Help me with the math

[Sandisw]

Oh I don't think anyone is saying it's numbers only. You need to realize in 2019 vs 1995 it's a drastically different decision.



Ummmm actually it makes perfect sense. If DVC cost < hotel stay then it makes sense. You can add in other things to the equation if you want or choose.

I mean I can buy DVC shirts, magic band, hats, and mugs without owning DVC. So I can act like I am a member and actually have more choices when going to book my hotel. Pay a little more for an AP, get a Disney Visa, TIW and you basically have all the benefits covered except for extremely limited time and quantity special events.

I think the point was that going to Disney in and of itself is not a wise financial investment if your goal is making as much money as you can.

Lets face it, one can vacation far cheaper or not vacation at all. DVC won’t save any money if you compare to the offsite hotels.

DVC can certainly save you money when compared to deluxe hotels over the long run. And for people who want to vacation at WDW, year after year, it is a good way to cut costs for those trips. Its why I own 825 points because I want to spend time there and felt what it cost me to do it this way was worth it.

But we are talking purely money being used for fun and enjoyment vs, money being used to investment income.

From a financial standpoint, though, the money I used to pay for it, would have earned me more if I had never spent it and didn’t visit. I think that was the point of that Post

 

[CanadaDisney05]

From a financial standpoint, though, the money I used to pay for it, would have earned me more if I had never spent it and didn’t visit. I think that was the point of that Post

This is not aimed directly at you, or the previous poster, but more at the general sentiment that continuously gets repeated....

I think it goes without saying that spending money on anything that does not accumulate wealth itself, by default reduces wealth, and therefore works in opposition to a goal of "making as much money as you can".

I can almost guarantee that anyone here who is discussing the financial implications of buying DVC, are not going into this with the assumption that spending possibly hundreds of thousands of dollars at Walt Disney World over a life time is going to make us rich.

 

[sethschroeder]

But we are talking purely money being used for fun and enjoyment vs, money being used to investment income.

Which maybe they were trying to say. Its a pointless discussion though as that is a whole other discussion. This is about how you are spending on vacations not if you should.

Which is back to my point of if DVC lowers the amount you need to spend on the vacations you will be taking it makes sense.

I mean I could go to the extreme and honestly say 99% of every day expenses are wasteful. Do you ride share (even if you had to leave for work 3 hours early)? Buy that steak at the grocery store? Get new clothes? Ever drink coffee?

The same poster stated "If you want to buy into DVC and have the means, then go ahead. You don't need a spreadsheet to tell you it's OK to spend your own money on something you want."

So no I completely disagree with the poster and where my comment comes from.

 

[Stan Chen]

Your adding outside money into a closed system on one side of the equation only, which is not a fair comparison.

Example)

Option 1) Spend 100K on DVC over 40 years (Purchase Price + Maintenance Fees)
Option 2) Invest 100K in a broad market ETF for 40 years. Then pay out of pocket for Disney trips using 100K from your budget.

Option 1 = 100K total investment
Option 2 = 200K total investment.

Option 1 would have to be that much better to end up with more money at the end of the timeline because it is starting with half the investment.

While I understand the sentiment, this is probably not how it would work out in real life. No, you are probably not going to take the money you would have invested in DVC and create some sort of fund and withdraw from it annually to cover DVC. In reality, what would likely happen is, you would take that upfront lump sum and invest it. Since your investments are now that much further ahead, over the long run, you will reduce the amount you are adding in, which would then be redirected towards your normal budget (which includes Disney hotel costs). It's basically the same thing in an indirect method.

Fair point. Interestingly, the cutover is pretty much the same on # of trips if you include investment gains on all dollars flowing through, including maintenance and rentals (plus/minus when you toggle purchase price or investment gain %). But the long-term delta gets further skewed in favor of buying DVC because you keep driving the rental dollars into the investment portfolio. Of course, we are probably not quite disciplined enough to invest each of those dollars, but your point remains.

