AssetBuilder - Registered Investment Advisor

By Andrew Hallam 

Two years ago I lay on a sofa, as a new age “hands on” healer stood over me. I was dying, she moaned, as if getting the word from some divine source in the couch. And my only salvation? To visit her as often as possible, for $175 a session.

She knew that I had bone cancer. I had told her when we first met. A friend of mine had hooked us up and I wanted to be polite, so I went.

Yes , this fortune telling healer filled me with fear. But it reminded me of the movie Man On The Moon. In the film, Jim Carrey (who played Andy Kaufman) laughed hysterically while watching the practicing techniques of a quack witchdoctor. Kaufman had cancer, and he hoped that he’d find an alternative cure. Like many people facing a desperate plight, he put his hope in a miracle—for a fee.

Whether we face cancer or have our financial back against a barbed wire fence, most of us do one of three things:

1. We give up
2. We put faith in evidence based studies or procedures
3. We take greater risks to seek a miracle

Before going any further, I want to add that I’m actually fine. Surgeons removed large chunks of three tumour-affected ribs, before cutting out the Chondrosarcoma surrounding my spine. The only good thing about getting cancer—if there is such a thing—is that I started to write my book, Millionaire Teacher, while stuck in the cancer ward of a Singapore hospital. Yes , the nurses thought I was crazy too. But it was a great distraction.

If you or a family member is facing cancer, putting faith in evidence-based studies (and faith itself) gives the highest statistical odds of success.

My favorite read on the subject is Anti-Cancer, A New Way of Life, by Dr. David Servan-Schreiber. He starts by suggesting that we’re all going to die. Not accepting that is crazy. As my oncologist says, if I were creeping around 200 years from now, I’d scare people.

After accepting that revelation, Servan-Schreiber suggests that we do the following:

1. Eliminate sugars and processed food from our diet. Cancer loves them.
2. Eat as many dark, green leafy vegetables as possible.
3. Eliminate red meat
4. Stay calm, and meditate if you can
5. Put faith in your medical team and your support network

Is it easy to abandon evidence-based methods in favor of something more “promising” when we’re feeling threatened? It is never easier.

Investors do it routinely. .

We all know people who realize that they haven’t saved enough. Some of them seek alternative investment strategies to make up for lost ground. Perhaps they buy a hedge fund, or they eliminate bonds in their portfolios. Brazilian forestry companies advertising guaranteed returns of 15 percent annually can look pretty tempting. And let’s not forget how easy currency trading is supposed to be. It says so in the online advertisements.

When facing a shortfall in your retirement portfolio, perhaps you could take lessons from those who lean towards evidence, rather than promises.

1. Keep a diversified investment portfolio of stocks and bonds.
2. Small cap stocks have higher historical returns; you may want some in your portfolio. But just some.
3. Rebalance your portfolio to stay on track.
4. Stay calm when markets fluctuate.
5. Put faith in your investment strategy, and live below your means.
6. Remember that quick solutions aren’t. Stay calm, focus on evidence-based procedures, and have faith.

Above all, don’t put your life in the hands of a fortune teller.

By Andrew Hallam

When I was a kid, Tom Fitzgerald’s The Great Brain, was one of my favourite book series. The main character was a boy genius growing up in Utah during the late 1800s. He could solve nearly any problem. He once strategized how to find two boys lost in a cave network; another time, he taught a young, victimized Greek immigrant how to whip the schoolyard bully; and he wasn’t above using his powers of observation and psychology to occasionally seek profits.

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By Andrew Hallam

My brother was a professional soccer player. Today, he’s grooming his fifteen year old to earn a soccer scholarship. That’s the first goal, and my brother is doing just about everything he can to give his son’s career a push in the right direction. If he helps him enough, his son might be as good as his father, or better. “With me in his corner,” says my brother, “Niklus could end up playing professionally.” But the competition is tougher than it used to be, he explains. His kid needs every break he can get.

Sometimes, when my nephew lines up to take a corner kick or a penalty, my brother steps in and takes the shot in his place. In his late 30s, and still a stud in his own right, my brother can drill the ball past virtually any 15 year old goalie. Nobody bats an eye and some of the other fathers do the same thing for their kids. “The game’s harder than it used to be,” they explain. Officially, Niklus gets credit for each assist or goal that’s scored by his dad.

The trouble is that the boy, who showed great promise as a younger player, is starting to blow far too many wide open opportunities when he has to take his own kick at the ball. The more my brother helps him out, the worse it gets. He plays half of each game looking at his dad, often begging my brother to steal the ball for a perfect break-away pass. We’re a family of high-achievers, yet my nephew’s confidence is waning, not to mention drive. He’s starting to rely on his dad as a crutch.

