First-time DVC Purchase -- Resale

[CanadaDisney05]

Based on your theory you should refinance every time you can do it for no cost and even remove equity from the house every chance you get. Is there not risk that is associated with that?

Of course there is an element of risk associated with it. Anytime you invest in anything, there is an element of risk. However, you are mathematically correct. This is what a lot of investors do.

The big difference here, is that we are not talking about the same kind of numbers. A typical DVC contract is maybe 15 to 30K. An average home in my city is probably around 650K. So the element of risk is a fraction.

Also if you are doing it in lets say January this year you are now actually negative to where you were. Yes the market likely will rebound over time but it seems like a bad play to take on debt of a timeshare to put that money in the stock market.

This isn't a personal finance board so I won't go too much into it. The stock market fluctuates over the short term. Over the long term, it has historically gone up at a pretty consistent long term average rate around 8-10% per year. If you are investing over a period of less than 5 years, I would never recommend this strategy, because of the short term fluctuations. If you are investing 5+ years (and preferably 10+years), this strategy makes more sense.

Of course, even investing over the long term has an element of risk. The aliens could take over and turn our world into one single dictatorship. In that case, you would have been better off paying cash mathematically. Not sure what that really means though.

However, there is also a level of security in not tying up your liquid cash into a timeshare. The current situation can be a pretty good example. If you were laid off during this whole crisis and had just paid cash for DVC, that cash is not available if you need to pay for food or pay your mortgage. If you had taken a loan and invested your cash, you could have pulled your cash out. Yes, you may have pulled it out at a loss, but if the decision is feeding your family vs paying some interest in a timeshare, I'd rather feed my family. FWIW, a well funded emergency fund would allow you to not pull your investment out at a loss unless things got really dire.

It gets me thinking under your plan you should actually take on the 18-24 month interest free credit card debt whenever possible and invest that as well.

Just seems to risky but I haven't ever really looked in to it.

The risk here is that investing in the market historically provided consistent returns if you keep your money invested over the long terms (atleast 5 years, but preferably closer to 10 years). 18-24 month interest free credit card promotions are too short. The fluctuations of the market could be really costly.