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View Full Version : Join DVC or invest buy-in cost


720L
01-14-2007, 11:56 AM
My DH quickly put together some number to help us decide on DVC.

We are still trying to convince ourselves that buying into DVC is the best
option, financially. Consider the following.

If you purchased Disney stock in 1987 when it was $5 per share, which is now
worth $35 per share, you would have a 600% return on your investment or 30%
per year averaged for 20 years. So if instead of buying into DVC you bought
$15,000 worth of Disney stock today, 20 years from now it would be worth
$90,000.

Taking a 10 night stay once a year in a moderate resort at rack rate in
today's dollars and figuring a 3.12% compounded annual rate increase for the
next 20 years would cost you $45,190 total cost. Do the same calculation
for a deluxe at rack rate and with a 30% discount would give $72,487 and
$50,740 respectively.

At the end of 20 years take the $90,000 balance of your Disney stock
investment minus $45,190 total moderate resort cost over 20 years puts your
Disney stock value at $44,810. This is money that you would not have if you
had bought into DVC 20 years prior. Now if you subtract your Disney stock
value of $44,810 from the total you paid for moderate resort stays over 20
years, $45,190, you get $380, so essentially that is all it cost you to stay
at moderate resorts over the last 20 years.

$90,000 value of Disney stock at the end of 20 years
-$45,190 Total cost over 20 years to pay rack rate at a moderate resort
=$44,810 Real value of Disney stock adjusted for paying for moderate stays
-$45,190 Total cost for 20 years of moderate stays
=$ 380 Total cost to stay at moderate resorts over 20 years.

Now lets look at a rack rate deluxe stay for 10 nights each year for 20
years.

$90,000 value of Disney stock at the end of 20 years
-$72,487 Total cost over 20 years to pay rack rate at a deluxe resort
=$17,513 Real value of Disney stock adjusted for paying for deluxe stays
-$72,487 Total cost for 20 years of full price deluxe stays
=$54,974 Total cost to stay at deluxe resorts over 20 years or $2748 per
year.

10 night stay per year for 20 years at a deluxe with a 30% discount

$90,000 value of Disney stock at the end of 20 years
-$50,740 Total cost over 20 years to pay rack rate at a deluxe resort
=$39,260 Real value of Disney stock adjusted for paying for deluxe stays
-$50,740 Total cost for 20 years of 30% discounted deluxe stays
=$11,480 Total cost to stay at deluxe resorts over 20 years or $574 per
year.
NOTE: $574 per year is less than your dues would be each year for 20 years.

Bottom line, the only way DVC makes sense is if you paid full price for
deluxe resorts had you not joined DVC.

Now the disclaimer, the assumptions based in my calculations assume Disney
stock will perform at least as good as it did over the past 20 years for the
next 20 years. Generally historical data is no predictor for future returns
on a stock. A 30% discount at deluxe resorts is also not assured, but not
unrealistic. I also did not assume that the yearly DVC fees would be also
invested if you bought stock rather than join DVC, if you factor this in as
well it comes out even more favorable to invest in stock over joining DVC.

tjkraz
01-14-2007, 12:23 PM
If you purchased Disney stock in 1987 when it was $5 per share, which is now
worth $35 per share, you would have a 600% return on your investment or 30%
per year averaged for 20 years. So if instead of buying into DVC you bought
$15,000 worth of Disney stock today, 20 years from now it would be worth
$90,000.

OK, seriously, I don't want to be mean, but your entire analysis falls apart right there. Getting even a 10% annual return on investment dollars is often difficult these days. And most investments involve risk. The most secure investments like US Savings Bonds or bank CDs run about 5-6% annual return.

To think that you can AVERAGE 30% return by pouring all of your money into TWDC stock is just completely unrealistic.

Pennyguy23
01-14-2007, 12:35 PM
I agree, Pretty Bad:sad2:

MIDisFan
01-14-2007, 12:43 PM
I have to agree with tjkraz. You should be more realistic in your assumptions if you are seriously considering DVC. A 30% return on your investment and a 30% room discount? It sounds more like you are trying to talk yourself out of buying DVC. JMHO

Slakk
01-14-2007, 01:03 PM
I have to agree with tjkraz. You should be more realistic in your assumptions if you are seriously considering DVC. A 30% return on your investment and a 30% room discount? It sounds more like you are trying to talk yourself out of buying DVC. JMHO

If they can do it please show me where to sign up!

I believe this - if you need to spend all that time manipulating numbers to make a decision then more than likely DVC is not for you.

If you enjoy running around looking for cheap codes or traveling at value season and staying in value or moderate then DVC is not for you.

DVC is not cheap but I will take my 5 nights at VWL in a 2BR vila over the All Stars any day!

jimmytammy
01-14-2007, 01:13 PM
DVC is probably not a good choice for folks who are looking at it from a financial investment point of view. Is it better choice than most timeshares? I would say yes if most of your time you want to be in the Orlando area. If not, I would consider one of the other timeshares that may be equal to how DVC operates. And that is few and far between, IMO.

