Better investment DVC or Disney stock?

Silly23

Disney Art Guy
Joined
Nov 10, 2019
That thought popped into mind when it hit me how much Im spending to purchase DVC. I am clueless when it comes to day trading and buying stocks and let my expert retirement lady handle all of that stock stuff. And if I asked her id bet dollars to donuts that shed say buy the stocks.

The way I see it I will save thousands on DW trips buying DVC but I cant help but wonder about the stocks.
 

bwvBound

DVC SSR & other timeshare
Joined
Feb 5, 2004
LOL. We bought DVC in May 2004. Looking back, the stock price was near $25/share. This week it is dancing near $145/share. Then to add in the dividends ... yes, financially it would have been better to buy the stock.

That said, if you look at the charts you'll see long periods without growth. Jan 1, 2000 was at $40/share ... but it went through a long lull and didn't return to that level until Oct 2010.

See: https://finance.yahoo.com/quote/DIS?p=DIS&.tsrc=fin-srch
 
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_auroraborealis_

I like marshmallows. And adult beverages.
Joined
Oct 18, 2015
A timeshare is not an investment. Stock is.

A timeshare is only a vehicle via which you pay cash up front to potentially save on accommodations in the future. And those accommodations are higher-end, so likely fail to represent savings over staying off-site or at a Value resort, and have a host of accompanying expenses (travel, food, tickets, etc.).

DVC is not an investment.
 
  • jerseyduke

    Home is just where you stay when not at WDW
    Joined
    Jan 19, 2013
    DVC is not an investment.
    Neither is day trading, that's gambling.

    But @_auroraborealis_ is right, DVC is in NO way an investment. Eventually a DVC contract will be worth 0, that is a guarantee. The chances of Dis stock being worth zero?????

    A stock could also depreciate of course, there is no sure thing in life.

    I picked up some Dis Stock somewhere in the 2009-2010 time frame for about 35 a share. its now 146 (plus dividends)
    I picked up fo VGF points in 2013 for 150 a point. I can maybe sell them now for 165??? a 10 percent increase (minus dues)

    There is zero comparison.

    If you want to go with that "I will save thousands" philosophy, you had better be investing that "saved" money. If you just spend it on something else, you haven't saved shine-ola.

    Not every DVC person saves money. I dont, i just go more. My DVC actually costs me money. I just got a lot more joy out of it.
     

    CanadaDisney05

    DIS Veteran
    Joined
    Mar 20, 2017
    Neither is day trading, that's gambling.
    👍

    DVC is far from a sure thing, but atleast there's a pattern that you can make reasonable assumptions over the long run to understand the financial implications.

    Buying a single stock is really no different than placing a bet on Red
     

    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    LOL. We bought DVC in May 2004. Looking back, the stock price was near $25/share. This week it is dancing near $145/share. Then to add in the dividends ... yes, financially it would have been better to buy the stock.

    That said, if you look at the charts you'll see long periods without growth. Jan 1, 2000 was at $40/share ... but it went through a long lull and didn't return to that level until Oct 2010.

    See: https://finance.yahoo.com/quote/DIS?p=DIS&.tsrc=fin-srch
    Except you need to realize how much you could have rented your points for.

    On the flip side if you were going to Disney each year still how much stock would you have taken our to pay for the trip?

    I mean its fun to think about but I don't think you can make a statement about the future from it. I would suspect you would have more money from DVC right now if you had bought and only rented it out and looked to sell it. I mean each year right now you would be making $7-$10/point which is way more than any dividend per share (although never looked at Disney so correct me if I am wrong).
     

    jerseyduke

    Home is just where you stay when not at WDW
    Joined
    Jan 19, 2013
    👍

    DVC is far from a sure thing, but atleast there's a pattern that you can make reasonable assumptions over the long run to understand the financial implications.

    Buying a single stock is really no different than placing a bet on Red
    They are VERY different.

    placing a bet on red has a negative EV - Guaranteed.
    Buying a single stock isnt diversified by any means - but it is not a guaranteed negative EV.
    That alone makes them night and day to me.

