Collectible Investing: Making Money While Having Fun

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There is a lot left to be desired when it comes to the stock market. We learned that much back in 2007 when the world saw an almighty collapse starting with banks that thought they were too big to fail. But the risk of an economic meltdown only makes up part of the rollercoaster that is investing in stocks and shares. It is also complex, complicated, risky, intangible and, let’s be honest, incredibly dull. Even if you have a moneyball secret it can be dull. Sure, if you get it right you could argue that the results weren’t dull, but while the destination is great that doesn’t change the fact the journey wasn’t. Why head to New York on a Greyhound coach when you could drive a ‘67 Mustang Fastback.

You see, you could shake up your portfolio and start investing in a crate of incredibly fine wine, or a restored Mercedes SL W113 Pagoda, maybe even a piece of counterculture artwork has taken your fancy. Not only will an investment like this given you something that stocks won’t, that being an incredible amount of enjoyment, but they could also see you land a serious profit in time. Yup, welcome to the mind-boggling, effervescent, kooky and quirky and extremely profitable world of collectible investments.

Now you may well have considered this avenue before and thus you will have almost certainly be warned off it as a whole by your financial adviser. The reason for this; a lot of investment firms believe the risks far outweigh the chance of returns, and that small – and large – fortunes can be squandered by what people call ‘alternative investments’. What makes them so attractive to millions of people, though, is the diversity that is on offer.

On the smaller end of the scale you have things like stamps, cigarette cards, comic books and first edition novels, and on the larger end you have the big ticket stuff – the cars, the wines, the art – and somewhere in between are alternatives like sporting memorabilia.

But diversity isn’t the only attraction because if we learned anything from the last recession it is that we can’t trust intangible investments. Collectibles were one of the few investments that saw an increase in value, and not just a slight increase either but a dramatic and sharp rise. Instead of buying a piece of paper where the investor had no control, it was much preferable to have something that could be used and then sold.

Of course, there are no guarantees in this world of investing. As Michael Banks rightly points out, this is no different from other types of investing, however, the risks are far higher and so the warnings to be understood properly. As such, investing in collectibles is almost reserved for three types of people; those who are experts in a chosen field, those that have large cash reserves and those that have a fairly extensive portfolio spread out over a range of investments. Even then, though, you’re entering into the unknown. Just be wary of that fact.

The number one golden rule of investing in collectibles is research. The second is research, and so is the third. Without research you have no hope of knowing an item’s true value, or whether it is even the real thing. So in order to be successful in any area of collectible investing you need to discipline yourself and learn to have a passion for this game, a passion that borders on obsession. That way you will know the history, the truth, the story, similar transactions, the value, the price and the room for profit. But while research will help, it won’t guarantee you anything.

If we haven’t put you off just yet, though, and you’re still considering this as a new avenue then we admire your tenacity and focus. And to help you take it one step further we have come up with a list of investment areas we believe are worth looking at a little deeper.

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Go Classic With The Cars

For so many people in the investment game, one of the most attractive transitions into alternatives is classic cars. There is an obvious correlation to make between successful investors and fast cars, so to take that hobby and turn it into another revenue stream almost seems logical. The only that really has to be taken into consideration is budget because the difference between having $30,000 and $200,000 is a big one.

Whatever your budget, though, there is good news; the classic car market has seen a great few years. That isn’t just in terms of price but also successful sales. That is one area of concern. It is all good and well owning a desirable car and knowing the value of it, but you still have to find a buyer. Basically, if you’ve got some cash that is suffering under the poor interest rates offered by banks at that moment but really can’t stand stocks and shares, then why not see how you fair in the classic car market? Just make sure you stay within your budget, buy sensibly and look for cars that don’t require too much restoration; in a few years, you could see yourself cash in and make a tidy little profit.

It is hard to say what drives the value up because it varies a lot, but obviously, rarity has a lot to do with it. Other variables also include great modern versions of old classics, anniversaries, film roles, celebrity purchases, model and year. Anything before 1980 is a great place to start. As for picking an actual purchase, find a make, model and year and then look at one you can’t afford; that should be your benchmark of what to aim for in a car. Then enjoy your new toy, until the time comes to enjoy cashing in on it.

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You Had Me At Merlot

The hardest thing about investing in wine is resisting the temptation to get the corkscrew out. After that, it is just a matter of cautiousness because there is a lot to be cautious about. The reason for this is the complexity involved in wine investments. That’s where our initial piece of advice comes in because research is going to be everything, and knowing the difference between fact and factoid.

The reason for this is, an old wine is not necessarily a great wine. The year of certain wines are what classify it to be valuable, so it is important squatting up on everything you can about a certain wine. It is also worth knowing exactly what a bottle looks like, including the wax seal, label, writing, and spelling. The reason for this is wine fraud is rife in the business as unfortunate as that is. If you haven’t heard of Rudy Kurniawan yet, then look him up, which is easily one by watching the Netflix documentary Sour Grapes.

Of course, that isn’t meant to put you off and a lot of decent profits have been made in this area, and all it takes is a matter of stockpiling what people consider to be the best wines produced in Bordeaux and then selling them for a profit. The immediate downside to this investment is the fact you can’t actually enjoy your investment. However, you also know that your investment can only get more and rarer as others drink theirs.

One of the most famous cases – excuse the pun – involves a case of 1982 Le Pin. When this first hit the shelves, a case would have set you back around $250. Now it is worth closer to $31,000. That is not a bad rate of return and, what’s more, it isn’t a total anomaly either. Pick the right grape and you could be in for a serious amount of money, as long as you don’t consume it. I mean, knowing that your drank away a $30,000 profit may turn out to be quite hard to swallow.

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Investing In The Beautiful Game

The demand for sporting memorabilia – at least among the big and popular sports – has remained stable over the past several years, which is a testament to the fact people still love sports. Many argue that it is more loved than ever thanks to the fact that we have far more ways to watch it, and that it remains one of the few, if not the only, entertainments that needs to be watched live. In terms of investing, though, it is just a matter of buying at the right time and selling at the right time, which will never change. This can make it tough to garner a profit.

As such, try and find young sports stars that are tipped for the big time, which can be done by simply reading the paper and seeing which unknowns are being scouted by the top clubs. However, don’t just go and buy any old piece of memorabilia. Autographs are no longer worth what they once were due to the sheer volume of autographs out there and the fact many of them are frauds.

As such, try and get your hands on an actual kit, one worn by a player, one that had sweat poured into. The reason for this is it will more that definitely go up in years to come. Sure, a replica shirt that has a nice signature scribbled across it is fantastic and maybe worth a small fee, but a match worn version will fetch substantially more, like thousands more.

Obviously, it is not simply the kit that needs your attention, though, because different sports are famous for different equipment. Imagine if you could get your hands on Ali’s boxing gloves, Beckham’s football boots, Barry Bond’s home run ball or a Babe Ruth baseball bat. Obviously, the player has a huge impact on price, but so does the size of the match said memorabilia was used in. The bigger the occasion and the more iconic the event, the more money it will fetch. But don’t leave it too late before you cash in because a lot of the time you will have to strike while the iron is hot.

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