 

[Sandisw]

Which maybe they were trying to say. Its a pointless discussion though as that is a whole other discussion. This is about how you are spending on vacations not if you should.

Which is back to my point of if DVC lowers the amount you need to spend on the vacations you will be taking it makes sense.

I mean I could go to the extreme and honestly say 99% of every day expenses are wasteful. Do you ride share (even if you had to leave for work 3 hours early)? Buy that steak at the grocery store? Get new clothes? Ever drink coffee?

The same poster stated "If you want to buy into DVC and have the means, then go ahead. You don't need a spreadsheet to tell you it's OK to spend your own money on something you want."

So no I completely disagree with the poster and where my comment comes from.

Well, you are right in that this is why everyone has to look at things in their own way. I agree with what was said because each has to go into this and evaluate it the way they want,

For me, I do not understand people worrying about lost investment incomes, value of money, etc. to analyze a DVC purchase to death. It is really about what it costs you to own vs, what you’d spend on vacations anyway.

Having said that, it’s not my money, it’s theirs and if they feel those financial aspects are important in making the decision, then more power to them.

DVC offers more than just financial. When we bought, our DVC costs were not any less than what it would cost to stat at the Contemporary. But, what we would be doing, for our yearly 5 night trip, was getting a 1 bedroom for the same price.

Too many factors, And yes, all the examples you mention, in the strictest sense, don’t make financial sense, when that is defined as whether It is the least expensive way. But life is about more than that.

 

[lovin'fl]

Without having done a deep dive in this thread I will just point out that SIL and BIL started going to WDW years ago and stayed at Poly every time with the dining plan. Back then, early 2000s, they spent like $8K for that. They have 3 kids and knew they eventually needed 2 rooms. So buying DVC and being able to book a 2BR is a better deal. Numbers wise and also there is the emotional aspect. We too bought in because we have 3 kids and needed more room than a single regular hotel room (wanted that master bedroom with a door).

Now I did recently do a rough calculation of what each point, we own, is valued at. To see what the true cost is to stay for the trips we do. We have 450 points and 3 home resorts (bought in many small contracts over several years). I came up with about $5102 based on 2020 dues and estimating price per point buy in cost. My 450 points are about $5102 next year ($3537 of that is just the annual dues). That is a lot. The numbers would be smaller had I not bought a few direct contracts. The first 5 contracts we bought, via resale back in 2006-2013, would be a lot lower (but we resold 2 of those though). But then adding on BWV direct in recent years really put that price per point up there. So if you buy resale and/or buy a resort with longer life...that will stretch the cost out and make it lower. Still, I think I come out cheaper than booking non-DVC Disney rooms at cash rate. And we get a master bedroom, kitchen, laundry....and have bulk of points at BWV where we can walk to 2 parks.

 

[lovin'fl]

Oh, and I always say that if one plans to go to WDW every other year, at least, and do not stay in value resorts then DVC is a good way to go. If someone wants to go every 3 years or longer...and they are fine staying in a value....DVC is not best for them. And if someone cannot plan ahead, like several months out, then DVC is not best either as it requires booking some things at 11 months and most everything by 7 months....maybe 6 months but definitely can't just decide 2-3 months out.

 

[CanadaDisney05]

For me, I do not understand people worrying about lost investment incomes, value of money, etc. to analyze a DVC purchase to death. It is really about what it costs you to own vs, what you’d spend on vacations anyway.

You are right. Everyone needs to evaluate it in their own way. But just for your own information, I can explain the justification of why lost investment income carries weight for those of us who choose to evaluate it this way.

