling our money in 5 years. This was 2 years ago. We're still in the waiting stage with this one. We're in this one for about $80,000, and so far (according to the newsletters) they haven't started anything with our project yet. Sometime this fall, they expect to "approach the city to discuss how the land could best be developed." I'm still optimistic that this one might pan out.

The second venture was pretty shady. We "donated" $11,000 to a charity, and applied to be admitted as members of a trust. We were accepted, and donated our shares of the trust to the same charity, and received tax receipts for our $11,000 (real) donation, plus the $30,000 value of our donated trust shares. The income tax refund covered our original $11,000 donation, plus a few thousand extra.

Now, it turns out that the government is determined to close this loophole retroactively, and they're currently in the tail end of a court case that doesn't look good for us. We've already been subjected to scrutiny from the tax man, received scare-letters telling us that every single person who participates in programs like this will be audited and will have to pay the money back. However, to date, we haven't yet received a demand from CRA (Canada's IRS) to repay the tax refund. I've little doubt it's coming though. This was for tax year 2006. We elected not to participate again in 2007.

Oh, and the money for the land-banking program (the $80,000) came from our home equity. Under the club's advisement, we refinanced our mortgage to take out $98,000 in equity to participate in the program. In doing this, we incurred fees for breaking our mortgage early, as well as about $8,000 in CMHC insurance premiums (like the US's PMI), since the new loan-to-value ratio was consider "high." This also covered closing fees, lawyer expenses, and the $4,000 club membership. Throughout all of this, we were assured it would all be worth it when we doubled our money in 3-5 years. We'll see, I guess.

This was all 2 years ago. Since then, I've done a ton of reading and self-educating, and I now see that we're being taken for a ride. We've spent thousands and thousands of dollars we'll never get back, yet my wife doesn't see it that way. She still believes these guys are legit, and I'm just not being patient enough.

 

[kombat]

How did you find this investing group? Did a friend bring you in?

I'm embarrassed to say, it was a telemarketing cold-call. I know, I know. They promised to be able to show me how to pay my mortgage off sooner. I figured "what have we got to lose? If we don't like it, we can just say no." So we let them come by and make their pitch.

The ironic part is that at the time, we had about 7 years left on our mortgage. Our current mortgage will be paid off in about 28 years.

 

[Niko]

Don't walk, but run away. Fast. Were it me, I would make it my personal goal to get some or all of my $4,000 back.

In terms of your wife, I'd echo what an earlier poster said. Line up 10-20 credible websites that expose this company and similar wealth-building companies. That coupled with the imminent tax audit you are facing should be enough to convince her that this is all a scam.

 

[kombat]

If the land is going to be worth more in a few years, what exactly was the reason they decided to sell it to you?

I guess for the same reason Microsoft sells shares of itself to small investors. They're a huge corporation worth billions, but more external money lets them grow faster.

This company (S&D International) has several developments going on at any given time. We've bought into the "Royal Links Point" development.

 

[sarahsays]

I'm embarrassed to say, it was a telemarketing cold-call. I know, I know. They promised to be able to show me how to pay my mortgage off sooner. I figured "what have we got to lose? If we don't like it, we can just say no." So we let them come by and make their pitch.

The ironic part is that at the time, we had about 7 years left on our mortgage. Our current mortgage will be paid off in about 28 years.

Ouch. I'm sorry.

At least you said she's interested in the books you've been reading. Try to get her to read a couple (which I'm currently trying to do with my BF). Ask that she give you some time to show her why you're skeptical. In a few weeks, the pitch might be out of her head and you can put the money toward something else.

And don't go anymore. Offer to take the wife to a nice dinner or a movie on the nights these events are supposed to happen. Probably a better use of your money.

 

[kumquat]

The ironic part is that at the time, we had about 7 years left on our mortgage. Our current mortgage will be paid off in about 28 years.

This probably describes the value of you got from the club.

Here is a link to one of Canada's best financial forums with a discussion of Charitable Gift Tax Shelters

I might try taking DW to see a lawyer. Not for the D-word but to see if you can get any of it back.

 

[Sarah in SC]

Oh, god, that is an expensive lesson. Please do not give them any more of your hard earned money. My dad got pitched some junk from Investools the other month, and I had to send him 8-10 website references to get him not to go to the seminar. He lost $100 and I am so incredibly grateful that is all he lost--who knows what would have happened if he'd actually attended?

Please please do not go to another meeting! Do whatever it takes to convince your wife--books, maybe have her talk to older people you know that have invested wisely and prudently and have money to show for it--do you know any "millionaire next door" types that can counteract the smoke blowing of these scammers and explain to her how wealth is really accumulated?

I am just so sorry--I can't tell you how many times I've heard stories like yours from the people we help. It is the same scam, over and over again. sigh.

 

[kombat]

Here is a link to one of Canada's best financial forums with a discussion of Charitable Gift Tax Shelters

Go to page 5 of that thread and search for "kombat".

