stocks versus DVC

[KANSAS]

i have lost alot of $ in the Us Stock market the last four years.

I have done very well $ wise with my DVC/BCV points, though this was not the intent, the last four years with my DVC/BCV Points.

has anyone else, by any chance, had a similar experience?

If so, do you sometimes think it is better to put your $ into things that you can enjoy that are tangible like DVC instead of stocks?

plus it actually might turn out to be a better investment, stressing this was not my intent with DVC.

 

[crazywig]

well, i sold some of my company stock (employee purchase plan) to buy our points last fall. i had already lost money on those shares, and don't see it ever getting back to it's late 90's high, so i took a tax loss on it and now i have 170pts fully paid for .

we reasoned we would rather have years of pre-paid vacations with our kids than sit around waiting for that stock price to rise.

 

[rinkwide]

Originally posted by KANSAS
...DVC instead of stocks?

Hmm...

Not as good as eBay.

Better than Enron.

Why not?

 

[KANSAS]

crazywig

is it also possible that your company stock, has fallen more in value since last fall, based on todays price?

while your dvc points are worth very close to what you paid for them, plus you enjoy the dvc vacations??

 

[jctwizzer]

You're comparing apples with oranges...go back to 1993 and make the same comparison.......for all intents and purposes, your comparison, altho amusing, is irrelevant...JMHO

 

[DVCconvert]

your comparison, altho amusing, is irrelevant

respectfully, I disagree.

I believe that since on avgerage the US market returns (over time) 4-8%....should you buy, and rent out, and recaputure the underlaying investment (about 12 yrs) of a sold out DVC resort, and continue to rent out the points over the remaining 23+ years....you'll realize a 8-9% return. Assuming fee's don't double. I think it's a good proxy to a bond.

 

[JimFitz]

Comparing the stock market to DVC is silly.

If you are looking at DVC as an investment, you have it wrong.

Yes, you may be enjoying your DVC membership, and it may still be holding it's value, but look at the maintenance fees. Take the money you put down for DVC, plus the yearly maintenance and compound that over 30 years..............You would make a ton of $$$$ in the stock market, and you will be giving your membership back to Disney.

 

[DVCconvert]

look at the maintenance fees. Take the money you put down for DVC, plus the yearly maintenance and compound that over 30 years.

Let's take for example BWV.

Fee's = $4.25 per point

Let's assume a 200 pt resale investment @ $70 per point, or $ 14,000.

Fees on 200 points = $ 850
Rent out 200 pts @ $10 = $2000

$2000
-$ 850 + $ 1150

$1150 divided into 14K = 8.214%.....after having recouped fees.

14K divided by $1150 = 12.17 years to recapture principle - net

2004 - 2042 = 38 years less 13 years = 25 years

25 years of rentals @ (net) 1150 = $ 28750

28750 divided into 14K = 205.37%

Hummmm....enron, worldcom, DISNEY, yahoo, .......Treasuries, CD's.....I don't know.....but I don't think it's THAT "silly".....I wouldn't bet the farm on this one course....but I'd not think as a diversification tact it was outlandish. JMHO.

 

[JimFitz]

Your post makes sense.....but the market yields more rewards.

14K investment for DVC

14K into three stocks........well lets say 15k to make it a round number. All purchased over a 10 year time frame.

5k into EBAY

5K into MSFT

5K into Exxon Mobil

Ebay was at 3.76 a share split adjusted back in 98 (98 is when it came public) so $5000/3.76 = 1329.78 shares.

MSFT was at 3.94 10 years ago (split adjusted). $5000/3.94 = 1269.03 shares.

Exxon was at 15.15 10 years ago so $5000/15.15 = 330 shares not including if you set this stock up for DIVRE.

So based on today's closing prices you would have a portfolio that looks something like this......

Ebay 73.76 x 1329.78 = $98084.57

MSFT 27.14 X 1269.03 = $34441.00

Exxon 45.12 x 330 = $14889.00

$98084.57 + $34441.00 + $14889.00 = $147414.57


Looks like the MKT blows DVC away except DVC offers better vacations, more fun, mickey, and a whole lot of other fun!!!!

 

[manning]

Assume and uncertainty

You hope you assume right and the uncertainty is always there.

 

[KANSAS]

thank you to everyone, that posted to my thread. I did expect such detailed thought.

I really think everyone, has had something interesting to add.

I want to stress dvc should never be thought of as investment.

The ultimate point of my thread.

do people sometimes now think about enjoying their money with something like DVC, instead of investing it, because of lifetime low interest rates and a US Stock market, with devastating losses the last 4 years

 

[Dreamfinder2]

We've got money in stocks, and we've done OK. And, we've got money in DVC, and that's good, too.