The common misconception I see here is, "DVC comes out of my vacation budget, not my investment budget, so it doesn't really make sense to worry about lost investment income". The fact is, DVC is not the same as paying for a vacation out of pocket. It requires a large upfront cost + regular installment payments. When evaluating DVC, we are generally comparing two or three scenarios against each other. 1) Purchasing DVC, 2) Paying cash rates out of pocket, 3) Renting DVC Points. Lets say you saved up 30K to make a DVC purchase, but at the final stages, you decided to move forward with option 2 or 3. You wouldn't (atleast you shouldn't) just keep that 30K in your chequing account, and draw down on it to subsidize for your future vacations. You would invest it in some sort of appreciating, liquid, vehicle, and then draw down on it to pay for your vacations. This could be a mutual fund, individual stocks, broad market ETF, or even something as simple as high interest savings account which has virtually no risk and can be withdrawn at anytime. Which one would be based on your own personal risk tolerance.

The point being, in either option 2 or 3, you will atleast earn some amount of extra income on your upfront purchase. If your do not factor that in, your adding personal bias into the equation. Your essentially tailoring the formula to give you the result you want, rather than the correct result.

Having said all of that, don't worry too much. I've run the numbers. If you travel year over year, you would need to earn an incredible amount of investment income to offset the savings of DVC.

 

[Sandisw]

You are right. Everyone needs to evaluate it in their own way. But just for your own information, I can explain the justification of why lost investment income carries weight for those of us who choose to evaluate it this way.

The common misconception I see here is, "DVC comes out of my vacation budget, not my investment budget, so it doesn't really make sense to worry about lost investment income". The fact is, DVC is not the same as paying for a vacation out of pocket. It requires a large upfront cost + regular installment payments. When evaluating DVC, we are generally comparing two or three scenarios against each other. 1) Purchasing DVC, 2) Paying cash rates out of pocket, 3) Renting DVC Points. Lets say you saved up 30K to make a DVC purchase, but at the final stages, you decided to move forward with option 2 or 3. You wouldn't (atleast you shouldn't) just keep that 30K in your chequing account, and draw down on it to subsidize for your future vacations. You would invest it in some sort of appreciating, liquid, vehicle, and then draw down on it to pay for your vacations. This could be a mutual fund, individual stocks, broad market ETF, or even something as simple as high interest savings account which has virtually no risk and can be withdrawn at anytime. Which one would be based on your own personal risk tolerance.

The point being, in either option 2 or 3, you will atleast earn some amount of extra income on your upfront purchase. If your do not factor that in, your adding personal bias into the equation. Your essentially tailoring the formula to give you the result you want, rather than the correct result.

Having said all of that, don't worry too much. I've run the numbers. If you travel year over year, you would need to earn an incredible amount of investment income to offset the savings of DVC.

Thank you, So out of curiousity, when one uses this idea..vacation vs. investment because that is what I did...do you consider that once you take that initial money out that one would be putting back each year the money from the vacation budget no longer needed to cover rooms and so the loss decreases every year? Do you think people account t for that?

We took out the money, paid, but then each year, because the room part of our vacation was paid, that part of the vacation budget went back into savings. So, the vacation budget didn’t change, but instead we paid ourselves back for the initial DVC cost,

 

[CanadaDisney05]

Thank you, So out of curiousity, when one uses this idea..vacation vs. investment because that is what I did...do you consider that once you take that initial money out thst would be putting back in the vacation budget each year and so the loss decreases every year? Do you think people account t for that?

We took out the money, paid, but then each year, because the room part of our vacation was paid, that part of the vacation budget went back into savings. So, the vacation budget didn’t change, but instead we paid ourselves back for the initial DVC cost,

Your calculations should include the lost investment income during the period while you were paying yourself back.

Here is a very rough quick calculation of how I would do it with some made up numbers. There are other more correct ways of doing this using NPV formulas, but for this purpose I figured this way illustrates it better.