To approach buying DVC, you need to from the heart. Will it give you what you need emotionally, will it give you much needed vacations for years to come, will it force you to vacation when otherwise you might not, will it provide you nicer accomodations that otherwise you might not be willing to or can afford those types of rooms at that given time, etc.?

You put a lot of effort into your financial thinking, I will give you that. But you may be over analyzing a bit. I feel as if you may be analyzing your way right out of buying into DVC.

Bottom line....do what your heart tells you.

720L
01-14-2007, 01:19 PM
"I believe this - if you need to spend all that time manipulating numbers to make a decision then more than likely DVC is not for you."

That's what I think also! (MY DH posted that thread not me)

"If you enjoy running around looking for cheap codes or traveling at value season and staying in value or moderate then DVC is not for you."

We don't go only if there is a cheap code and we go during peak seasons. We also stay at AKL sometimes (with AP discount). What we don't enjoy is wasting our money on something we don't really like/need. We are trying to determine if we will like DVC.

tjkraz
01-14-2007, 01:22 PM
For what it's worth, here is why we DID choose to buy into DVC:

Our purchase price = $79 per point

$79 / 50 years = $1.58 per point, per year (initial investment)

$1.58 + $4.12 dues = $5.70 total cost of each point per year (in 2007 dollars)

A One Bedroom DVC villa at Saratoga Springs for Adventure, Choice and Dream seasons runs between 20 and 25 points per weekday. That means our OOP cost for a 1B is about $114 to 142 per night. That's less than what we would pay for a moderate room with reasonable discounting and substantially less than the cash rate for the same room ($416 to $546 per night with the 12.5% tax.)

Granted that financial analysis is a bit over simplistic, but it's enough to convince me that we made a wise decision.

Slakk
01-14-2007, 01:59 PM
"I believe this - if you need to spend all that time manipulating numbers to make a decision then more than likely DVC is not for you."

That's what I think also! (MY DH posted that thread not me)

"If you enjoy running around looking for cheap codes or traveling at value season and staying in value or moderate then DVC is not for you."

We don't go only if there is a cheap code and we go during peak seasons. We also stay at AKL sometimes (with AP discount). What we don't enjoy is wasting our money on something we don't really like/need. We are trying to determine if we will like DVC.

It HAD to be a man!!! :lmao:

Honestly if you are an AP holder and like to enjoy your trips then DVC is for you. I love the fact I can plan and stay in amazing suites versus a hotel room.

For us Disney is relaxing now - DVC taught us to relax and enjoy our trips. We no longer commando.

We travel at least once a year. This year we are staying at VB, BCV and VWL and in December we took a cheap weekend trip to HH plus have done BWV and SSR...for us our 2 years trips almost pay for half the cost of buying in!

Plus we invite my parents (or somehow after we joing it became a joint vacation) and give our son some pretty cool memories.

It is hard to compare a villa (with a full kitchen and washer and dryer) to a regular hotel room. We have stayed almost everywhere and find DVC is just so much more for the money.

I am also an AKV lover so the new VAK is thrilling me to no end. I enjoy staying at all of the resorts - each one has its plusses. For us DVC allows us to have our annual WDW trip without the worry. We go when we want staying in the room we want.

Next year we are treating my brother and his family as well as my parents - we NEVER would have been able to without DVC.

Good luck with your decision.

dumbo71
01-14-2007, 03:17 PM
"I believe this - if you need to spend all that time manipulating numbers to make a decision then more than likely DVC is not for you."

That's what I think also! (MY DH posted that thread not me)

"If you enjoy running around looking for cheap codes or traveling at value season and staying in value or moderate then DVC is not for you."

We don't go only if there is a cheap code and we go during peak seasons. We also stay at AKL sometimes (with AP discount). What we don't enjoy is wasting our money on something we don't really like/need. We are trying to determine if we will like DVC.



Let me start by saying, I'm glad you are giving this a lot of thought because DVC is a large purchase.

We purchased because we visit WDW at least once a year and planned on doing so for the foreseeable future. We also purchased DVC because we felt it was the best out there for an Orlando stay. We also purchased because we wanted larger rooms with seperate bedrooms. Our idea of vacation is not being crammed on top of each other so the Timeshare thing made sense.

Notice I didn't talk about DVC as a money saving venture or an investment. It isn't either of those things. It is more emotional than anything really. It has not saved me money, in fact we spend more now at WDW than we did before DVC.

Good luck with this decision. Sounds like you are really thinking it through which is very good.

CapeCodFam
01-14-2007, 04:22 PM
I think DVC and investments are 2 different things. DVC, for us, is an affordable vacation plan to the place we love the most. Investments' goals are to make money.