Of course, none of this story is true. But you’d probably agree that such friendly fire could eventually scuttle even the soundest vessels. Despite great intentions, however, many of us sink the next generation in much the same way when it comes to money,.

Like the soccer fable, maybe the game really is tougher than it used to be. I won’t argue against that. But Thomas Stanley, author of The Millionaire Next Door, has studied America’s wealthy for decades. And he finds that adult children who receive monetary aid from their parents tend to financially under-achieve those in the same vocations who don’t get handouts. Like a father throwing a kid’s touchdown pass, taking a penalty shot or eyeing down a Little League pitcher, Stanley has found that gifting assets (such as Christmas cash, a down-payment on a home, or passing down the family car) usually has detrimental financial consequences for the receiver.

Naturally, many people expect their kids to be the exception; a helpful hand at just the right time can put their tottering teens or twenty somethings squarely on their feet, they assume.

The Chinese have a proverb. They pass it down in hushed tones. It serves as a spooky sceptre to anyone daring to stuff their children’s nets with fish: Wealth doesn’t pass three generations. The first generation acquires the wealth, the second generation maintains it, and the third generation squanders it. The parents of the first generation, of course, want to make life easier for their children. But the age-old axiom prevails for the majority.
Studies and history seem to suggest that we can educate our children and train them to survive—even thrive—but financial handouts, forgiven loans and material gifts from one Jones generation to the next get wrapped up as prettily as Pandora’s box.

By all means, teach your children to fish. But don’t land anything (a soccer ball or a trout) in junior’s proverbial net. Doing so may cost more than you think.

By Andrew Hallam

I have a confession to make. I’ve sold two holiday Timeshares. And the guilt hurts. Like most people who have done the math on these holiday resorts, I understand that they’re a good deal for salespeople, but they’re usually a bad deal for buyers.

Here’s my story. Eight years ago, I saw an ad in the paper: sit through a two hour Timeshare presentation at a local resort, it suggested, in return for a great restaurant meal and two nights of luxurious accommodation. Timeshares are also called “Fractional Ownership” or “Interval Ownership.” I jumped at it—a small price to pay for a free long weekend, I figured. When I got home, I bragged to my friend about it.

The following weekend, he went into the dragon’s lair himself, looking for the same deal. But he got scorched. He came home the proud owner of a Timeshare. Indirectly, I sold that Timeshare, and I felt awful.

As a travel junkie who has visited more than 30 different countries, I’ll admit that I’ve committed a few holiday bloopers. I once booked a couple of flights online and arrived late to the airport—one month late, to be exact. But I’ve never bought a Timeshare. To me, that ranks with burning your own passport during a Russian holiday. You might get some warmth from the flame, but expensive hassles await the drunken tourist (blame the vodka) who would do such a thing.

The first problem with Timeshares is the upfront cost. My friend’s Timeshare (and no, I didn’t earn a commission) cost $14,000 at the end of 2003. Not having a disposable five figures in his savings account compounded his problem. He had to finance the purchase at a usurious interest rate. “Your investment will increase in value,” purred the saleswoman, in consolation. Instead, he sold it three years later at a loss.

Savvier buyers might pay less for their Timeshares, but the annual maintenance costs, which run as high as $800 a year, can quickly dampen the party.

My friend, Maggie, paid $16,000 for a Timeshare in Cozumel, Mexico, but after a few years of enjoying the resort, she neglected her payments. And the Timeshare company tasted blood. If you fall behind in your payments, they might charge more interest per month than some credit card companies charge in a year.

Overwhelmed by the mounting liability, she gifted the Timeshare to me, after unsuccessfully trying to sell it. I paid the interest-inflated maintenance fees, which had ballooned to $3,500. Wanting to go to Hawaii that winter, I tried to trade my two weeks in Cozumel for two weeks in Maui. Salespeople might tell you that this is easy. But don’t believe them. I eventually sold the Timeshare at a loss to two gentlemen who wanted to share the albatross.

Does this mean you should save your money instead of taking luxurious vacations around the world? No, I think you can do both. Maggie paid $16,000 for her Timeshare in 1993 (not to mention her maintenance fees). If she had invested that money in a S&P 500 index fund, instead of buying the Timeshare, she would have roughly $57,000 by December 2011.

And if you look around, you can find screaming holiday deals for less than a Timeshare’s annual maintenance fees. In May, my parents took a 12 day Royal Caribbean cruise from Fort Lauderdale to England for $500 each.

A week’s accommodation in Hawaii, including airfare from the west coast, is currently offered for roughly the cost of an air ticket.

And next week, I’ll be flying from Vancouver for an all-inclusive week-long Cuban holiday, including airfare, for less than the price of a flight to Havana.

But don’t report me to the U.S. government. I’m Canadian. And after selling two Timeshares, I’m desperately trying to redeem myself.