Are Timeshares a Good Investment? Unfortunately, when people say "investment" and timeshare in the same sentence, it usually means they have a huge misconception about what a timeshare is and what it is for. Let's clarify!
Investments are "means" to an end, right? You invest money, for instance, to increase that money, so you have it to use towards goals you have in your life. The goals are the "end" purpose you intend to achieve. Are we on the same page here? Okay.
So are timeshares a good investment? Relatively speaking, a timeshare should be an "end" not a "means." That is where the confusion comes in. A timeshare is something you buy, like a wedding ring is something you buy or a vacation is something you buy.
When you put it that way, it's easy to understand where timeshare fits in. Are timeshares a good investment? Do we ask if a wedding ring or a vacation is a good investment? No! You are not going to increase money from buying a wedding ring or a vacation, you are spending money, right?
Timeshare cannot be grouped in with stocks, mutual funds or investment real estate. It is not the same thing! This confuses the difference between "means" and "ends."
Timeshare belongs in the group with the wedding ring and the vacation. These "end" purposes move the word "investment" into an emotional realm -- investing time with your family, investing love into a relationship. In the emotional realm the ROI is not interest, the ROI is quality of life, the ROI are your memories.
Do you see the difference? When I was doing financial planning for clients, and we focused on their financial goals, we focused, of course, on the kids education, retirement and inheritance, but I also loved moving my clients to open the treasure boxes in the attic of their minds and dream again!
Vacations always came out!
They weren't traveling like they'd dreamed of. Why not?! That needs to be a goal. A vacation home -- a cottage by the lake, a house on the beach, a cabin in the mountains -- was another frequent goal we'd uncover. Timeshare is both of those dreams wrapped up in one!
Are timeshares a good investment? I realize the reason for the confusion.
Because timeshare (ideally) does have a real estate deed, investor-types (like financial planners, ha! ha!) began analyzing timeshare as a traditional investment, comparing it to stocks, mutual funds and investment real estate.
They went searching for a monetary ROI. They went looking for value appreciation and instead found what you see on e bay timeshares! (see E bay Timeshares).
They saw that the monetary value of timeshares plummet when you try to sell it! They saw a saturated market for timeshare resales. They then became alarmed whenever a client owned a timeshare or even mentioned that they were considering purchasing one, and advised them that it was a very bad idea!
If they would have dug a little deeper to understand what timeshare is for, they would have instead calculated how much their clients would save on that vacation travel dream and that vacation home dream! Savings that the financial planner could then move to investing for their other goals!
Do you think the French families who invented timeshare (see What is a Timeshare) thought their chalet in the French Alps was a "bad investment?" It was the only way they could afford to own a chalet, and they saved hundreds of thousands of dollars between them compared to if each family would have tried to save up to buy their own chalet. How much more could they then invest for their other goals?! Ask them - are timeshares a good investment!
If financial professionals would have dug a little deeper, they would have encouraged their clients who own timeshare to USE it, and make sure they maximize their use of it to save money, and they would have advised against ever selling it! Instead, it can be added in to the inheritance goal to be handed down to their children as a legacy. Hmmm, a multi-purpose, quality-of-life, memory-building legacy!
If they would have dug a little deeper, they would have advised their clients who don't own timeshare to buy it (see Buying a Timeshare) to meet their vacation travel dreams and vacation home dreams in the most cost effective way, allowing the savings to be funneled to investing in their other goals.
Clients very often would contact me to pull money out of their investments because their vacation was going to cost more than they thought, or they went on vacation and spent way more than they had planned (see Timeshare vs Hotel to see why!).
Are timeshares a good "investment"? Timeshare is the best way to head-off this investment disaster. Talk to financial planners you know! They can attest to this. It is a common comment in the financial community -- 'how am I supposed to help them retire in 5 years when they keep blowing investment dollars on vacations! '
Well, financial professionals must admit that this is missing the forest for the trees. Vacations are vital. Vacations stop undermining financial planning and investment strategies when they are made part of the plan!
Are timeshares a good investment? Are memories important to you? Then you have your answer.