Either way, it's a nice problem to have. ;)

SuzanneSLO
01-14-2007, 04:25 PM
Whether DVC makes sense or not all depends on your assumptions. I ran some calculaitons using the the following assumptions:

Current rack rate at a Moderate for an water view or king room in Oct: $185
Current rack rate at BW for a standard room in Oct: $369
Lest's assume both rooms are consistently available at a 30% discount, making them $129.50 and $251.30. With room tax of 12.4%, these rooms would currently be $185.56 and $282.46.

Minimum purchase for a new DVC member is 150 points, but let's say you buy 154 points, which will get you 11 nights in a row at BWV in preferred or Boardwalk view in Oct. The current price of BWV from DVC is $95/point + closing costs, for a total of about $14,830. Annual dues are $4.8847 per point, making the dues that first year $752.24.

Thus, that first year you will spend a total of $15,582.24 to buy into DVC and stay 11 nights at BWV. In contrast, if you stay at 11 nights at a Mod that year, you will pay $1,602.56 and if you stay 11 nights at BW, you will pay $3,109.84.

Let's assume that you can consistently earn a 6% return on your investments after paying taxes.

Let's assume that inflation will be 3.12% each year and let's assume that both room prices and DVC dues go up that amount.

So the second year, as a DVC member, your dues will be $775.71, and paying them will allow you to stay for 11 nights at the BWV. In contrast, you will need to shell out either $1,652.56 for 11 nights in a Mod or $3,206.86 for 11 nights at the BW.

At this point, a DVC member who is wants to maximize value for his or her $$$ would take the money they are not spending on rooms and invest it. This would allow an investment of almost $2,431.15 if not staying at the BW or $876.85 if not staying at a Mod.

The money invested by the DVC member from not paying each year to stay at the BW quickly adds and up and by 2014, the DVC member will have more in the investment account than the non-member would have.

Investing the difference not spent at a Mod adds up more slowly, with the break even point is in 2032 but the non-DVC member is economically better off to this point in time only if you assume that the membership itself has no value. Note that in 2042, when the BWV membership truly does have no value, the DVC member will have $30K more in the investment account than the non-member.

I was glad the OP posted this and I was surprised that buying DVC did as well as it did. Of course, I really don't think 30% discounts are really doable, which makes DVC even better financially. That said, I think if that kind of discount can be consistently had, it will be at the last minute. For example, the current AP discount for late Feb to the end of March at a Deluxe is about 30%. If you are the kind of traveller who can take advantage of those kinds of deals, then DVC probably isn't right for you.

But, as others have said, purchasing DVC only makes sense in comparison to a Deluxe hotel and the decisions on whether to stay Value, Moderate or Deluxe really comes down to an emotional one for most familes.

DVC also only makes sense if you can plan ahead and be flexible. If you can't get a reservation for the room you want, then the room you have already paid for thru DVC is not worth that much to you.

Best of luck to the OP in your decision -- Suzanne

castleri
01-14-2007, 04:36 PM
Two of my three contracts I was able to purchase outright - the third I am still paying off by switching balances whenever offered 0% balance transfers.
My OKW and BCV contracts are currently worth more than I paid if recent for sale numbers are accurate. My SSR is a break even at this point because of commissions if I decided to sell. I didn't buy based on financial info but on the idea of prepaid vacations and at a place I love to visit, plus the options of trading for other places if desired (so far only Disneyland Hotel, GC and a week at Vaill). I look at my cost per trip as the maintenance fees x's the number of points at this point. If I sell before resale prices go down I really haven't lost that much. I would have spent money on vacations anyway so it wouldn't have been available to invest. I had occasion to stay at POR this past April and while it was a nice room and probably close to a DVC studio it just wasn't the same and actually cost me more when you figure it out. I would suggest you take the tour next time you are there and if possible rent some points for a stay of at least a couple of days. You really don't get the feel until you stay at a DVC resort. I would reccommend a 1 BR at OKW or a studio at any of the other resorts. As it is a big financial outlay you are right to do your research and make certain you would like what you are going to purchase.

tomandrobin
01-14-2007, 04:51 PM
Forget about investing in Disney stock and all that crap.

Bottom line is this, if you are planning to go to Disney every year for the next 8 plus years, and staying in deluxe/moderate accomadations, then DVC is for you. You will be going on vacations! The only question is where and how much you will be spending.

Oh, and you need to go back an add a value for the DVC membership and put that into the "real cost" of DVC if you sold it in 20 years. It will be worth something, if you bought SSR, you would still have 27 years left on the contract. I doubt it would be worth less then what you will pay now for it.

TammyAlphabet
01-14-2007, 05:41 PM
I believe this - if you need to spend all that time manipulating numbers to make a decision then more than likely DVC is not for you.



I think this hit the nail over the head! It reminds me of making a list of the pros and cons of marrying someone. If it doesn't feel right, it isn't.

Granny
01-14-2007, 08:16 PM
I think DVC and investments are 2 different things. DVC, for us, is an affordable vacation plan to the place we love the most. Investments' goals are to make money.


