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]

Quote:

Originally Posted by kombat 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.

[Leonidas]

Quote:

Originally Posted by REWahoo 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?"

Quote:

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.

[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]

Quote:

Originally Posted by kombat 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]

Quote:

Originally Posted by ChrisC 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]

Quote:

Originally Posted by 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...

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.

[Moemg]

Quote:

Originally Posted by kombat 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.

[audreyh1]

Quote:

Originally Posted by kombat 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

[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]

Quote:

Originally Posted by sarahsays 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]

Quote:

Originally Posted by kombat 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?

[kombat]

Quote:

Originally Posted by sarahsays 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.

[sarahsays]

Quote:

Originally Posted by kombat 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]

Quote:

Originally Posted by kombat 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.

[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.

Quote:

Originally Posted by kombat 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.

[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]

Quote:

Originally Posted by Hamlet 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.

[Grizz]

Quote:

Originally Posted by kombat 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.

I have lived, worked, and invested in and around Edmonton all of my life. OK, a few words of encouragement and warning for you. I looked at the S&D website, and the properties all actually exist. The Saunders lake one is on my way to work, and does have the S&D sign planted on it. I don't see Edm. developing very many of them since most are in outlying counties where Edm. has no jurisdiction. That said, most of the areas that they have invested in are easily worth your $80K per acre, but let me know and I can tell you which are the areas that are most likely to see growth and why. Bear in mind that this rapid rise in land prices has made many farmers in the area into instant multimillionaires and there are lots of for sale signs on the farmland in the area, so plenty of choices for developers.

My business is just 15 min south of Edm. and bare land in the industrial park is selling at $300K per acre, 6 years ago I paid $62K per acre. (U.S. and Can dollars are pretty much at equal value right now). 10 years ago my home 3.5 acres would sell for about $10K per acre. Now it would sell at easily $80K per acre but of course farm land out where I live is somewhat less. It would be more like $20K zoned agriculture.

A big problem with Edm. expansion outward is that the mayor recently announced that Edmonton would attempt to grow "up" rather than "out". This is because land wise, Edmonton and its satellite communities are huge compared to most major cities and it takes a lot of $$ to build roads, but if someone builds a skyscraper the city still gets taxes from it, but they won't need to build and maintain a long road or get a vast infrastructure of electrical and plumbing in place.

Cross your fingers and hope that the land is south of the city. If it is, then you pretty much automatically win big. Edmonton is in a boom due mainly to oil, both the conventional, and more importantly, the Alberta Oil Sands. Edmonton is a 4 hr drive away from the oil sands, but it is the main supplier of services, and a staging area for the huge tanks etc. that need to be made for all of the billions of dollars of projects taking place.

The latest non oil related mega dollar project that may directly impact your investment is something called "Port Alberta". Alberta is inland, but once the freight from China is offloaded from ships on the west coast it will travel by rail to a vast area to the immed. west of the Edm. International Airport which is 15 min. south of Edm. It is apparently the most logical spot in North America for freight from Asia to be dispersed by road or rail or air. It is also to be the air hub for items from China because they fly over the N. pole to get to North America, and Edm. is already set up with the runways that are needed for these huge transport planes.

Overall, I'd say that you likely have not been taken in on this one. Although it looks much like the types of gains that the U.S. housing markets had prior to that bubble burst, these ones aren't based on crazy lending or anything suspect. Here's the warning. Pay close attention and always remember this. The value of land in Alberta is going fluctuate exactly in parallel with oil and natural gas prices. It always has and always will. The current lull in price appreciation of your investment land is directly due to the low conventional drilling activity in the province since the price of natural gas is low and nobody is drilling for it right now.