Money Mechanics is a website run by three self-styled “financial consultants” who offer financial tuneup services in and around the Toronto area. On their website, they appear to hold what at first glance appears to be reasonable views on financial topics but follow it up with investment ideas that are, at best, unworkable and at worst detrimental to one’s financial well-being.
Take for instance, the suggestion that one should not view one’s home as an investment (let’s be charitable and assume that the sloppy math that ignored the imputed rent from owning a home is an oversight). It sounds perfectly reasonable because as any homeowner will tell you, houses cost a bundle in property taxes, insurance and maintenance every year and we pretty much hold the same opinion that a home is a place to live and rise a family, not an investment portfolio.
So, you would think that the remedy proposed would be something along the lines of rent a home and invest the difference. But no, that’s not what these “consultants” have in mind. They instead propose investing in “global real estate”, which I initially understood to mean a diversified portfolio of global REITs. Wrong again. The consultants brag about investment opportunities such as “the most beautiful patch of land” on top of a giant hill with a gorgeous view of the ocean in… Costa Rica. Or a gorgeous, pre-construction, resort in Barbados with “guaranteed returns”.
And the same people who diligently pointed out that owning a home could be risky, mention the word risk exactly… never. Perhaps the fact that they are brokering these real estate deals might have coloured their views. No matter. A quick Google search reveals the significant risks involved in investing in Costa Rican real estate. Risk as in losing your entire investment to fickle government rules, squatters or plain old expropriation (without compensation). And Costa Rica is supposed to be an “established” democracy. One shudders to think of the state of affairs in unestablished democracies and dictatorships in the Caribbean and Central America. Say what you want about real estate in Toronto or Vancouver. At least, the risk of squatters moving into your home or Government stealing it from you is close to nil.
I could go on but I think I’ve made my point. The website carries more articles along these lines:
We pay too much in taxes… but we can show you how to save up to 100 percent on your income tax (for a fee, of course).
Mutual funds are a terrible idea… but you should own more gold (and we can help you with that).
Your advisor recommends products that pay him fat fees… but fees play no part in our rose-tinted view of Costa Rican land deals.
If the quality of suggestions on the website are anything to go by, this might be one tune up you can safely skip.