I think this sums it up pretty well. ::yes::


It HAD to be a man!!! :lmao:
Hey, I resemble that remark!! Besides, who would have thought a man would start out a post commenting about his DH?? :confused3

720L
01-14-2007, 08:36 PM
"Hey, I resemble that remark!! Besides, who would have thought a man would start out a post commenting about his DH?? "

LOL!! Too funny! He obviously wanted it to sound like I was writing the post--believe me I wasn't. All I care about is going to Disney as often as I can, all the other stuff I leave up to him.

kimberh
01-14-2007, 09:04 PM
I have had Disney Stock for about this period of time, and I am going to have to check all my paperwork. I do not believe that we have seen this type of return. The stock has taken some major hits through the years. It is doing well right now, but it had a hard time when Euro Disney was being built and several years after, then it bought Cap ABC , went back to issue price. All that being said, I do not think that we have experience this GREAT return that has been posted. I bought more when it hit Issue price, because I believed in Disney and the park attendance was high. Eisner was even quoted as saying, when asked about the stock price and Euro Disney,"Let the Mouse be the Mouse," all that being said, I will now read the rest of the posts.

Or Maybe I do not understand how Stocks works, I just know what my balance is.

kimberh
01-14-2007, 09:11 PM
Hey, I resemble that remark!! Besides, who would have thought a man would start out a post commenting about his DH??

LOL!! Too funny! He obviously wanted it to sound like I was writing the post--believe me I wasn't. All I care about is going to Disney as often as I can, all the other stuff I leave up to him.

This I can agree with! If you decide to buy, make sure it is a decision you can live with and most of all, Enjoy!!!!

TenThousandVolts
01-14-2007, 09:25 PM
I have had Disney Stock for about this period of time, and I am going to have to check all my paperwork. I do not believe that we have seen this type of return. .
It was 5 in 87 and it is 35 now. But it is easy to find a 600% return investment when you are looking for it in a rear view mirror. If only it were that easy! I am very happy to see DIS at 35. I bought a few years ago and finally it is doin' something- hooray.

greenban
01-15-2007, 03:52 AM
It was 5 in 87 and it is 35 now. But it is easy to find a 600% return investment when you are looking for it in a rear view mirror. If only it were that easy! I am very happy to see DIS at 35. I bought a few years ago and finally it is doin' something- hooray.

Okay 10KVolts, share!

How do you pick 600% returns by using your rearview mirror? Are you driving at the time? Who steers? What do you do with the monkey and his darts? (for throwing at the stock page).

TIA,

-Tony

castleri
01-15-2007, 06:53 AM
It was 5 in 87 and it is 35 now. But it is easy to find a 600% return investment when you are looking for it in a rear view mirror. If only it were that easy! I am very happy to see DIS at 35. I bought a few years ago and finally it is doin' something- hooray.

Probably because I sold my shares after yeaers of stagnation and also my misunderstanding about an online service that was holding my shares and selling them off to pay their monthly fee which I didn't realize. When I transferred them into that place they said there were no fees. Shame on me for not understanding what i was getting into ahead of time. Fortunately I only had a few shares. People who are thinking of making an "investment" in future vacations should definitely understand what they are getting for their money before they put that money into it also.

TenThousandVolts
01-15-2007, 07:02 AM
Okay 10KVolts, share!

How do you pick 600% returns by using your rearview mirror? Are you driving at the time? Who steers? What do you do with the monkey and his darts? (for throwing at the stock page).

TIA,

-Tony
No need for the monkey and the darts when you have the benefit of hindsight. Monkeys throwing darts are just for fun- and if you are monkey-darting while driving- simply place monkey in a child safety restraint.

Paging Tom Morrow
01-15-2007, 07:30 AM
Perhaps you are looking at this the wrong way...

If your $15k investment is really what you plan on funding your vacations out of, you should be subtracting the value of your yearly vacation costs out of the annuity you are growing.

Below is a table in which:
- $15k was initially invested
- $2,100 was subtracted each year to pay for resort accomodations
- $675 was added each year to offset the savings of not paying dues
- an 8% annual compounded rate of return was issued for remaining monies

Time Annuity
Year 1 $13,575
Year 2 $13,068
Year 3 $12,520
Year 4 $11,929
Year 5 $11,290
Year 6 $10,601
Year 7 $9,856
Year 8 $9,051
Year 9 $8,182
Year 10 $7,244
Year 11 $6,230
Year 12 $5,136
Year 13 $3,954
Year 14 $2,677
Year 15 $1,298
Year 16 -$191
Year 17 -$1,799
Year 18 -$3,536
Year 19 -$5,412
Year 20 -$7,438

Disclaimers: This doesn't take into account annual room cost increases nor does it take into account annual dues increases. Nor does it take into account the value of DVC at the end, which would almost definitely be more than the initial $15k investment (assuming buy-in @ SSR).

eliza61
01-15-2007, 10:04 AM
I think DVC and investments are 2 different things. DVC, for us, is an affordable vacation plan to the place we love the most. Investments' goals are to make money.