    Within 50 years, every existing DVC contract will be worth 0. Disney stock could be as well, who knows, but I doubt it.

    But if people want to view DVC as an investment, they are more than free to do so.

    Eventually, the current patterns you talk about are going to falter.
    My sister bought BLT for < 100 per point and can now sell for about 140 (in 5 or 6 years) DVC contracts can not continue to go up 40% every 5 years. (
     

    jerseyduke

    Home is just where you stay when not at WDW
    Joined
    Jan 19, 2013
    Except you need to realize how much you could have rented your points for.

    On the flip side if you were going to Disney each year still how much stock would you have taken our to pay for the trip?

    I mean its fun to think about but I don't think you can make a statement about the future from it. I would suspect you would have more money from DVC right now if you had bought and only rented it out and looked to sell it. I mean each year right now you would be making $7-$10/point which is way more than any dividend per share (although never looked at Disney so correct me if I am wrong).
    the profit from point rental does exceed dividend yields.
    Inceease in principal is another thing. Anc DVC has a GUARANTEED date that it will be worthless.

    If you want to get into the rental business, you can also do it with a house, which will likely appreciate and may provide tax benefits as well.
     

    CanadaDisney05

    DIS Veteran
    Joined
    Mar 20, 2017
    Within 50 years, every existing DVC contract will be worth 0. Disney stock could be as well, who knows, but I doubt it.

    But if people want to view DVC as an investment, they are more than free to do so.

    Eventually, the current patterns you talk about are going to falter.
    My sister bought BLT for < 100 per point and can now sell for about 140 (in 5 or 6 years) DVC contracts can not continue to go up 40% every 5 years. (
    I was really referring to the projected "savings" of DVC (cash rate vs cost of DVC) more so than any appreciation on the real estate interest. In the short term, the appreciation on DVC is comparable to that of a stock (basically a gamble), but like you said, in the long run DVC is guaranteed to be worth zero.
     

    Brianstl

    DIS Veteran
    Joined
    Sep 8, 2019
    DVC is a time share. There is nothing that magically separates them from other time shares. DVC has a distinct location advantage over many time shares, but that isn't enough to expect DVC resale prices to remain so much stronger than their peers. This is especially true when you consider the amount of the product DVC continues to add to the market.
     

    sethschroeder

    DIS Veteran
    Joined
    Feb 24, 2013
    DVC is a time share. There is nothing that magically separates them from other time shares. DVC has a distinct location advantage over many time shares, but that isn't enough to expect DVC resale prices to remain so much stronger than their peers. This is especially true when you consider the amount of the product DVC continues to add to the market.
    Don't put money in as investment. That being said it will always remain way stronger than any other timeshare on the market. The difference is that a normal timeshare is competing with hotels, airbnb, and a wide area of locations (is the beach here that much better than the beach 5 miles away?). DVC is really competing with the cash side of the WDW hotels which are always going to be drastically more than just your MFs.

    Even in the last few years before a contract expires you will get a good amount back.

    The absolute cheapest BWV (studio std) room was $511 rack rate (mid Jan to mid Feb). Accounting for a possible 30% discount that is $357 plus tax which comes out to roughly $400 a night. Even if we take the high side (excluding Christmas/Easter) of 108 points for a week that is an average of 15.4/night or $25.97/point. Remove the maintenance fees of $7.37 next year you are left with $18.60/point. Now for the hoops of DVC vs direct booking take another 40% off. In the end the "floor" for even a single year of usage is $11.16/point.

    By the way its $17.70/point when accounting for the points period of that rack rate (which was primarily adventure season). This is not even accounting for the drastic difference in hotel rates we will see 20 years from now.
     

    jerseyduke

    Home is just where you stay when not at WDW
    Joined
    Jan 19, 2013
    DVC is a time share. There is nothing that magically separates them from other time shares. DVC has a distinct location advantage over many time shares, but that isn't enough to expect DVC resale prices to remain so much stronger than their peers. This is especially true when you consider the amount of the product DVC continues to add to the market.
    Location, Location, Location.
    Many time shares people will give away if you take over the dues.
    Not saying DVC is an investment, but it is a way better product than other time shares.