 

[Bestwifeever]

It sounds like you paid $4,000 to join and also $80,000 for venture 1 and $11,000 for venture 2 (when you said "we" I'm assuming you mean you and your wife, not the whole club). So sorry. Those people are such incredible pros at their pitches and two years ago when you joined it did seem like the sky was the limit for how much money could be made.

Agree you should drag your wife away and at the very least chalk it up as an expensive yet valuable life lesson since I bet you can't get any money back. It is really helpful that you are sharing this with the forum readers--thank you.

 

[kumquat]

Go to page 5 of that thread and search for "kombat".

mea culpa

 

[kombat]

It sounds like you paid $4,000 to join and also $80,000 for venture 1 and $11,000 for venture 2 (when you said "we" I'm assuming you mean you and your wife, not the whole club). So sorry. Those people are such incredible pros at their pitches and two years ago when you joined it did seem like the sky was the limit for how much money could be made.

Correct. But here's the problem I'm having with my wife: There's no proof we've been scammed. We get these newsletters from S&D reporting about other developments that have "sold," and listing how much profit the investors in these developments made (typically doubling their money). Are they outright lying? Is it possible that they don't actually own those developments, or that the people involved in them aren't actually making the money claimed in the newsletter? If they were lying, wouldn't the investors in those properties have cried foul? Do those investors even exist, or is S&D lying about them?

We have a deed for the property we bought. There's no doubt we actually own that parcel of land. S&D has been around for 6 years, and has a "Satisfactory" rating with the BBB.

I have no ammo to convince my wife it's a bad deal. As for the income tax scheme, we did get the money back, and we have not yet been ordered to repay it. It's been over a year. My wife still thinks I'm being overly conservative. Moreover, she thinks I'm being contradictory, and that these real estate ventures are safer than my index fund buying, so she can't understand why I'm OK with the "risky" tactic of buying stocks, but shying away from buying a safe, "hard asset" investment like land.

I think the court case is still pending, but there will no doubt be appeals. It'll be years yet before we know conclusively whether either of these two ventures (the land banking or the charity tax scheme) are legitimate or ripoffs. That's my problem - how do I get my wife to understand why I don't trust these guys, when by all appearances, they seem to be delivering (without us making any actual profit yet)?

 

[FIREd]

Get your wife to watch "American Greed" on CNBC... It smells like a lot of the scams they present on that show. Promises of too-good-to-be-true guaranteed returns with no downside risk, exotic investments in far away locations... When your wife sees all those people who lost their life savings in such "ventures", she won't walk out, she'll run... Try to get your money back as soon as possible. If it's a Ponzi scheme, you have to get your money back before it collapses.

Correct. But here's the problem I'm having with my wife: There's no proof we've been scammed. We get these newsletters from S&D reporting about other developments that have "sold," and listing how much profit the investors in these developments made (typically doubling their money). Are they outright lying? Is it possible that they don't actually own those developments, or that the people involved in them aren't actually making the money claimed in the newsletter? If they were lying, wouldn't the investors in those properties have cried foul? Do those investors even exist, or is S&D lying about them?

It could be fairly typical in a Ponzi scheme (though in your case I'm not sure it's such a scheme). Everything looks legit at first. Older investors get paid with new investor money, so on the surface it looks like everything works as promised. Everyone seems to be making money. It's not a "lie", but rather a slide of hands. Then something happens, the scheme collapses and the newer investors are left holding the bucket.

I have no ammo to convince my wife it's a bad deal. As for the income tax scheme, we did get the money back, and we have not yet been ordered to repay it. It's been over a year. My wife still thinks I'm being overly conservative. Moreover, she thinks I'm being contradictory, and that these real estate ventures are safer than my index fund buying, so she can't understand why I'm OK with the "risky" tactic of buying stocks, but shying away from buying a safe, "hard asset" investment like land.

Stocks, as risky as they are, return only 12% a year on average. Savings accounts, as safe as they are, return only 3% a year. Real estate is in between those two extremes IMO. Personally I would be very wary of anyone trying to sell me RE while promising me the safety of a savings account and quadruple the returns of stocks. It just doesn't make any sense and if there were such an investment out there, we would all be on it. Maybe it's the kind of logic your wife could appreciate?

By the way have you and your wife actually visited that "hard asset" you supposedly own? Have you checked with the local authorities to make sure you are the sole, legitimate owner of this property? If you are, then you should receive a property tax bill each year. Do you?

 

[audreyh1]

I agree, and I'd love to cut all ties with the club. However, we paid $4,000 to join. My wife is still determined to "get our money's worth." Except I keep roadblocking us from investing in the shenanigans they promote each month, hence the marital discontent.

Oh God! They really got you hook line and sinker!

I wish I could think of any advise other than talking to your state attorney general to see if there are any investigations being made of this "club" or any way to discredit them to your wife.

Audrey