Any new thoughts on the OKW Extension

[tjkraz]

again depends on your point of view, to me it makes unbelieveable financial sense

so which is a better deal

15 years and 3750 points for $3750 and 15 years of MF's or
50 years and 2000 poiints for $3750 and 50 years of MF's

250 points extended= $3750
total points potentially used: 3750(250 points for 15 years)

new 40 point contract = ~$3750
total points potentially gained: 2000(40 points per 50 years, Ill even give you the 50 years although its less at this point)

as you can see you can use whatever math you want to get to your conclusion, it works either way

you can not debate that the same $3750 will get you almost double the points with an extension as with a new contract

not to mention the new contract has 35 years MORE of MF's

As Sabor pointed out, your logic is a bit off. And the inflationary nature of dues makes it even worse.

Today dues at AKV are $4.71 per point. If we assume 3% annual increases, the dues will finally top-out at $20.05 per point in the year 2057. On a 40-point contract, the accumulated dues over those 50 years will total $21,250.93

On the OKW extension, you won't even begin paying dues until 2043 when they will be $12.83 per point (again assuming 3% increases starting with the 2008 figure of $4.56 per point.) The OKW dues will go up to about $19.41 by 2057.

So, paying dues on 250 points in that 15-year period between 2043 and 2057 will cost about $59,661.66. That figure is nearly three times the cost of the add-on dues.

While it's true that you get more total points with the extension, buying a separate contract gives you the advantage of paying dues today when the burden is much, much smaller.

Here's another completely separate approach to consider. Let's say you took the $15 per point extension fee and invested it at 8%. On 250 points that would be an investment of $3750. Thanks to the wonders of compounding interest, in thirty-five years that investment would be worth $51,338 or a little over $205 per point.

I realize that the price of points is bound to increase, but I'm going to go out on a limb and guess that, in 2042, it will be possible to buy an extended OKW contract or even and AKV contract on the resale market--with 15 years remaining--for less than $205 per point.

 

[tjkraz]

lol yeah sure,

another case of someone putting the numbers together to get the outcome they have already reached in their heads

fact is you shouldnt be basing todays purchases on what you might be make in 20 years or 30 years ro 50 years.

There is absolutely nothing wrong with applying sound economic principles to the discussion.

you could save that money today and have nothing to show for it in 20 years or you could have an equal amount or you might have more

The stock market has averaged in excess of 10% long-term growth over the last 80 years. That's the only defensible position we have to work from.

For every Enron there's a Microsoft. For every WorldCom there's a TWDC or Pixar. Again, if you aren't getting 8-10% average returns on your money, you need a new investment adviser.

 

[jade1]

And be paying at least an additional $8000 for the next 35 years just in maintenance plus the cost of additional trips and/or time to use those extra 50 points a year.

That is true, but some would have good reasons to do this (some would not). That $228 a year would get you over 5 nights a year in an OKW studio, and yes that would be an additional expense to go again, but there are folks that travel to WDW more than once a year. Otherwise somebody may be ready to jump up to a 2BR from a 1BR (No extra trip money at all) which this would cover more than 6 nights at OKW-depending on the time of year. Others may jump to a 2BR becasue they now have a 3rd child or so they can bring friends or extended family (of which some would certainly chip in more than $228 for an OKW studio for 6 nights). Theres just so many options to consider.

 

[sjdisneywedding]

The Error in your Logic is the New Contract MF are on 40 points a year
and the renewal is on 250 points a year , and those 250 points will MF starting in 35 years , so will be a lot higher per point than the MF being paid on 40 points today.

Even if they did not go up at all

15 years of points = 250 * 4.00 a point = $1,000 a year or $15,000
50 years of points = 40 * 4.00 = $160 a year * 50 or $8,000

A lot less Maintenance fees on the 40 point extension

true sort of but you cant quite figure it out that way

 

[sjdisneywedding]

As Sabor pointed out, your logic is a bit off. And the inflationary nature of dues makes it even worse.

Today dues at AKV are $4.71 per point. If we assume 3% annual increases, the dues will finally top-out at $20.05 per point in the year 2057. On a 40-point contract, the accumulated dues over those 50 years will total $21,250.93

On the OKW extension, you won't even begin paying dues until 2043 when they will be $12.83 per point (again assuming 3% increases starting with the 2008 figure of $4.56 per point.) The OKW dues will go up to about $19.41 by 2057.