	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Purchase Price	-25,000
Maintenance Fees		-1,000	-1,040	-1,081.60	-1,124.86	-1,169.86
Hotel Costs		3,500	3,640	3,785.60	3,937.02	4,094.51
Savings		-2,500	-2,600	-2,704	-2,812.16	-2,924.65
Lost Investment Income		-1,125	-1,181.25	-1,110.31	-1,030.63	-941.55
Net Cash Flow		-1,125	-1,181.25	-1,110.31	-1,030.63	-941.55

Year	Annual Savings	Lost Investment Income (5%)	Balance
0	0	0	-25,000
1	2,500	-1,250 (25,000 * 0.05)	-23,750 (-25,000+2,500-1,250)
2	2,600	-1,187.50	-22,337.50
3	2,704	-1,116.88	-20,750.38
4	2,812.16	-1,037.52	-18,975.73
5	2,924.65	-948.79	-16,999.87

Using the numbers above, if you extend it out, after about 11 years you would have paid yourself back for the purchase price. If you continued to put the difference between hotel cost and cash flow into savings, you would now have positive investment income. After about 20 years, your positive investment income would outweigh your negative income. Again, these are completely fabricated numbers I made up off the top of my head.

 

[Sandisw]

Your calculations should include the lost investment income during the period while you were paying yourself back.

Here is a very rough quick calculation of how I would do it with some made up numbers. There are other more correct ways of doing this using NPV formulas, but for this purpose I figured this way illustrates it better.

	Year 0	Year 1	Year 2	Year 3	Year 4	Year 5
Purchase Price	-25,000
Maintenance Fees		-1,000	-1,040	-1,081.60	-1,124.86	-1,169.86
Hotel Costs		3,500	3,640	3,785.60	3,937.02	4,094.51
Savings		-2,500	-2,600	-2,704	-2,812.16	-2,924.65
Lost Investment Income		-1,125	-1,181.25	-1,110.31	-1,030.63	-941.55
Net Cash Flow		-1,125	-1,181.25	-1,110.31	-1,030.63	-941.55

Year	Annual Savings	Lost Investment Income (5%)	Balance
0	0	0	-25,000
1	2,500	-1,250 (25,000 * 0.05)	-23,750 (-25,000+2,500-1,250)
2	2,600	-1,187.50	-22,337.50
3	2,704	-1,116.88	-20,750.38
4	2,812.16	-1,037.52	-18,975.73
5	2,924.65	-948.79	-16,999.87

Using the numbers above, if you extend it out, after about 11 years you would have paid yourself back for the purchase price. If you continued to put the difference between hotel cost and cash flow into savings, you would now have positive investment income. After about 20 years, your positive investment income would outweigh your negative income. Again, these are completely fabricated numbers I made up off the top of my head.

Thank you for the detailed information,,.even if based on an example. It does help to understand how others might see iit, especially if they are concerned about that lost interest,

For us, it wasn’t a factor, but for those that want to know how it figures in, this type of chart helps a great deal!

 

[jerseyduke]

The money you spend on a nice dinner has no monetary ROI.
If money is your only barometer then you should be eating the cheapest meal possible that provides you with sufficient nutrition EVERY SINGLE MEAL of your life.
How many are doing this...Im thinking a very round number.

There is something to be said for enjoying your time on this rock.

 

[CanadaDisney05]

The money you spend on a nice dinner has no monetary ROI.
If money is your only barometer then you should be eating the cheapest meal possible that provides you with sufficient nutrition EVERY SINGLE MEAL of your life.
How many are doing this...Im thinking a very round number.

There is something to be said for enjoying your time on this rock.

In Economics there is something called Utility. Basically it's a fictional unit of measurement of "happiness" that something provides. A nice dinner provides more utility than a non-nice dinner.

DVC in itself does not provide additional utility over cash reservations. It's the same product with more restrictions. If you were 100% guaranteed that you can take 50 vacations using DVC, or 50 vacations with cash reservations, and that the DVC option would be 50% more expensive, would you purchase DVC? Probably not. Why pay more for the same product with less flexibility? We buy DVC because it is a cheaper way to take those 50 vacations than cash reservations, and in exchange for the lower price, we are willing to accept the limited flexibility.

