Is 12 extra years just more risk?

[OneMoreTry]

The value of DVC points is only as good as the popularity of Disney, specifically WDW, and dependent on the companies' management.

Paying more for 12 extra years means gambling that Disney will be around and well-managed from 2042 to 2054. I realize Disney has done well for the past 50 years, but 2040 is a long way off. A lot can change. (The next Walt Disney may be in Jr. High right now.) It's something I consider when thinking about point cost and value for an add-on.

 

[Chuck S]

How old will you be 50 years from now, will those 12 extra years have any meaning or value for you? I'll be well into my 90s.

None of knows what the future will bring...we may not be able to AFFORD to go to Florida in 50 years, DVC or not. We may all be dead in 50 years, global warming may have submerged Florida in 50 years. All of these scenarios are possible (not likely, but possible). Disneyland has survived for almost 50 years, I would imagine WDW would still be an attractive and popular destination in 50 years as well.

 

[Divamomto3]

Let's just say that I wouldn't purposely buy into DVC 1 (unless that's what I wanted specifically) just because Disney may be 6 feet under in 50 years. Whether it be 2042, 2054, or whatever..I'll have gotten my $14,000 worth by then for sure.

 

[mydogdrew]

I place a lot more value on the next ten years than the last. SSR holds no appeal to me as I place no value on the additional time. While Disney is the most likely exception (due to continued development), most timeshires are worthless after 20 years as owners get socked for ever increasing maintenance costs. The dues for those last 12 years could be above room rental price (i.e. no value to timeshare). While I don't think this is likely, it is possible. I also think Disney is raising the rates now to entice us members to add-on (while making it more difficult to get "old" resorts). I think the $95 ultimately gives Disney more room to discount from in the future. Keep in mind that points and dues have been climbing dramatically while room rates have been declining (actually flat but lots of discounts to be had). For this reason, the DVC benefit has been eroded some over the last 2 years. If dues keep growing faster than room rates, we'll all be vacationing somewhere else in 2042 anyway. The real key is that DVC will have resale value so long as DVC keeps building. If no ROFR, watch out!

 

[KANSAS]

I see no extra value if the additional 12 years, because i will be 76 in 38 years and no man in my family has lived past 70.

I see the DVC I, with 38 years left very attractive at $75.00 per point,
versus DVC II, with 50 years left at $95.00 per point.

 

[Pa@okw95]

WDW has changed enough for me already to consider not going to the parks at all, BUT, and it is a big BUT, the weather in Florida is just great which makes getting away from CT winters worth the while. I am going to be 100 when 2042 roles around so I may not be too interested in 12 more years after that.

 

[ripleysmom]

I am well on my way to getting the value of my initial investment. Between the cost of the cruise we took on points and the accommodations that we have enjoyed since then we have for the most part paid off that investment.

Even if we never go back to WDW and only use the points for HHI at the end of the summer I still consider my money to be well spent.

 

[timC]

I agree.

I see very little value in putting 2004 money down on a vacation for the years 2042-2054.

For me, I'll get the greatest value out of my contracts, in their first 15 years (1999-2015). My kids/grandkids might get good use from them for another 15-20 years (2020-2040), and even those plans are highly "tentative".

After that, who knows!

 

[pumpkinboy]

I disagree with the shorter termers here. I think the extra 12 years are worth something, but in my calculation not too much more than $10 per point (your personal calculations may vary, by your age, value you place on the asset, whether or not you have children, etc.). Clearly for many, the extra 12 years is a strong selling point.

Also, there is something you can do about it: you can own Disney shares and vote your proxies with the aim of keeping it a well-run company. Companies will listen to their shareholders, and those that don't do so at their peril.

 

[Stitch 03]

I believe that there is indeed value in the additional 12 years. Once 2042 rolls around I will be 70 and will hope that I will be able to enjoy WDW for another 12 years. And when you consider what hotel rates at WDW will be like at that time, the extra $$ a point is a bargain.

However, we come back to the original post. Even if you do see the value of the extra 12 years, those benefits will not be realized until 2042. I am as much of a Disney fanatic as anyone and have been all my life. For all it pains me to thing of it, there is no guarantee that Disney will still be around.

When I was making the decision to buy into DVC, it was not based on 40 years of vacation. It was based on a more realistic timeframe (10 -15 years). When it comes time to do the add-on I will face the same issue. If I choose to go with DVCI it will not be a price issue for me. I can afford the extra cost for SSR and would like the extra years. But if my comfort level is not that WDW will be as it is today, then I may go for DVCI

The big issue to me when deciding between SSR & DVCI (other then the value issue), is the comfort level that Disney, WDW, and DVC will be what it is today in 40 years. In my opinion the world is changing too fast to coung on anything being around that long (no matter how much I may want to think about it).

 

[jaysue]

Yes, 12 yrs is more risk by a risk management standard. More time in an investment always = more risk & of course more reward.

The equation to me becomes is the more risk greater than the more reward

We own both at DVC I (BCV, VB) and DVC II (SSR)

We bought into DVC II at $79 net per point so for us the equation was

Risk of 12 years versus point difference of about $8 or so net for another 12 years of prepaid - in this case the equation works

Now with a price of $95 I think the equation is not balanced anymore and I would not buy into SSR at $95 per

Unfortunately the real risk/reward point will come for us (we are 37 now) much later in the future when we do not/cannot/are not around to enjoy in probability our DVC II last years - there is no way to forecast this part but we hope that our DS's have kids of their own and use our DVC I and II points from time to time to give their kids the type of experiences we have given them

Of course this is all as they say in economics "ceteris paribas" or all other things being equal (Florida still there, still able to get there in reasonable time, able to afford dues etc. etc.)

thanks
jaysue

 

[Disney4ever4569]

Think about this: 12 years from now DVC III comes out with a new 50 year plan. Now all of a sudden DVC I with 26 years left is not looking as good to someone who's looking to buy a resale (unless its a much cheaper price). On the other hand DVC II has 38 years left and still has great resale value.