So, paying dues on 250 points in that 15-year period between 2043 and 2057 will cost about $59,661.66. That figure is nearly three times the cost of the add-on dues.

While it's true that you get more total points with the extension, buying a separate contract gives you the advantage of paying dues today when the burden is much, much smaller.

Here's another completely separate approach to consider. Let's say you took the $15 per point extension fee and invested it at 8%. On 250 points that would be an investment of $3750. Thanks to the wonders of compounding interest, in thirty-five years that investment would be worth $51,338 or a little over $205 per point.

I realize that the price of points is bound to increase, but I'm going to go out on a limb and guess that, in 2042, it will be possible to buy an extended OKW contract or even and AKV contract on the resale market--with 15 years remaining--for less than $205 per point.

again math to prove a point

you are omitting half of the very factors you are describing above

if you start paying for dues now and for the next 50 years that is money you could be putting into your so called 8% investments. So you have to factor all that money too. so the differnce is nowhere near what you descrive above

 

[sjdisneywedding]

There is absolutely nothing wrong with applying sound economic principles to the discussion.



The stock market has averaged in excess of 10% long-term growth over the last 80 years. That's the only defensible position we have to work from.

For every Enron there's a Microsoft. For every WorldCom there's a TWDC or Pixar. Again, if you aren't getting 8-10% average returns on your money, you need a new investment adviser.

there is nothing sound about trying to convince someone they will get 8% return over the next 10, 20 or 30+ years

I have come across many advisors and never met one that would even think fo guarenteeing an 8% return--most feel the average return over the next 50years will NEVER come close to the last 50 years

furthermore your profit is not calculated by average return, it is calculated by compound return which is probably always going to be less than the average, sometimes significantly less

 

[WelcomeHome]

My head hurts.

 

[Sabor]

true sort of but you cant quite figure it out that way

You were the one that brought Maintennce Fees into the Discussion !!

If nothing goes up than the simple Math works , If you want to count inflation than you need to include it on not only the ROI on the $160 a year of Now MF's vs the cost of Inflated MF's starting out 35 years from now , then brought back to Present Value.

No matter how you slice it, dice it or carve it up---- There is absolutely no way that the extended contracts Maintenance fees are not going to be more of a burden than the 40 point extensions. For the simple reason that one is 2000 points of MF's vs 3750 Ponits.

 

[sjdisneywedding]

You were the one that brought Maintennce Fees into the Discussion !!.

already agreed with about the MF's

If nothing goes up than the simple Math works.

sorry thats simply incorrect, even if all costs remain equal over the years, you are still out the MF's now and up to 35 years from now, thats about $200 currently each and every year plus any interest gained thats means you are also losing the supposed 8% interest on that money

No matter how you slice it, dice it or carve it up---- There is absolutely no way that the extended contracts Maintenance fees are not going to be more of a burden than the 40 point extensions. For the simple reason that one is 2000 points of MF's vs 3750 Ponits.

sorry not necessarily true, its not apples to apples. you are paying for one now and for the next 50 years, the other you are not paying anything on for 34-35 more years

 

[Saratoga Souris]

Seems like a lot of arguements setlle around the.... "Let's compare buying 40 pts" scenario.....
That makes me wonder..... how many of those not extending OKW are actually going to buy 40 pts somewhere else??
I think for many..... they will do neither..... the money will disappear into that great "pit" in life (the... I'm not sure where the money went pit). It will be that extra dinner out, that nicer bottle of wine, etc). It won't end up in the "Disney Fund" in most cases. It won't get invested either..... might buy a TV (cause that's what they cost now)

I added on - it IS in the Disney Fund.... the "you deserve it" fund! I'll be really old when the the extension starts but I still plan to be young. In 35 years , I'll be 80 but today.... that isn't old and in 35 years, it will probably be "even younger". I see it as investing in "myself" as well as leaving it to the kids/grandkids.

 

[toocherie]

My head hurts.

I was thinking the same thing . . . . I know there was a reason I never took another math class after high school . . . . .