We looked at DVC NOT as an investment (in the financial sense), but as "anyway" money. We were gonna take vacations anyway, so why not put those funds into something that would last and retain value?

Two different pockets; two different goals.

 

[dannnyjr]

We were buying $100 per month of Disney Stock. We sold it and used the money as our down payment on DVC.
On the bright side to Disney stock owners, I am sure the stock price has skyrocketed since we sold.

 

[rinkwide]

Originally posted by dannnyjr
I am sure the stock price has skyrocketed since we sold.

Hey, I wonder if I got your shares!

 

[garettdoyle]

Considering the purchase of time share and/or prepaid vacation as anything other than a luxary/prepaid vacation is "silly". The fundamental concept of investing is loaning money to someone else because you believe they will be able to use that asset to create wealth. First, DVC is a lease. You will receive none of the appreciated value of the Disney property. In fact, while Disney's land value increases, Disney will pass on the cost of maintenance to you. Second, your resale value of the points will go down as the number of years left on the lease goes down. So, your initial investment, is really an initial expense. Similiar to the stock market or any financial market (real estate, energy, etc), you are investment is subject to market conditions. If Disney decides to lower the cost per night of their other resorts in order to fill them, the rental market for DVC points will suffer. Or worse, if a hurricane hit WDW and the parks we closed for an extended period of time. Let your imagination run wild and you'll soon realize that there signficant risks.

As you might guess, I am not a DVC owner or do I own any other time shares. Are time shares good investments? No way. Are they good way for you vacation? Depends on your family and situation. I have read and done a lot of analysis on time shares and specifically DVC. As a result, I have determined that it doesn't make sense for me and my family. If it makes sense for you, GREAT but don't kid yourself into thinking DVC is anything else other than a prepaid vacation.

 

[dannnyjr]

OH wow! Thanks garettdoyle for clearing that up. Darn, I thougt I would be able to use my DVC to retire.

 

[garettdoyle]

I suppose if you purchased enough points and were willing to pay the maintenance fees, you could retire AT DVC.

 

[CVW]

The best news is that we can even have this debate with a straight face.

I recently spent a bundle on a timeshare at Big Cedar near Branson (the resort side of Big Cedar is part of the Concierge Collection for DVC.) It's a great resort. Facilities are actually nicer than anything at Disney. It's easily the best timeshare resort in the Midwest.

Yet it's dragged down by the Bluegreen system, and an overbuilt Branson market.

It would be very difficult to realize any kind of return on this. I would probably get my money back if I sold it on resale, but with DVC I don't think of the word "probably". And there's not as well-organized network for renting Big Cedar. (Although that may change as it's becoming more well-known.)

In short, I have four young kids. I was able to buy DVC knowing that if anything happened to me, we could get a return on the investment.

I'm just as happy with my purchase at Big Cedar. But I know it could be a big loser if we're unable to use our time there.

We got a good thing going here.

 

[donmil723]

Right now I'm more proud of my DVC "investment" than my Disney stock! Enough said.

Donna

 

[DrTomorrow]

Originally posted by garettdoyle
Considering the purchase of time share and/or prepaid vacation as anything other than a luxary/prepaid vacation is "silly". The fundamental concept of investing is loaning money to someone else because you believe they will be able to use that asset to create wealth. First, DVC is a lease. You will receive none of the appreciated value of the Disney property. In fact, while Disney's land value increases, Disney will pass on the cost of maintenance to you. Second, your resale value of the points will go down as the number of years left on the lease goes down. So, your initial investment, is really an initial expense. Similiar to the stock market or any financial market (real estate, energy, etc), you are investment is subject to market conditions. If Disney decides to lower the cost per night of their other resorts in order to fill them, the rental market for DVC points will suffer. Or worse, if a hurricane hit WDW and the parks we closed for an extended period of time. Let your imagination run wild and you'll soon realize that there signficant risks.

I agree with most of this, but a few caveats:

1. Your resale value of the points may go down over time. I believe that, so far, they have increased.

2. Since this pseudo-debate focused on Disney stock vs. DVC, the "wild imagination" scenarios you suggest would also significantly affect Disney stock.

3. It seems to me (subjective opinion based solely on anecdotal information) that the "investment value" of DVC does not behave quite like other timeshares, due in part both to the Disney ROFR as well as the Disney "magic".

Hey, here's an idea - a mutual fund (or would that be a REIT?) based on DVC point / contract futures!