Either way, it's a nice problem to have. ;)

You hit the nail right on the head, cape. We are seriously not saving any money on our dvc simply because we are going so much more. :yay: and I'm about ready to sell my first born so I can buy an add on at VWL. We crunch very few numbers, other than what were the best rates to finance at.

A million magical memories and more to come= Priceless. :flower3:

emerymt
01-15-2007, 03:58 PM
I think DVC and investments are 2 different things. DVC, for us, is an affordable vacation plan to the place we love the most. Investments' goals are to make money.

Either way, it's a nice problem to have. ;)

This is always the way it is with vacation properties. We decided not to buy DVC and instead invested the money (well, a lot more money, actually) in a high quality townhouse in a different resort. We use II to trade out when we want (this June into OKW- we are very excited). We have held the property for 8 years and will sell it this summer. So, we've gotten "free" vacations for 8 years, appreciated property value, tax deductions, and rental revenue.

When we started out, we didn't think about it like an investment, which is good so that in case the property value tanked we wouldn't be upset about it. After all, as a realtor friend told me, "You don't play with the mortgage money." However, it's nice to know we're able to sell it for three times what we paid for it. That's unusual, I know. Ultimately, however, that's what always bugged me about the DVC- you're not buying, you're renting in advance- but you're getting a good deal on that and you have a sense of belonging, which is nice.

DVC is not about investing, it's about going to Disney, staying in a first-rate resort, and spending a good deal less than if you paid for a hotel room or villa. I mean, really, the rack rate for our week in June is over $4000. Of course DVC makes sense when compared to that!

So you really have to compare apples with apples.

rahrah
01-16-2007, 08:05 AM
Doing all of the math is a good idea. Current wisdom on the stock market is that it returns 9% a year over the long term.

What all the numbers prove is that no one is getting ripped off. Not you, and not Disney. This is compred to going 3 times every 2 years and staying at a DVC studio instead of a moderate resort.

Now you just need a good reason to buy a DVC that is not financial.:thumbsup2

Slakk
01-16-2007, 03:52 PM
This is always the way it is with vacation properties. We decided not to buy DVC and instead invested the money (well, a lot more money, actually) in a high quality townhouse in a different resort. We use II to trade out when we want (this June into OKW- we are very excited). We have held the property for 8 years and will sell it this summer. So, we've gotten "free" vacations for 8 years, appreciated property value, tax deductions, and rental revenue.

When we started out, we didn't think about it like an investment, which is good so that in case the property value tanked we wouldn't be upset about it. After all, as a realtor friend told me, "You don't play with the mortgage money." However, it's nice to know we're able to sell it for three times what we paid for it. That's unusual, I know. Ultimately, however, that's what always bugged me about the DVC- you're not buying, you're renting in advance- but you're getting a good deal on that and you have a sense of belonging, which is nice.

DVC is not about investing, it's about going to Disney, staying in a first-rate resort, and spending a good deal less than if you paid for a hotel room or villa. I mean, really, the rack rate for our week in June is over $4000. Of course DVC makes sense when compared to that!

So you really have to compare apples with apples.


You use II to trade a townhouse in Orlando you own into DVC? Am I missing something??

emerymt
01-16-2007, 04:35 PM
The townhouse isn't in Orlando. It's at a ski resort :cool2:

vandy
01-16-2007, 04:42 PM
I just bought into SSR, not for just the financial aspect, but for the emotional aspect. With children that are young adults and teenagers, we always try to find a suite or room with separate bedrooms and at least a small kitchen. If we would spend even 3 days in a normal room or even two rooms, I am sure our family would no longer total 6! We WANT what the DVC can offer.

We Want: Space, a full Kitchen to cut down on dining costs, space, a washer/dryer so we don't need to pack as many clothes and space!

If I had known about DVC years ago would I have bought? Probably yes, for the reasons listed above only our room choices may have been different due to younger children. Now that we did, I look forward to having the ability to vacation more and in the future to be able to let my children use it for a honeymoon or maybe trips with their future families.

I am an Inventory Control Manager and I know that people can crunch and skew numbers to reach whatever results they wish. :teacher: For example; I could spend a lot less money buying tickets to a local amusement park instead of WDW and the kids would be thrilled and have a fantastic day, but they would not have the same emotional or special Disney experience. Numbers don't validate the cost of a Disney World ticket versus the other places, our emotions do. The same can be said about owning DVC. Numbers won't neccesarily validate the cost of ownership, your emotions will. It's all about you and your family, the type of room you like (or WOULD like) to stay in, the pace you wish to set while on vacation and so on.

I agree with the statement that sometimes people use numbers to talk themselves in or out of something. If you need to crunch numbers, just use the simple methods found in previous posts, and use the results only to validate your emotions and verify that it is not a terrible purchase.

