Better investment DVC or Disney stock?

[CanadaDisney05]

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.

On gut feeling, if we're specifically talking about Disney stock, I'd say I agree with you. But that being said, if we're just talking a theoretical random stock, I'd say the gamble is nearly identical...

The only material difference between the two options is that DVC is guaranteed to be zero at the end of the contract, so it's market value is already fighting an uphill battle by its very nature

 

[Jenniebee]

A timeshare/vacationing should not be thought of as an investment. No financial person would ever advise this. Ideally, in your budget you have a bucket for discretionary spending, which is where vacations and recreation will fall, and a separate bucket for investing, whether that be stocks, IRA, 401K, etc.

 

[CanadaDisney05]

A timeshare/vacationing should not be thought of as an investment. No financial person would ever advise this. Ideally, in your budget you have a bucket for discretionary spending, which is where vacations and recreation will fall, and a separate bucket for investing, whether that be stocks, IRA, 401K, etc.

I've said this a few times before here, but here it goes again. FWIW, I am a "financial person".

Money itself doesn't have any true value. It's a piece of paper, or a number on a screen. The value of money is the goods and services it can be exchanged for. A well designed financial plan should be a strategy to allow you to purchase the goods and services that you need. If that has been taken care of, the next step is to come up with a strategy to purchase the goods and services you want. These needs and wants should be broken up into Short, Medium, and Long Term goals. As long as you are comfortable with your strategy to satisfy these goals, the rest is discretionary spending.

IMO, indexed ETFs are an investment. They are a tool used in my long term strategy (put X dollars into an ETF every paycheque), which is aligned with my long term goal of becoming financially independent (no need to work to support my lifestyle) by the age of 55. DVC is no different. DVC is a tool used to reach my long term goal of staying at a Deluxe Disney Resort every year for the next 35 years that fits within my budget constraints.

So IMO, DVC is an investment by it's very nature. Having said that, notice that I said that it is a tool used to reach my long term goal of staying at a Disney Resort every year. I could have said that my goal was to purchase DVC and then sell it in 10 years for 40% more than I paid for it. That too would be an investment, however it would be a poor financial strategy because it is not aligned to any specific goal. What would I do with that money in 10 years? Okay, lets change it up a bit and say that my goal is to sell it at a 40% gain to pay for my kid's education. Well now I have an investment that is aligned to a long term goal. This is really no different than my ETF retirement example. In both scenarios, I am taking money out of my budget today, and hoping that after a certain length of time I will see a specific return so that I can achieve my goal. If I were to buy a Disney stock today with the long term goal of selling it in 10 years at a 40% gain to cover my kids education, it would be the same scenario. Anyway you look at it, all three are investments.

Having said all of that, I would not recommend DVC as an investment if your goal is to sell it at a profit down the road, and you have no other means to achieve your long term goal. It is simply too risky of an option. I would also say the same thing about investing in DIS stock. Anytime you buy a single asset, there is a high level of risk. Anything could happen. This is why financial experts always suggest broad market investments. It reduces long term risk, while providing an acceptable, and easy to define rate of return that makes strategies easier to build. If you know what your return will be, you know how much needs to be invested.

 

[Jenniebee]

Can you buy DVC and make money on it? Possibly. But you can also say the same about popcorn buckets and pins, sounds silly, but at the end of the day DVC is not very different than those things.

The difference with a stock is you have a board working very hard to make sure that a return on this item is made. With DVC, you could almost say the opposite.

 

[DianeW]

They are two entirely different things. Apples...oranges.

I own both...300 DVC points, and 100 shares of Disney stock.

Financially, as of today, the return on my Disney stock investment is over 50%, but I'm not selling it, so that value is only on paper.

As far as my DVC points go, I purchased resale, saving almost $17,000 over what Disney would have charged me by buying direct, and I can resell my DVC contract for about $10 more per point than I purchased it for, if I sold it today. Also not selling it, so again...only on paper.

Now...emotionally speaking, my DVC has been the MUCH better investment. We have had so many wonderful times, happy memories, fun, love, pixie dust, and Dole Whips from our DVC ownership. My Disney stock has never given me that in return. Do I love seeing the stock ticker show a much higher price than what I purchased the stock for? Yes, of course. But my stock hasn't once given me a breakfast of Mickey waffles or a fireworks spectacular at Top of the World Lounge, or a hug from the Mouse.

