Should you buy a timeshare?

published 18 April 2008

Rui greets me with a flashing smile and an outstretched arm. You must be Tom,' he beams with unnatural enthusiasm, and shakes my hand as if I am his oldest friend. Follow me.'

Meekly I do so, to a table where Rui arranges his white teeth, his matching white polo shirt and chinos, his permatan and his unflinching gaze in such a way that I can only describe his body language as full frontal. Rui is in switched on selling mode, and what he is going to sell me is a timeshare, or to be more accurate an elaborate version of such a scheme, that will have me buying points that I can exchange for comfortable holidays spent in any of a number of condominiums around the USA.

Rui clicks into gear and begins his routine. He starts by making connections. I have two sons. Why! Rui has three so he knows all about that! I live in Oxford. Rui wife's cousin is married to a guy who lives outside Cambridge so we are practically neighbours! Do I like staying in poky hotel rooms or do I, as Rui does, prefer to stay in a nice apartment complete with comfortable beds, a kitchen, and clean carpet? Knowing that I am falling into his trap, I admit to the latter.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Having established the principle Rui then disappears for ten minutes, leaving me to flick through a glossy brochure of the holiday properties. All shiny condominiums, their bedrooms are pristine, their sofas are plump, their swimming pools reflect the sun, and their golf courses roll lazily into the distance. When Rui returns my mouth is duly watering. They look nice, don't you think,' says Rui, knowing that I can only agree.

Immediately my suspicions are raised, and are confirmed as Rui reels off a series of decidedly dubious statistics. Do I know, he asks, that the productivity of the average worker rises by 87% after a holiday? Do I know that people who take four weeks holiday each year live eight years longer than those who do not? Do I know he asks, again mistaking me for a hopeless workaholic, that 97% of obesity is caused by stress?

My expression betrays me. You are not convinced!' roars an incredulous Rui. Well consider this. If you take four weeks holiday per year for the next thirty years at a cost of $200 per night do you know how much it will cost you?' Without giving me time to reply he supplies the answer. $633,000!' I do a bit of quick mental arithmetic. Four times thirty times $1400 comes $168,000. I put this number to Rui, who rewards me with a look that of surprise that I can be so ignorant. Inflation,' he cries. Inflation! You have to allow for inflation'.

This, of course, is the oldest trick in the book. Any number compounded out into the distance soon becomes surprisingly large. I am not falling for this. So I stir myself. You said that you would be totally honest with me,' I say, leaning across the table. Now let me be totally honest with you. I am not going to take up this offer. Not because I don't like your properties. Not because I don't like the principle of a timeshare. Not because I don't want to go to the USA four times a year. And not because I think it is a bad deal.' I pause.

Tom worked as a fund manager in the City of London and in Hong Kong for over 20 years. As a director with Schroder Investment Management International he was responsible for £2 billion of foreign clients' money, and launched what became Argentina's largest mutual fund. Now working from his home in Oxfordshire, Tom Bulford helps private investors with his premium tipping newsletter, Red Hot Biotech Alert.