DisDaydreamer
01-16-2007, 04:56 PM
For what it's worth, here is why we DID choose to buy into DVC:

Our purchase price = $79 per point

$79 / 50 years = $1.58 per point, per year (initial investment)

$1.58 + $4.12 dues = $5.70 total cost of each point per year (in 2007 dollars)

A One Bedroom DVC villa at Saratoga Springs for Adventure, Choice and Dream seasons runs between 20 and 25 points per weekday. That means our OOP cost for a 1B is about $114 to 142 per night. That's less than what we would pay for a moderate room with reasonable discounting and substantially less than the cash rate for the same room ($416 to $546 per night with the 12.5% tax.)

Granted that financial analysis is a bit over simplistic, but it's enough to convince me that we made a wise decision.

I think I prefer the "bit over simplistic" analysis. :crazy:

salmoneous
01-16-2007, 05:26 PM
Who boy, this ought to be a fun thread. I've only read the OP and can't to see the replys. But here's a shortcut for folks wanting to do similar financial analysis...

When the alternative is investing in a stock with 30% annual returns, no need to do the math. EVERYTHING else is a bad idea.

jade1
01-16-2007, 06:52 PM
So if instead of buying into DVC you bought
$15,000 worth of Disney stock today, 20 years from now it would be worth
$90,000.


What if you have $30,000 available? Should you use $15K on stock and $15K on DVC then? What if you have $45,000 available? The point is there are millions of folks out there with infinite descisions to make.

sagwanamu
01-16-2007, 07:40 PM
It was 5 in 87 and it is 35 now. But it is easy to find a 600% return investment when you are looking for it in a rear view mirror. If only it were that easy! I am very happy to see DIS at 35. I bought a few years ago and finally it is doin' something- hooray.

You don't have to go that far for a 600% return. A few years back American Airline was about 2 dollars and now it's over 40 dollars. 600% return? here is about 2000% return in 4 years.

Stop crunching the number. If you love Disney, you won't regret the DVC.

Hibernians
01-17-2007, 09:39 PM
Sure DIS is near 35 today but 4 years ago (January 2003) it was trading in the range of 15 - 17. How would the OP feel about that using the same rationale of investing that original 15,000 ? Anyone one of us can pick a scenario that supports or disputes a premise based on how a stock performed.

Like others have said, making an investment in the stock market is not on the same level as paying for one's vacation.
For one thing, I know that my DVC membership guarantees me a lifetime (at least 49 years) of wonderful family vacations. I purchased a DVC membership and end of story; that money is gone and IMO it was money well spent.

The stock market is a whole different can of beans: I have no guarantee of profit and I have to be diligent; knowing when to dump a stock, when to take profits, when to re-invest, etc.

Good Luck -

Joe

CSUFSteve
01-17-2007, 10:14 PM
Yeah, the whole DIS growth being 30% seems pretty unlikely to me as well. As someone pointed out, DIS only recently FINALLY passed its last split price of $33/share, which was in July 98 according to Yahoo! Finance. So that's 6.5 years of nearly flat growth - no telling where you'd catch a single stock in its cycle.

But I REALLY like someone's idea of reinvesting year-over-year savings from comparable hotel stays vs membership in DVC. That seems like an AWESOME idea! I might actually do that.

DISDVCER
01-18-2007, 10:34 AM
I would invest it. In the end you will still have something in your pocket. :thumbsup2
With the protection wall street has in place the market will never crash. They will just clock out early that day.

In the end with DVC your pockets will be empty except for a little firestarter called a deed and lots of broken stuff made in China. :lmao:

DISDVCER
01-18-2007, 10:50 AM
{snip}
Disclaimers: This doesn't take into account annual room cost increases nor does it take into account annual dues increases. Nor does it take into account the value of DVC at the end, which would almost definitely be more than the initial $15k investment (assuming buy-in @ SSR).

Nor does it take into account the 3-4% rise in dues which will increase when major rehabs are needed. And the value of your DVC contract will be $0. DVD will not be making bids to buy the contract back from you in 2054 (assuming SSR ownership).

fishermouse
01-18-2007, 11:26 AM
IMO most of the postings are failing to take into account the most important factor. DVC is in no way a great investment.. DVC is "entertainment" and should be bought and maintained with the same disposable income one would use for vacationing every year. With the exception of a owners that rent regularly and turn a profit, or the occasional profitable sale. You are not going to make money by buying into DVC. You are going to benefit from the conveniece and joy of being an owner. Also IMO the op and others that come up with the "numbers" that show DVC to be a bad investment are not "trying to decide if they should buy" they are trying to make us think we made a bad decision, the reason for this is anybodies guess, envy and ignorance are the only reasons I come up with but maybe I'm wrong. Bottom line is no matter what they come up with I for one am very happy with my DVC membership and recomend it any one who asks, but as entertainment not investment. Call Fidelity with your investment concerns. DVC to me is no different than my camper or boat as an investment.

erikthewise
01-18-2007, 11:37 AM
If you purchased Disney stock in 1987 when it was $5 per share, which is now
worth $35 per share, you would have a 600% return on your investment or 30%
per year averaged for 20 years. So if instead of buying into DVC you bought
$15,000 worth of Disney stock today, 20 years from now it would be worth
$90,000.