As far as future is concerned, you can't try and guess. Everyone that has bought DVC has taken some risk by giving Disney thousands upfront and hoping to gain more in the long run.

 

[tjkraz]

I'm going to end up echoing Disney4ever4569's comments, mainly becuase it was a significant part of our decision. DW and I figured that if there was any point at which we might want to sell our DVC investment it would be in the next 20-25 years when our children have grown. At that point, the 2042 contracts will only have 13-18 years left. Meanwhile SSR will have 25-30 yrs left.

Which do you think will have a higher resale value?

Investing in DVC, as is the case with most everything in life, carries some amount of risk. But let's be realistic--there probably will not be a point in time where the entire world collectively decides that Walt Disney World is no longer a viable vacation destination. Perhaps things will happen in future years to slowly alienate people. But when far inferior "theme parks" like Cedar Point, Six Flags (take your pick) and King's Island remain profitable in the wake of WDW, I have to believe that WDW will not disappear from the face of the Earth some day.

That said, if things do being to sour for us, we will certainly consider selling our ownership. There will ALWAYS be SOME resale market for DVC points. Whether that market price is higher or lower than today's rates remains to be seen. In the meantime, we will simply pay our dues, take our trips, and have a heck of a time doing it

 

[Kelly Nelly]

I have never viewed DVC as an Investment, I consider it a prepaid vacation plan, then again I am not an expert like the above poster.

 

[BillPA]

In the long run is doesn't matter, it's the cost of the dues. If dues continue to increase at 3.65% a year, as they have done from day one to now at OKW, then your SSR dues will be around $23.30 a point. What does a few bucks mean now???
Just a different way to look at the costs. Either you like Disney or not, 38 years or 50 years doesn't much matter, the original price will be dwarfed by the cost of the dues either way.

 

[OneMoreTry]

"the original price will be dwarfed by the cost of the dues either way."


That does not account for the future value of money. If I had taken the money I put into DVC and invested it, it would grow to many times it's value by 2042. So would the extra $$ per point.

The cost of dues will also grow proportionately to the cost of living plus some extra for higher upkeep of older property.

I agree that buying in is not an investment. If Disney is still doing well in 2042, somebody's kids will be happy their parents paid for the extra 12 years.

Someone else's will be happy their parents invested in the next Microsoft.

 

[pumpkinboy]

Originally posted by jaysue
Yes, 12 yrs is more risk by a risk management standard. More time in an investment always = more risk & of course more reward.
The equation to me becomes is the more risk greater than the more reward...

I like your analysis JaySue! I have always valued DVC like an Annuity, you pay in up front and get a stream of benefits on a periodic basis for a set term (less maintenence dues of course). Of course, the present value of those more distant years is very low, accounting for a small fraction of the initial cost of the annuity/ "vacation ownership" contract. When I was doing my spreadsheet and present value analysis, the last 12 years of SSR came out to about $6 of the purchase price, then $84; it would be more with the price rise, increasing the riskiness of the asset in theory. But then would timeshares with no expiration date be seen as even riskier than DVC? We are winding down to zero at DVC in 2042 or 2054, while deeded timeshares exist on an ongoing basis ("to infinity, and beyond" as someone once said). So in my view, the risk is priced in on those distant years for SSR.

I believe that a lot of folks find the extra 12 yr worth of ownership valuable, and I expect the price rise will dampen demand for a few months (after a frenzy of activity beforehand), but then regain a steady pace, assuming the economy doesn't tank. In those months after the price increase, our DVC I resale will likely rise somewhat, then reach a higher equilibrium level.

Still not sure if we want to add-on at SSR, but we have the month of April to decide; I expect DD's college fund and our retirement accounts will win out there, but it's still worth considering. Obviously, I'd rather buy into the next Microsoft, but then I'd like to win the lottery too.

 

[tjkraz]

Originally posted by Kelly Nelly
I have never viewed DVC as an Investment, I consider it a prepaid vacation plan, then again I am not an expert like the above poster.

You're absolutely correct. "Investment" was a poor choice of words simply because it assumes some appreciation of value over time.

What I should have said was simply "purchase".

So please feel free to substitute the word "purchase" where you see "investment." However the point remains the same. Will DVC appreciate in value? Maybe yes, maybe no. But even if it declines in value, it will still retain SOME value. And, I still feel that my point is valid: all things being equal, 25 years from now the DVC II resort(s) will likely be worth more on the resale market than DVC I.

That's part of the reason we went with SSR.

Don't worry about not being an "expert". Keep reading these boards and you'll get there someday.

 

[Kelly Nelly]

So you mean if I keep on reading and posting then I will be an expert about DVC, I guess my 8 years of being a DVC member means I now nothing about DVC because I hardly post on the board. I guess it takes 5 months of being a DVC member and posting on the boards alot to become an actual DVC expert.

 

[tjkraz]

Originally posted by Kelly Nelly
So you mean if I keep on reading and posting then I will be an expert about DVC, I guess my 8 years of being a DVC member means I now nothing about DVC because I hardly post on the board. I guess it takes 5 months of being a DVC member and posting on the boards alot to become an actual DVC expert.

Actually "expert" was your word, so I guess I will have to defer to your definition.

Unless I'm missing something, I didn't think there was a probationary period on being able to share OPINIONS on a PUBLIC message board. If you have some sort of a personal beef with me, then please feel free to send me a PM. Seems kinda silly to force other people to read your unsubstantiated public pot shots at fellow board members.

Have a Zip-A-Dee-Doo-Dah, Zip-A-Dee-Day!!!