It's similar to buying a $20,000 Costco membership. I'm not going to buy the membership just so I can tell people I belong to the Costco club. Unless I know I'm going to save more than $20,000, it just doesn't make sense. It takes maybe 10 - 15 minutes to do the math once or twice before you purchase. I personally sleep a lot better understanding the financial implications of major purchase like DVC instead of blindly believing everything that mouse tells me to believe.

 

[TikiRob]

I thought I put a lot of thought into getting a membership! I had several spreadsheets of cost per point at various resorts and ultimately came up with this: We can afford it and it will bring us joy.

 

[Moonlight Graham]

The money you spend on a nice dinner has no monetary ROI.
If money is your only barometer then you should be eating the cheapest meal possible that provides you with sufficient nutrition EVERY SINGLE MEAL of your life.
How many are doing this...Im thinking a very round number.

There is something to be said for enjoying your time on this rock.

This is a classic straw man argument. No one was suggesting that a DVC purchase should only be evaluated on the basis of ROI. I don’t even think anyone was suggesting that ROI was a meaningful way to look at a DVC purchase. For those who try to run some numbers before buying a DVC contract -- at least for us -- the question is not whether DVC is a good investment generally. My guess is that most people who take the time to look at the numbers would admit that purchasing a DVC contract is a terrible investment. In order for a DVC contract to make any sense as a purchase, you have to assume that you will be going to Disney regularly for the foreseeable future and that you will generally be staying in deluxe accommodations for those trips. If you are making those assumptions, you are already committing to giving tons of money to the mouse, which strikes me as an awful way to get rich.

Rather, the question we were trying to answer, given those assumptions, was whether it made sense to buy a DVC contract as opposed to doing something else with the money and continuing to come out of pocket every year for a hotel for our trips.

If we could have parked the money we used to buy a DVC contract in some alternative, relatively liquid investment which would have generated enough proceeds to pay for a DVC villa on an annual basis, we would have chosen that option every time. Because all things being equal, I’d rather continue to take our trips and have a non-timeshare asset when we decide we are done going to Disney than owning a timeshare. But it doesn’t take a particularly sophisticated model to confirm that you need to assume that you will generate unrealistically high annual returns on your hypothetical alternative investment to get the same benefit as you could from owning a DVC contract. And that is where we found the value in buying.

And, I may be wrong, but I think that was kind of the point of this thread -- just trying to get to the bottom of how some people model it out to break even.

I don’t have any expectation of our contract having any residual value if/when we decide to sell it. And I don’t think about the money we spent on it even a little bit, nor does the annual “savings" have any bearing on our budget. The purchase was never intended to be an investment in any respect. All we wanted to know when we bought was whether we could use that money to essentially get the same thing - a room every year at Disney - by investing in something other than a DVC contract. Given that we couldn’t, DVC made sense for us.

 

[Soap_1984]

I admire all those who actually look at DVC from a financial perspective, we never have. We have over 1300 points at 6 resorts, some direct and some resale and have probably spent around 100,000 on points and $10,000 a year on maintenance. I know we are lucky that we could buy for cash and didn’t miss the money. And that we can afford the maintenance fees. We go to DW at least once a year for 2 weeks and often a second time at Christmas for a week, we also go to aulani once a year for 10 days, and we often give a few days away to friends and family. Our investment guy told us long ago to never view this as an investment. If we like it, will use it and can afford it that’s the reason to buy, we have owned some points since 1998 where we got boardwalk for slightly over $50 a point and the last points we bought were last year when we sold two contracts, at AK and Wilderness, for a few thousand more than we bought them and purchased OKW resale for 100 a point because it has become our favorite resort at WDW.