Increasing by a factor of 7 over 20 years does not mean your investment grew 30% per year. In fact it grew an average of 10.22% per year, which is still pretty good.

If a $5 share of stock actually grew 30% per year, it would be worth $950 after 20 years.

fishermouse
01-18-2007, 11:40 AM
I would invest it. In the end you will still have something in your pocket. :thumbsup2
With the protection wall street has in place the market will never crash. They will just clock out early that day.

In the end with DVC your pockets will be empty except for a little firestarter called a deed and lots of broken stuff made in China. :lmao:

If I'm still alive "In the end" I doubt if I'll be able to strike a match to light my fire starter to burn the broken stuff from China. So worrying about where all the money I made ended up will not be an issue. But my memoriesof WDW will be priceless.. GOD WILLING :hourglass

3DisneyKids
01-18-2007, 11:45 AM
The classic "should I buy DVC" questions:

Do you plan to visit WDW at least every-other year (and more likely every year)?
Do you usually stay in deluxe on-property resorts?
Do you want/need to stay in larger accommodations? (such as 1 or 2 BR units)
Can you afford it without financing it to the hilt?

If you answered yes to these questions, then DVC is for you. Yeah, it's that simple. The numbers work out that way, and that is basically the only way they work out, if you are truly looking at it from a financial standpoint (note that I said financial standpoint, not investment standpoint...see below).

It is a pre-paid vacation, period. It is not an investment and comparing it to one is a mistake right off the bat.

If you would like to guarantee your accommodations at awesome resorts on-property for the next 50-ish years, then DVC is for you. If you have a family and need more space when you stay on-property, then DVC is for you.

Best of luck as you make your deicision. You are doing a great job of asking questions...it is so important to go into this purchase with your eyes open.

erikthewise
01-18-2007, 12:00 PM
Yeah, what 3DisneyKids said.

But it's definitely a legitimate question whether you are getting a fair value for your money in buying DVC, and whether other alternatives might be better uses of your money.

Unless you're so wealthy that $15K-$30K is meaningless to you, it is not going to be a purely emotional decision whether to buy or not.

casper
01-18-2007, 12:22 PM
Well, lets have some fun!

By not spending $2.00 a week for the lottery over the past 18 years
= $1,872.00

By not spending $40 a month on cable T.V. for the past 15 years
= $7,200.00 not including tax.

By not spending $36 a month on a cell phone for the past 15 years
= $6,480.00 not including tax.

Total= $15,552.

Imagine what I could have saved if I didn't drink pop/soda!:confused:

The bottom line: There are many ways we can invest money. But there are many more ways in which we can spend it for fun. For some, spending $15,000 for a couple weeks stay at a Theme park every year is not worth it. For those of us who like the Theme park experience, like Disney, and like the often "stress free" environemnt it offers, it makes the perfect investment in fun (whether we get money back or not).

No flames to anyone! We all know how to spend our hard-earned money on ways to enjoy ourselves. And sometimes I may think you're "wasting" your money because I would never spend it on what you did. And the other way around too. But as long as each of us are enjoying what we spend, are being responsible managers to meet our short term and long term needs, then hey! To each their own.

I personally feel I have spent my money well. I also invest a lot of my money. I'm on track to my future (as best as I can know) but I'm also on track to living a fun life right now. And the $15,000 I spent for DVC was A LOT OF MONEY for me!!! It took some serious thinking and praying before I took the leap.

bcvillastwo
01-18-2007, 12:59 PM
...........fishermouse said,
DVC is "entertainment" and should be bought and maintained with the same disposable income one would use for vacationing every year.

A little later 3DisneyKids said, It is a pre-paid vacation, period. It is not an investment and comparing it to one is a mistake right off the bat.

I agree with both of these comments. So if our premise is that we are using using disposable income to for our Disney vacations we then have the basis for comparing DVC to other options both Disney and otherwise. This was my view when I conducted my analysis. On the other hand, if I were going to use disposable income to make investments then my premise is different and I would need to consider other factors in my analysis.

I always thought, and continue to think, that what we spend on our Disney vacations is a sunk cost and that no part of that money was ever going to be used for anything but Disney vacations. That simplified my financial analysis and made it easy to compare different options.

Mtnman44
01-18-2007, 02:47 PM
I believe that the historical average return of the stock market over any 30 year period is around 12%.

If that is true that would be the max discount rate I'd use when doing a Net Present Valuation of a DVC purchase. Realistically, you should probably only do it out to 10 or 15 years at the most.

The bottom line is, DVC is not an investment. It's a vacation expense. As far as saving money, every reasonable scenario I could think of shows DVC costing less OVER TIME vs. staying at Deluxe Disney resorts every year. The only was it doesn't is if the Cost of staying at the Deluxe resorts starts to go down over time. What do you think the chances of that are?