So, I guess what I'm trying to say is what are you looking for? If you are only interested in a financial investment, then the stock shares are the way to go. If you want fun, memories, happy times, and pixie dust, DVC is where it's at. I have never once regretted my DVC purchase. It is the single best emotional investment I've ever made, hands down. And I have the side benefit of knowing I could make a little money if I ever wanted to sell my contract. But again, my Disney stocks don't come with all the happiness my DVC has provided for me and my family. If I could only choose one.....it's DVC.

 

[CanadaDisney05]

The difference with a stock is you have a board working very hard to make sure that a return on this item is made. With DVC,

Both are speculative investments. Which one will grow more over the next 1, 5, or 10 years is really just yours or my own opinion. (Not including the big factor on DVC that it will by very definition be worth zero at the end of the contract). Neither comes with any of the safety that a diversified portfolio of assets would offer.

you could almost say the opposite.

 

[crisi]

With each, it depends on when you bought and when you sell it. The Disney stock I bought in the 1980s. That's done pretty well - bought at about $3 a share (its split a few times, I paid more per share for it back then - that's adjusted for splits), worth about $148. And they are tied to each other - if Disney the corporation has major issues - if there is a terrorist attack or a weather disaster - your DVC value will suffer.

The stock sits there though - DVC is something you get value from using. I don't think its wise to look at it as a financial investment though in the same way you look at stock.

 

[rg35]

LOL DVC is not an investment

 

[CanadaDisney05]

LOL DVC is not an investment

Just saying that doesn't make it true though..... Anything can be an investment if you believe it's value will go up. But just because you believe something will happen doesn't mean it will.

 

[RaymOOOnd]

Something which costs you hundreds or thousands per year in dues and then is ultimately worth nothing? If DVC is an investment it's certainly an odd one.

 

[MJ NH]

DVC is an investment in family, IMO

 

[CanadaDisney05]

Something which costs you hundreds or thousands per year in dues and then is ultimately worth nothing? If DVC is an investment it's certainly an odd one.

It's "worth" is the positive cash flow on your hotel expenses.

 

[Fred M]

A timeshare is not an investment. Stock is.

DVC is not an investment.

Thank you, thank you, thank you!

That's the biggest misconception folks have regarding DVC. For DVC, it begins and ends with prepaying your lodging.

 

[Fred M]

DVC is an investment in family, IMO

Absolutely agree with that one!

 

[mentos]

lol DVC is definitely not an investment, it’s a lease with terribly high fees and limited market to reassign. DIS has been very good to me.

however, if you like to speculate, every now and then you might get lucky (my VGC contract went from $150/pt to $200/pt on paper).

 

[Disneypapa]

I am one of the fortunate ones. I actually own a 100 shares of DIS (bought at about $35 as a novelty) and it is now worth $145 per share. I also purchased 200 points at OKW and have enjoyed many WDW vacations in the past 15 years. So I have benefited from both. I agree with other posters, DVC is not an investment.

 

[Jelly563]

Whatever your amount is..... cut it in half. Spend one half on DVC & the other half on whatever stock u fancy..... Then, compare and contrast. I assure you, u will be very fond of your DVC contract (just don't buy SSR).

 

[The Prophet]

I own both and all I can say is that my kids went to school on a Disney scholarship.
Let me explain, when both my kids were born, I bought a few hundred shares of DIS for each kid.
I let it sit for many years, re-investing all the dividends. When it was time to pay for college, those shares were worth quite a bit -- enough to pay for 4 years of school without taking out any loans

So for me it worked out

The Prophet

 

[mentos]

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

If you do the proper research, it’s not just left to chance. But most people don’t, so having a diversified/low cost ETF is what I d/what I advocate others do.

picking stocks is a loser’s game, eventually you have reversion to the mean, AND you have to pay for active management fees. Yuck.

 

[mentos]

I got bored and decided to compare my DVC contract vs an equivalent bucket of money in an S&P 500 fund.

S&P 500 fund (January 2017 to December 2019)
Initial = $15,000
Today = $21,735

VGC contract (same time frame)
Purchased for $150/pt ($15,000)
Currently worth ~$200/pt
Subtract 3yrs of dues ($6/pt avg)
Subtract 8.5% commission selling
Net result = $16,500

3 years on contract gets me about 6 nights/yr, so 18 nights roughly cost me $290.83/night. The average retail rate for a stay at GCH is $500-$700/night. Realistically, had I not stayed under VGC, I would have stayed at a similar 4* hotel for $150-$300/night.

so from an asset/liquidity perspective, it’s a TERRIBLE investment...but from a happiness and convenience perspective, it’s a big win, at least over these three years.