DVC Survey asks about pre-paying for annual dues for future years

[Greysword]

If the issue truely is the need for cash, I think DVC could earn quite a bit by partnering with their Theme Park division to sell "life of contract" aTheme Park tickets to WDW. I would consider paying $5,000 per person in our household (same restrictions as APs) for unlimited park hoppers.

Expected Caveats:
- Would need to be directly linked to my ownership in a resort within my portfolio, which dictates expiration dates

- If I sold my interest in that specific contract, the tickets would expire (no refunds nor transferability).

- Good for admission to any of the WDW theme parks, like a park hopper.

- At $5,000 per ticket, ticket prices would essenially be $100/year for a new resort, and the agregate would increase depending on remaining time in the linked resort.

Not only would this provide an influx of cash for two divisions of WDW, it would be a great selling point for future DVC sales. Actual revenue would likely be recognized annually over the term of the corresponding resort, which could be a boon for their income statement.

Just a thought.

 

[sweetdana]

If it garenteed no 3-5% increase every year for the life of my contract. I would do it in a minute.
The most unsure part about DVC and all time shares are the MF. What will they be next yr.. or 5 yrs or 10 yrs from now. Will I be able to afford it?

I would do it to hedge inflation. I have the funds now sitting around at 1-2-3% interest. I would love to never have to sell it no matter what happens in the future.. Free trip to DW just pay travel expenses and tickets if wanted. NO questions, with the time value of money being so unclear. Not only would I do it. I would buy more points. REALLY! (part of the reason i dont have more is I do not know what the MF are in 2015, 2020, 2035. ect.)
I would immed. do it and buy an extra 125 points at BC!

 

[Caren]

If the issue truely is the need for cash, I think DVC could earn quite a bit by partnering with their Theme Park division to sell "life of contract" aTheme Park tickets to WDW. I would consider paying $5,000 per person in our household (same restrictions as APs) for unlimited park hoppers.

Expected Caveats:
- Would need to be directly linked to my ownership in a resort within my portfolio, which dictates expiration dates

- If I sold my interest in that specific contract, the tickets would expire (no refunds nor transferability).

- Good for admission to any of the WDW theme parks, like a park hopper.

- At $5,000 per ticket, ticket prices would essenially be $100/year for a new resort, and the agregate would increase depending on remaining time in the linked resort.

Not only would this provide an influx of cash for two divisions of WDW, it would be a great selling point for future DVC sales. Actual revenue would likely be recognized annually over the term of the corresponding resort, which could be a boon for their income statement.

Just a thought.

I like that idea, but if the ticket is tied to a specific person rather than a DVC contract, they'd have to price it according to age--an 85-year-old shouldn't pay the same price as a 35-year-old.

 

[nunzia]

An index fund invested in the S&P 500 would do it. My use of the 5% figure was based on the example of a PP comparing dues over a 32 year period - a long term view. If you even look at 15 year time periods, 5% return is easy.

In the last 60 years, the S&P 500 has returned greater that 5% per year gains in every single 15 year period except the one that ended in 1974. Even 2008, with its troubles still had a 15 year return of over 6% per year. And 2009 was back up to 8% average return.

If DVC is planning to offer dues prepayment in 5 year increments, the long term return on money is what is needed to do the right financial analysis.

Well, we shall see. I've had real good periods and real bad periods with rate of return and maybe it does all average out, but lately I'm not so sure that's going to continue..It always just depends on where you are in that cycle when you need to start cashing out..but yes, I would guess a modest index fund would do OK..but still never a sure thing.

 

[bom_noite]

What I would not mind doing:

Pay my 2011 Dues. Then, begin paying my 2012 dues monthly starting in Jan 2011. Then it becomes like a utility payment - just pay it monthly via Auto-Pay.

I might lose $14 or $20 a year in interest - but - it is better then getting zapped in January after X-mas expenses.

 

[Mickey'sApprentice]

But dues can only rise a certain percentage each year. Seems like it would be better to pay them later with inflationary dollars that are worth less than today's.

Dues can rise 15% per year. If you think about compounding...15% per year, for several years could be an enormous amount. The formula is the AMT(1+i) to the nth power. I also agree in that I don't see dues rising 15% year over year.

a) "Economists" predicting high inflation are generally partisan yahoos rather than economists. Actual economists generally project very modest inflation for the foreseeable future, with a small risk of *de*flation over the next couple of years. Of course you're right that it would be particularly popular with seniors now, much like the cynically marketed gold "investment" products are particularly popular with seniors now.

b) As already posted, given % caps on dues increases (isn't it 5% or 10% in a given year?), pre-paying may not be a good hedge in an inflationary environment, depending on the level of inflation.

As an ECONOMIST, I will say that there are economists of every stripe and that you don't have to look far to find an economist to validate a particular opinion.

The view that we will have hyper-inflation in the near future comes from three sources. 1) History has shown that when governments print lots of money, it leads to hyper-inflation. The Weimar Republic of Germany in the 1920s is the example that comes to mind. Deficit spending is commonly known as "printing money." 2) The concept of Supply and Demand is used to analyze the money supply. When there are many dollars in the market, then each dollar becomes less valuable, meaning that it takes more dollars to purchase goods and services. 3) A stimulus of funds in the economy has a multiplier effect as the money changes hands in the economy it grows, which further expands the impact of the stimulus added to the economy.

Real economists and not just partisan yahoos are aware of these conditions.

Other economists, such as the well respected Ben Bernanke (Fed Chairman)have taken the deflationary housing and stock markets into account as well as the shrinking state budgets to forecast that we will not have a period of hyper-inflation. Bernanke's area of expertise is the Great Depression.

I am not saying that Bernanke or you are wrong. I'm just saying that there are as many economists that disagree with Bernanke as there are that agree.

Time will tell.