CSUFSteve
01-18-2007, 04:54 PM
I always thought, and continue to think, that what we spend on our Disney vacations is a sunk cost and that no part of that money was ever going to be used for anything but Disney vacations. That simplified my financial analysis and made it easy to compare different options.

Wow, that is a really good way to look at it too. I do meet all of the "classic" criteria for DVC membership. I average two trips a year to WDW, I have a PAP, I am at a point where I prefer Deluxe (or at least Moderate) accommodations, and I am looking toward the future with family trips now that my niece/nephew are at an age where they would enjoy WDW.

salmoneous
01-19-2007, 12:31 PM
I believe that the historical average return of the stock market over any 30 year period is around 12%.

If that is true that would be the max discount rate I'd use when doing a Net Present Valuation of a DVC purchase. Just to get geeky for a second, I think the max rate that should be used is the lowest available financing rate.

If you honestly think you are losing 12% by having your money in DVC instead of the market, you should finance rather than buy DVC. From a financial standpoint, you should only buy DVC is your anticipated market return is less than what the rate at which you can borrow.

Note that's from a financial standpoint. There are many other factors to consider. Because of personal circumstances, you may want to buy rather than finance DVC even if you think you'll get 10% from the market and can borrow at 6%. But when analyzing a deal from a financial standpoint, it doesn't make sense to "penalize" the calculation for those non-financial factors.

Note - as a side point, 12% seems way too high to me as an average market return. But that's another conversation for another day.

Paging Tom Morrow
01-19-2007, 04:32 PM
Nor does it take into account the 3-4% rise in dues which will increase when major rehabs are needed. And the value of your DVC contract will be $0. DVD will not be making bids to buy the contract back from you in 2054 (assuming SSR ownership).

I suggest you go back and re-read my post.

First, I did mention that it didn't take into account dues increases, but it also mentioned it didn't take into account room price increases as well.

Second, the comparison was for the first 20 years only - that was the criteria established by the OP, not me. To do a fair assessment, the value of DVC @ 20 years should have been incorporated. If I were to take the analysis all the way to the end, then the value would have been zero for the DVC membership.

dumbo71
01-20-2007, 10:43 AM
I suggest you go back and re-read my post.

First, I did mention that it didn't take into account dues increases, but it also mentioned it didn't take into account room price increases as well.

Second, the comparison was for the first 20 years only - that was the criteria established by the OP, not me. To do a fair assessment, the value of DVC @ 20 years should have been incorporated. If I were to take the analysis all the way to the end, then the value would have been zero for the DVC membership.



I'd like to say that agree with Tom Morrow's assessment. I also feel like anyone holding DVC until the end is making a huge mistake.

Let me give you a real life scenario. I recently held 1400 + points. I downsized to 350 points at SSR. I bought most of those points at OKW for an average of $68 dollars a point give or take. I used those points for 14 years. Lets call it 1000 points at $68 = $68,000 to buy in. I sold those points for $84 pp. $84 x 100 = $84,000. subtract commision of 10% and you have $75,600. That gave me a profit of $7600. Now you had dues. Lets call it $4 pp. 1000 x $4 = $4000 per year. $4000 x 14 = $56000. $56000 - my profit of $7600 = $48400 to use those points for the 14 years. Now I rented 24 times averaging $3000 per rental. 24 x $3000 =$ 72000. $72000 - $48400 cost of use = $23,600. That is right folks. DVC PAID me $23600 to vaction at WDW for the last 14 years. It isn't an investment but it sure can be done rather easy. I rounded numbers but this is real close, actually a little low.

Many snicker when they read those telling others DVC isn't an investment. There are many who are making money off of DVC. The key is to not hold your cards to long. You must sell before the value plummets. You then buy back in at a new property renewing the 50 years. It can be done over and over thanks to ROFR. You could kep it to the end simply profiting off of rentals. I chose to sell high and reinvest in the stock market while DVC had value.

salmoneous
01-20-2007, 01:05 PM
Now I rented 24 times averaging $3000 per rental. 24 x $3000 =$ 72000. $72000 - $48400 cost of use = $23,600. And people had the nerve to call you a commercial renter. Good thing you chewed them out for doing so.

dumbo71
01-20-2007, 02:23 PM
And people had the nerve to call you a commercial renter. Good thing you chewed them out for doing so.



Hey, you have your opinion. Quite frankly your assessment makes no difference to me.

Fact is I was using 60% or more of those points for personal use. The rest was rented until I had the time to use them all. Commercial, professional, casual renter? Makes no difference what the label is.

This is type of attitude that we just discussed in another thread. I wish those bashing renters, commercial or otherwise, would start receiving warnings from the Dis.

If you choose not to rent, fine, don't. Please don't bash those that do something that has been encouraged by DVC guides and clearly allowed by the POS and FL law.