    There are nicer hotel rooms to be had within miles of WDW at every category. Heck Bonnet creek is basically on Disney. Yet Disney gets that premium for their rooms because its what people want.
    And there are some very nice accommodations at Bonnet Creek, but they arent Disney accomodations
     

    Heather07438

    WDW Apprentice
    Joined
    Oct 20, 2015
    That thought popped into mind when it hit me how much Im spending to purchase DVC. I am clueless when it comes to day trading and buying stocks and let my expert retirement lady handle all of that stock stuff. And if I asked her id bet dollars to donuts that shed say buy the stocks.

    The way I see it I will save thousands on DW trips buying DVC but I cant help but wonder about the stocks.
    This thought crossed my mind about 2 weeks ago. Not everybody needs to think about it this way but doesn't mean it's irrational because "DVC is not an investment".

    We're coming into extra money this year. What can/should we do with it? Personally I'd feel irresponsible not comparing scenarios and considering the pros/cons of different choices. While DVC is not a financial investment, it is an investment in our future experience. Would I be happier becoming part of the DVC community, or having more expendable cash during retirement? What are the odds of each? There's much thought to invest here before committing.
     

    Sandisw

    Moderator
    Moderator
    Joined
    Nov 15, 2008
    This thought crossed my mind about 2 weeks ago. Not everybody needs to think about it this way but doesn't mean it's irrational because "DVC is not an investment".

    We're coming into extra money this year. What can/should we do with it? Personally I'd feel irresponsible not comparing scenarios and considering the pros/cons of different choices. While DVC is not a financial investment, it is an investment in our future experience. Would I be happier becoming part of the DVC community, or having more expendable cash during retirement? What are the odds of each? There's much thought to invest here before committing.
    Sharing more of why this may have popped into your head makes it more understandable to me,

    Do you intend to still visit Disney regularly if you choose DIS stock?

    if the answer is no, then i think it would make more sense to go with the stock,

    If you are going to plan visiting Disney, regsrdless, then I’d look at DVC against the cash stays and decide if it makes sense for you to be an owner, vs. a cash guest,..whether that means booking through CRO or renting DVC reservations from an owner,

    Good luck!
     

    jerseyduke

    Home is just where you stay when not at WDW
    Joined
    Jan 19, 2013
    Obviously one does not have to choose Disney Stock vs, a DVC membership, there are many stocks or funds.

    Of course you can/should consider DVC an investment in your enjoyment of life - otherwise it would not exist as an entity.

    You could also consider buying a rental house in the immediate area and renting it out when you don't use it. Many people regard vacation rentals as one of the best investments going. (Now they are so easy to rent out) Plus its an appreciating asset that doesn't disappear within 50 years. Unless of course Florida is underwater. If I weren't so hung up with staying on property, I would strongly consider this route myself.
     

    ELMC

    DIS Veteran
    DVC Gold
    Joined
    Jul 4, 2011
    I think people got hung up on the investment aspect of DVC or lack thereof and might have missed the bigger point. Regardless of labels, I think the idea was to compare the financial implications of both potential purchases. The stock is a likely appreciating asset that will give you almost no joy whatsoever, aside from the joy that comes from seeing a number on a screen grow larger over time (hopefully). DVC is a lifestyle choice. It will likely improve your vacations and your happiness. Financially speaking it is a cost-mitigation vehicle, or at least it was in its original design, but I don't want to go down that road here. Let's just say I agree with the previous posters who cite the unrepeatability of some historical DVC gains. I will say that the cost mitigation still may exist, but it is not as substantial as it once was.

    That said, there have been a few instances where people have done very well "day trading" DVC and have outperformed the DOW, Disney Stock, and stocks in general. It's fraught with risk and uncertainty and I would not recommend it, but it can be done.