 

[tjkraz]

again math to prove a point

I can think of nothing better in a financial comparison...

you are omitting half of the very factors you are describing above

Enlighten us. What would those factors be?

if you start paying for dues now and for the next 50 years that is money you could be putting into your so called 8% investments. So you have to factor all that money too. so the differnce is nowhere near what you descrive above

You start paying dues now because you are receiving the points now. The points aren't deferred for another 35+ years as in the case of the extension.

there is nothing sound about trying to convince someone they will get 8% return over the next 10, 20 or 30+ years

I have come across many advisors and never met one that would even think fo guarenteeing an 8% return--most feel the average return over the next 50years will NEVER come close to the last 50 years

Of course nobody is going to "guarantee" anything. But history (and in my case, results) speak for themselves.

If you want guarantees, put your money in a CD or money market account at 5%. An agressive, well managed portfolio of stocks and mutual funds should earn a return of AT LEAST 10-11% in the long term. Anyone who tells you differently is probably covering for their own shortcomings.

 

[ammo]

another case of someone putting the numbers together to get the outcome they have already reached in their heads

Your post looks like somebody avoiding math in order to get the outcome they have already reached in their heads. How is that any better than doing basic financial analysis when people are considering whether or not to spend money today for something that they will not be able to use until 2042?

 

[sjdisneywedding]

Your post looks like somebody avoiding math in order to get the outcome they have already reached in their heads. How is that any better than doing basic financial analysis when people are considering whether or not to spend money today for something that they will not be able to use until 2042?

point being you cant just include the factors you want

you cant include lost investments on the $15 point extension, then not include it for difference in MF's

also you cant just say 'ok, you will get an 8% return, thats not any real financial analysis, run the figures for worst case scenario and best, then weigh the pros and cons

what type of analysis involves 1 input

 

[sjdisneywedding]

Enlighten us. What would those factors be?
You start paying dues now because you are receiving the points now.

lol . no kidding

the point is you cant simply say MF's will be 3x's as much for the extension scenario as for the buy new now scenario.

thats leaving half of the equation out

you want to talk about all this lost investment, then you have to apply it to the mf''s you are paying for in the new contract for 35 more years

 

[TisBit]

So I think the answer to the original question "Any new thoughts on the OKW Extension" is a resounding NO! There are no new thoughts, just the same arguments from the people who want it and the people who don't want it.

As for the ongoing debate, like everything else, there is no 'right' answer to if OKW extension is a good thing. It depends on you and what you want out of DVC. As for numbers based on investments (8% or whatever), the first thing is IF you would actually invest that money anyway, or just spend it on something else. Under the investment theory, I don't think DVC makes much sense, you are better staying in off-site value hotels (roach motels) and invest all your savings!

 

[tjkraz]

the point is you cant simply say MF's will be 3x's as much for the extension scenario as for the buy new now scenario.

thats leaving half of the equation out

you want to talk about all this lost investment, then you have to apply it to the mf''s you are paying for in the new contract for 35 more years

That's apples-to-oranges.

Under both scenarios (as I laid them out), you're paying the actual amount of dues when the points are received. If you buy an add-on, you begin paying dues at 2008 levels and receive 2008 points. If you extend, you begin paying dues in 2043 at 2043 levels.

Implying that you COULD set aside money now for the 2043+ dues under the extension scenario is true. However, the same holds true in the add-on scenario. I could invest money now which is earmarked for the for the 2030 or 2035 or 2040 dues, and the total dues under the add-on scenario will also go down.

So I think the answer to the original question "Any new thoughts on the OKW Extension" is a resounding NO!

Touche!

 

[dianeschlicht]

So I think the answer to the original question "Any new thoughts on the OKW Extension" is a resounding NO! There are no new thoughts, just the same arguments from the people who want it and the people who don't want it.

As for the ongoing debate, like everything else, there is no 'right' answer to if OKW extension is a good thing. It depends on you and what you want out of DVC. As for numbers based on investments (8% or whatever), the first thing is IF you would actually invest that money anyway, or just spend it on something else. Under the investment theory, I don't think DVC makes much sense, you are better staying in off-site value hotels (roach motels) and invest all your savings!

Yep, and you would have thought the definitive word on that was heard in the LAST thread about this. The arguements don't change, just as the participants don't change.

 

[tjkraz]

Yep, and you would have thought the definitive word on that was heard in the LAST thread about this. The arguements don't change, just as the participants don't change.

Hey, hey! I'll have you know that I was good and stayed out the last thread.

 

[sjdisneywedding]

So I think the answer to the original question "Any new thoughts on the OKW Extension" is a resounding NO! There are no new thoughts, just the same arguments from the people who want it and the people who don't want it.

!

lol very true