stocks versus DVC

[ralphd]

Originally posted by donmil723
Right now I'm more proud of my DVC "investment" than my Disney stock! Enough said.

Donna

Amen Donna!!!

ralphd

 

[chainkid]

Having lost a significant amount in the stock market, I made the decision to sell some mutual funds and buy DVC instead. I can rent the points to cover the maintenance fees and then have a nice winter retreat when I retire. I've already lost faith in the market after being in 10 years and not broken even yet. Unless you have the time to do alot of research the average mutual fund with fidelity, putnam you name it is like gambling.. Unfortunately there are not alot of safe options, DVC has been my one bright light as I could sell it now for more than I paid for it and have all those vacations dirt cheap to boot.

 

[rinkwide]

Originally posted by chainkid
...the average mutual fund ... is like gambling. Unfortunately there are not alot of safe options...

In 30 years my $20,000 DVC contract will be worth next to nothing but my $20,000 S&P 500 index fund will be worth something in the area of $350,000.

 

[wuv tigger]

Originally posted by rinkwide
In 30 years my $20,000 DVC contract will be worth next to nothing but my $20,000 S&P 500 index fund will be worth something in the area of $350,000.

Depends on your spending habits. If you "normally" spend $4,000 a year on a luxury resort, but only $1,000 on DVC and invest the extra $3,000 in a Roth IRA you will also have $350,000 and have taken all the vacations.

I personally treat my timeshare as a bond equivalent. I receive a tax free 5% annual yield vs. what I previously spent on vacations and have better accomodations to boot.

David

 

[garettdoyle]

See my responses below:

Originally posted by DrTomorrow
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.

Eventually the resale value will begin to decrease as the number of years left on your lease goes down. Obviously nobody is going to give you $60 or $70 a point during the last part of your lease. Also, the resale value is being artificially elevated by Disney's first right of refusal program. This would be sorta like a company being back their stock any time it went too low to raise the price. Although this can be done in the short term, it usually is not a good long term strategy

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

I don't have the numbers in front of me, Disney gets less than 25% of its annual revenues from the parks. Although this would effect the stock, not to the degree it would effect your DVC rental value if the disaster hit WDW. Besides, my alternative to "investing" in DVC would not be to put all my money in a single stock, regardless of how much I like the company. Having been employeed by two of the largest telecom providers that went Chapter 11, I am very careful about single stock/company investments.

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".

No doubt that the DVC program is a much better "buy" (i hate to say investment )than most of the timeshare programs in the marketplace, hence why I seriously looked at it. As mentioned earlier in this post, the ROFR by Disney keeps the resale market stable. It is pure speculation by anyone on what would happen to the resale market if Disney stopped the ROFR program. Based on the very fact that Disney does this program, tells me they want to keep the market strong (and I don't blame them, great strategy).

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

Disney stock is one way to invest in their properties!!!

I am sure many people on this board don't agree with my stance on DVC, but I appreciate everyone's polite responses. I know when I am looking for information in forums like this, I want to know a variety of peoples opinions on a matter.

Here are things I don't like about DVC that caused me not to purchase:

1) Limited locations (WDW, HH, and VB). I live in Denver. I would like to have an option to stay somewhere within driving distance (under 1000 miles).

2) Maintenance Fees - It is fair to say that DVC maintenance fees are relatively high in comparison to other timeshare programs. Frankly, in the long term, this is where they get you from a financial perspective. The $15K initial investment is peanuts compared to 30 or 40 years of maintenance fees. From a risk perspective, you are somewhat exposed as they could up the maintenances and there is little you can do about it.

3) Program Terms - Basically all the sharing of resorts, etc, is subject to change. At any time the whole idea of using another resort other than your home could change. I am not comfortable with the idea of this in the long term. One of the resorts I really liked was HH. I like the idea of this being my home resort with options of using the WDW properties (VWL, etc.) but I would not be happy if they ended the swap program.