We have an adult disabled daughter who still loves Disney and the characters and when we go we always bring her best friend. We might go to the parks for a day or two during a trip but we are more resort people, loving the pools and the ambiance. Our trust is set up so that after we are gone, her guardians will use the points to take her at least once a year. If we live long enough we might see some points expire and then we will need to decide if we want to extend or not.

We also do a Disney Cruise at least once a year but have never used points for that.

I figured out last year that during the past 24 month period we had used points for over 100 nights at Disney resorts, for us and friends, mostly in one bedrooms. Would we have done that if we were paying retail? No way, .
I’m not saying we are in any way financially astute about Disney but we are emotionally attached and that is what is important to us, at least for now.

Obviously you have the means to do this, so I am not going to question your aptitude, but no one is calling dvc an investment. There is a distinction between trying to save money vs trying to earn money (investment).

Analyzing numbers on this does not mean it is being viewed as an investment.

If you buy a car, will you not look at the numbers and factor that into your decision? You can have 100 points or 6,000 points, it really doesn't matter how many points you have.

To take this example to the extreme, say rack rates at vgf were $100/night and were not changing for the next 25 years. Also assume you never had an issue booking at any time using rack rates. If a vgf contract was $300 per point and the charts were the same as they are now, would you buy 1000 points at vgf?

Saying you would analyze this situation would not mean you are treating it like an investment. No one is planning on making money in dvc by looking at the numbers.

 

[Sandisw]

Obviously you have the means to do this, so I am not going to question your aptitude, but no one is calling dvc an investment. There is a distinction between trying to save money vs trying to earn money (investment).

Analyzing numbers on this does not mean it is being viewed as an investment.

If you buy a car, will you not look at the numbers and factor that into your decision? You can have 100 points or 6,000 points, it really doesn't matter how many points you have.

To take this example to the extreme, say rack rates at vgf were $100/night and were not changing for the next 25 years. Also assume you never had an issue booking at any time using rack rates. If a vgf contract was $300 per point and the charts were the same as they are now, would you buy 1000 points at vgf?

Saying you would analyze this situation would not mean you are treating it like an investment. No one is planning on making money in dvc by looking at the numbers.

While I agree with a lot of what you are saying, there are some who thought of it as an investment. I don’t begrudge them that. When I see people who look at ROI loss and resale value as part of their calculations, to me, they are trying to decide whether it makes financial sense vs keeping it as an investment.

Of course DVC is a large purchase and before one decides to spend the money to buy, they have to feel confident in spending their money to purchase.

 

[jerseyduke]

The problem with every analysis posed is this, it ASSUMES 100 percent of the money spent on DVC will either A. Go toward the purchase of a DVC contract or B. Go into an investment vehicle that returns some gain or dividend or whatever.

B is very rarely, if ever the case. If you have say 40K parked in some account somewhere and you buy DVC with it, and its no longer there, you are probably going to spend a less now that its gone. Dont buy DVC, and you buy something else. You splurge on a little something else.

Also, while it may not be true for everyone, for many (I would say most) DVC changes their behavior. That never gets factored in. For me personally, DVC costs me MORE than staying in cash rooms, because I go more often

I know these boards are international, but I can only speak to what I see in the US, and that is, that if a DVC purchase is foregone, at least part of what would have been spent on the DVC purchase gets spent on something else, so not 100% goes into savings. Every analysis put forth assumes 100% is invested and stays invested,

Americans are not good at saving, we are hungry to spend money. Maybe not all of it, but at least some of it.

There are just too many variables, particularly when considering possible changes in behavior to really get this analysis right.

 

[CanadaDisney05]

When I see people who look at ROI loss and resale value as part of their calculations, to me, they are trying to decide whether it makes financial sense vs keeping it as an investment.

I made a post earlier in this thread (maybe it was another thread?) about the misuse of the word "investment" which I think is what causes the majority of the miscommunication between people here. Different people are using the same word in different contexts.