    Your financial advisor is likely not going to recommend DVC. But you don't have to follow her advice. You also don't have to follow the advice of a bunch of biased strangers on a Disney chat forum. :)
     

    kboo

    DIS Veteran
    Joined
    Mar 10, 2014
    You could also consider buying a rental house in the immediate area and renting it out when you don't use it. Many people regard vacation rentals as one of the best investments going. (Now they are so easy to rent out) Plus its an appreciating asset that doesn't disappear within 50 years. Unless of course Florida is underwater. If I weren't so hung up with staying on property, I would strongly consider this route myself.
    I have friends who live in the Northeast who did this years ago, when their kids were young, thinking that they would use it to go to WDW and Universal when their kids were young (which they did, now both kids are in college). I think they found the hassle of renting and maintaining and being a landlord and property manager from afar was not worth the headache.

    I will add that I have done this in the past, both for long term and vacation rental property, and did not feel that it was worth the hassle. And I didn't even have any of the nightmare scenarios you read about - nobody trashed the place, everything worked, we got along fine with the tenants. But things break/run down, and even minor issues are hard to deal with if you're not nearby. (e.g. Renter can't connect to the internet - are they using the right password and network, is the router down, or is there an outage?)
     

    CanadaDisney05

    DIS Veteran
    Joined
    Mar 20, 2017
    I think people got hung up on the investment aspect of DVC or lack thereof and might have missed the bigger point. Regardless of labels, I think the idea was to compare the financial implications of both potential purchases. The stock is a likely appreciating asset that will give you almost no joy whatsoever, aside from the joy that comes from seeing a number on a screen grow larger over time (hopefully). DVC is a lifestyle choice. It will likely improve your vacations and your happiness. Financially speaking it is a cost-mitigation vehicle, or at least it was in its original design, but I don't want to go down that road here. Let's just say I agree with the previous posters who cite the unrepeatability of some historical DVC gains. I will say that the cost mitigation still may exist, but it is not as substantial as it once was.

    That said, there have been a few instances where people have done very well "day trading" DVC and have outperformed the DOW, Disney Stock, and stocks in general. It's fraught with risk and uncertainty and I would not recommend it, but it can be done.

    Your financial advisor is likely not going to recommend DVC. But you don't have to follow her advice. You also don't have to follow the advice of a bunch of biased strangers on a Disney chat forum. :)
    I'm going to take this and try and rephrase it slightly.

    Buying DVC is a cost-mitigation vehicle. The whole point of DVC is to gain access to a lower cost per night than a cash reservation on very specific hotel rooms. Once you decide that you want the vacation lifestyle that DVC provides, the next step is to understand the financial implications. How much are you truly saving, and are there alternative methods to get access to the same thing? In my opinion, there are several different choices that essentially get you the same thing (very slight qualitative differences between them).

    1) Buy DVC points
    2) Rent DVC points
    3) Cash reservations
    4) Invest your cash (DVC purchase price + future maintenance fees) in a liquid investment (mutual funds, ETF's, or individual stocks such as DIS, etc....) and draw down the principle and gains to cover cash reservations or DVC rentals.

    I believe it is a worthwhile exercise to do long term projections using reasonable assumptions, and compare the results among these alternatives. Always keep in mind that each option has it's own set of risks that need to be factored in as well. For example, purchasing DVC means locking in your cash. It's a non-liquid investment. Renting DVC points means less long term risk because your cash is free, but more short term risk because you are not in control of your reservations. Investing has it's own inherit risks. Cash reservations has the risk of "Disney inflation" far exceeding your projections and making this vacation lifestyle you love become unaffordable.

    So yes, there is a scenario where buying Disney stock (or really any other investment) can provide a better outcome than DVC. But what kind of rate of return would you need in order to yield the same results? What level of risk are you willing to take?
     

    skier_pete

    DIsney-holics Anon
    Joined
    Aug 17, 2006
    Holy cow - you better never think of buying DVC as an investment. An economic crisis could lead to resale prices plummeting 50% and a lack of renters interested in renting your points. Admittedly the same thing could cause the stock to go down, but I would put my money on the stock over DVC.

    In addition the value of your DVC property is destined to approach ZERO by the end of your contract, so don't ever think the value is going to keep going up.
     

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