I'll go along with the idea that interest is lost (although my best interest bearing account just dropped to 1 point something) but unless you can guarantee that investment then that point doesn't work right now. My investments may be beginning to creep up again, but I am still way in the red, so if you are looking at it that way, DVC wasn't a bad 'investment'. When I bought my first DVC contract, I sold most of my Ebay stock to do so..when it was high, so I guess I actually 'made' money on that. I do know I'm much happier having my OKW points than my Ebay stock.
I'll throw in my 2 cents on the interest/time value of money argument. What you need to do is compare both options on an apples to apples basis. For us, I considered the following scenarios :
1) Paying $12K for our resale contract and buying into DVC.
2) Taking that same $12K and creating a "reservation" fund that would either be invested in stocks/bonds, etc (or more realistically just sit in a bank account earning "some" interest). Instead of buying DVC, I would use these funds to pay for our rented ressies going forward.
I'm not really comparing DVC to booking thru CRO, because after finding DIS a few years ago and learning about renting points it was by far the best "deal" for us (even better than free dining
). And comparing DVC to paying rack rates on the same accomodations doesn't make sense for us as I'd never pay that much for those rooms (frightening seeing what rack rates are on 1BR/2BR rooms) but more realistically would stay at a mod or value.I tried to be on the conservative side and assumed a 10% post tax return on option 2 (should be so lucky to earning 10% post tax each year for the next 12 years
). In that scenario in about 12 years that "fund" would have a zero balance (ie used all $12K + whatever interest/returns were made to), and the money that could've been spent on DVC is all gone, and any future ressies will be coming out of pocket.With option 1 (buying DVC), after the same 12 years we would've also paid about $11K of MFs (using SSR MFs as that's where we made an offer), assuming MFs increase 5% annually.
So, if in 12 years we no longer wanted to own DVC, the approximate "cost" would be the difference between the $11K in MFs (plus interest) and the net resale value. IF that difference was $2K or $3K (the bad way), I would still think it's worth it to have owned DVC for 12 years given we had control of our own ressie, took great trips and stayed in the best on-site accomodations for us, and may have even been able to take advantage of other member discounts.
Now, I don't really have any interest in selling in 12 years (assuming nothing forces me to do so), and at that point in time we're just staying for the cost of our MFs so that's when the benefits of owning DVC really kick in from a financial standpoint. Could I sell my membership and create yet another "fund" to pay for reservations going forward, sure, and who knows, maybe I will.
I had always thought that buying a "timeshare" was one of the worst things to do with your money - and for many timeshares that holds true. The more homework I did around DVC, and the fact that we have 2 kids (5 years and 5 months) and plan on going to WDW at least 10 times in the next 15 years, DVC seemed like it wasn't that bad of a deal. When I did my analysis I just needed to make sure that it wasn't COMPLETELY irresponsible and a horrible use of our money, and the analysis proved that out.
Chris