Having said that, if we are going to go down the road of discussing DVC as an investment in an "appreciating asset" (which I don't believe 99% of the people who are claiming they would like to invest in DVC are really trying to communicate), I can argue that it is. It's really no different than investing in a stock, bond, business ownership, rental real estate property, mutual fund, ETF, or any other traditional investment. It's value could appreciate, or it could depreciate. Any guess of which way it will go is pure speculation. The only difference between all of those different options is the level of fluctuation risk, and the level of speculative risk. Without proper knowledge of the risks associated with an investment, I would never recommend someone investing in it. If you understand the risks, and are willing to take them, then have at it.

The only caveat I would add is that DVC does have one known thing about it's future value, and that is that it will be worth zero at the end of the contract. I personally don't think DVC is a good "investment" if your banking on asset appreciation.

The problem with every analysis posed is this, it ASSUMES 100 percent of the money spent on DVC will either A. Go toward the purchase of a DVC contract or B. Go into an investment vehicle that returns some gain or dividend or whatever.

B is very rarely, if ever the case. If you have say 40K parked in some account somewhere and you buy DVC with it, and its no longer there, you are probably going to spend a less now that its gone. Dont buy DVC, and you buy something else. You splurge on a little something else.

I see it a bit differently. While this may be true of the majority of the US/Canadian population, I'd bet that anyone doing a thorough analysis of a long term asset that factors in opportunity cost, is not keeping 40K in cash to purchase DVC. They are either pulling this cash from (or otherwise would place in) some sort of investment vehicle, OR are taking out a loan.

Also, while it may not be true for everyone, for many (I would say most) DVC changes their behavior. That never gets factored in. For me personally, DVC costs me MORE than staying in cash rooms, because I go more often

This is true, however I don't think it makes sense in this context. I can only speak for myself, but I'd be surprised if this wasn't true for 99% of the people who come here and discuss the financial analysis. The analysis we are doing is not about deciding which option is going to have the greatest long term affect on our overall net-worth. We understand that taking money that could otherwise be invested and spending it on vacations year after year to see a make believe castle is not the best decision if our goal is 100% about wealth accumulation. We are trying to figure out which option is going to offer the lowest per night cost, and by how much. It doesn't take much research to understand that DVC costs less than rack rate, but it also comes with a lot of restrictions. We want to be able to quantify how much are those restrictions worth. Am I saving $10 per night, or $400 night? I probably would not buy into DVC if my savings were only $10 - $50 per night.

I know these boards are international, but I can only speak to what I see in the US, and that is, that if a DVC purchase is foregone, at least part of what would have been spent on the DVC purchase gets spent on something else, so not 100% goes into savings. Every analysis put forth assumes 100% is invested and stays invested,

Americans are not good at saving, we are hungry to spend money. Maybe not all of it, but at least some of it.

There are just too many variables, particularly when considering possible changes in behavior to really get this analysis right.

This is true. The difference with DVC however is that you are literally taking a lump sum of money out of an investment (or taking out a loan). It's not a long term behavior issue. It's a one time event. Perhaps the "investing" of maintenance fees can be removed out of the equation if you are not the type of person who would actually reinvest that difference.

 

[jerseyduke]

This is true. The difference with DVC however is that you are literally taking a lump sum of money out of an investment (or taking out a loan). It's not a long term behavior issue. It's a one time event. Perhaps the "investing" of maintenance fees can be removed out of the equation if you are not the type of person who would actually reinvest that difference.

So is buying a car, and now, since you have not bought DVC, that little upgrade to the leather interior (or whatever) is now something for which you may pay, since perhaps you do not have to tighten your belt up as much.

Now you got a 1000$ option that you would not have gotten had you bought DVC. Yet this does not get deducted in the analysis. People are still taking the purchase price of a DVC contract, and increasing it by some factor representing ROI. And thats fine. My point is, in many cases, SOME of that principal is likely to get spend in another way. No analysis seems to allow for that.