4) Over Supply of on site properties at WDW - All the financial analysis for DVC compares the cost of on site property's rack rate. I have been to WDW 7-8 times in the past 12 years and I have NEVER paid rack rate. I just scheduled a trip for this fall and I am paying $49 for POP Century (that is cheap!!). I was offered AKL for $119 and WL deluxe for $199 as well. I stayed a week at HH this May for $149 per night (2 bedroom villa). With DVC you hedge against price increases but you don't benefit from the apparent over supply.

5) Outrageous cost for weekend stays - double the points for the weekend is way out of line. Using the going rate on renting points (around 50-100 points per night), weekend stays seem to be around $500-$1000 per night. For that cost, I want more than a kitchen in my room, I want a butler and grand piano.

I sincerely mean it when I say, if DVC works for your family, great. There is no doubt in my mind that there are much worse ways to spend money than vacationing with friends and family each year. RVs are horrible investments, but that doesn't mean you shouldn't get one. My point from the beginning has been, do DVC because you want to. Time shares are not investments.

Best wishes everyone.

We can't wait for our trip to WDW in October and we had a wonderful time at DVC HH this past May.

 

[Disney Doll]

I don't think anyone would ever consider DVC a monetary investment, at least not one which you could depend upon to earn you some money. However, there is other "value" in it, such as good memeories, enjoyment of family time together, and paying for a future vacation at today's prices, so it's not totally without perceived value. If you have rented out points in the past and earned a little on them, that's great too, but I wouldn't depend on DVC as part of my income or retirement.

 

[DVCPAT]

If Disney would split the points when the cost topped $100.00, I would consider it an investment. I might consider selling some of my DVC points and buy some additional stock

 

[poohnpiglet3]

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?

I think that's an excellent point. We're going to be spending about $5000 per year anyway on a nice vacation, we might as well spend that on accomodations that we will love at a place that we love. I really do think this will save us money, which will free up cash in the future that we will invest in DH's 401K or our kids' 529 plans. Great uses of that extra cash.

Now if only we could do half Cancun, half Disney... we'd be all set!

Sherri

 

[DrTomorrow]

Originally posted by garettdoyle
I am sure many people on this board don't agree with my stance on DVC, but I appreciate everyone's polite responses. I know when I am looking for information in forums like this, I want to know a variety of peoples opinions on a matter.

Hey, it's always nice to have a reasonable discussion on a DVC-related matter without things going all haywire ::cough pool-hopping cough::

A few comments back at you:

This would be sorta like a company being back their stock any time it went too low to raise the price. Although this can be done in the short term, it usually is not a good long term strategy

Heck, seems to me that if a company could buy back it's stock at one price and turn right around and sell it for $15 dollars more per share, they'd want to to that as much as they could! Of course, the value will go down long term, but by then you'd need less of a return to "make a profit" on the whole thing.

Most of your other issues deal with "risks" - rightfully so, considering the amount of $$$ DVC costs. However, there are also risks on the other side. The risk that room prices will go up, the risk that discounts will be harder to come by, etc.

But most of us here on the DIS DVC forum are actually happy when someone does the research and finds that DVC isn't right for him/her; it really cuts down on the cranky posts down the road!

I'd be interested to hear from Dean (or other more experienced time-share owners) on the true financial and risk-based differences there are between DVC and other programs.

 

[rinkwide]

...someone does the research and finds that "DVC isn't right" for him/her...

No worries.

But...

Fast-forward five years and six trips to WDW later and all of a sudden it's "I only wish we had done it sooner".

 

[jimmytammy]

After the last few days especially on the stock market, DVC seems like the logical choice from an investors standpoint

 

[Mike]

Originally posted by rinkwide
...someone does the research and finds that "DVC isn't right" for him/her...

No worries.

But...

Fast-forward five years and six trips to WDW later and all of a sudden it's "I only wish we had done it sooner".

Here I am

 

[manning]

DS, serving in Fallujah, and DD. Semper Fi!

Give them a big salute for me.