Boats are just one collectable that could earn you extra money
Why not use one of your passions as a possible money-earner as part of a portfolio of investments? Once upon a time people bought paintings, wine, antiques or classic cars because they liked them. Now all these things, and more, are seen as serious investments – a replacement for a pension in some cases. Of course there are many pros and cons to using collections as an investment vehicle: Pros: - This is an investment you can actually enjoy. Share certificates aren’t much to look at but a Rembrandt or a Classic Jaguar certainly are.
- Feeling of security. Like property, collections are things you can actually feel and touch which often makes you feel more secure about the investment.
- It’s a great excuse to spend money on things you love.
- It’s something you can control, unlike pension funds or equity funds. It’s up to you what you buy, when and at what price.
- Rarity. With some types of collecting – great art or sculpture for example – there is a very limited number of certain items. This very rarity means they’re likely to increase in value over time.
- Collecting is big news in several Western countries and increasingly in Asian countries too, so, if you happen to pick the right items to buy you can be confident of a growing, global market for them.
- Some collections that are popular now can be very cheap to start.
Cons: - Collections of all types are totally vulnerable to the whims of fashion. You could have a fabulous collection of silverware, for example, but when you come to sell it, it could suddenly be out of fashion and, therefore, not as valuable as it was.
- Storage, maintenance and insurance costs can be steep, certainly if you plan correctly and set aside a regular annual amount. In some cases these costs can be much greater than yearly management costs charged by equity funds.
- There’s no guarantee that the value of your collection won’t go right down to the floor. In fact, there is nothing to stop a poorly thought-out collection losing its entire value.
- It can be very hard to find, and afford, individual items for your collection, particularly if your passion is old masters or classic cars or Louis XIV furniture. If it is a serious investment, you need to factor in these costs (transport, internet access etc) when looking at profits.
- Collections are vulnerable to burglary, fire and other forms of destruction.
- Unlike shares, cash or property, most collections don’t produce any sort of income, only potential – and that’s the key - capital growth. Capital growth is growth in saleable value of the underlying product.
- You could love the items too much to sell them when you need the money.
What can I collect? -
What you collect, of course, depends on your tastes and, importantly, how much money you’ve got to spend. -
People with lots of money will collect top-of-the-range classic cars, rare antiques and art, gold, rare stamps, top wines and first edition books. -
Even if you have little money to play with, though, you could still develop a decent collection of slightly less rare first editions and stamps, more affordable art and perhaps a Classic MG. -
Collections of off-the-wall, cheaper items have been rising in value recently and, if you pick the right things, you can make money out of kitsch after just a few years. Barbie Dolls, Elvis memorabilia (even dolls produced now), Bakelite products, Ladybird books and electric guitars half-trashed by a rock star are just some of the more bizarre collectibles that are finding a growing market. -
If you don’t have thousands to invest right now but you’d like to start a collection that could make money later on, professionals advise you to buy things that today’s teenage boys want but can’t afford like Game Cube, BMX bikes or a girlfriend. The idea being that in twenty years time, when they’re old enough to afford these things, nostalgia will kick in and they’ll pay over the odds for something they’ve yearned for since they were 13. Just remember to keep the original packaging – that’s what collectors love. Main points to keep in mind when amassing your collection are: - Only collect things you love. You can’t guarantee that it will be a good investment but if you love them you’ll have had all that enjoyment of them over the years anyway.
- Go for the best you can afford – quality is better than quantity.
- Study your subject thoroughly so that you know what’s a good investment and what isn’t.
- Stick within the realms of reality. Unless you’re passionate about underground train tickets or Smurf memorabilia, try to collect things that already have dealers and a decent group of other collectors interested in them.
- Make sure you have the physical space to store the items, keep them from danger and protect them from deterioration.
- Budget enough money to cover maintenance and insurance costs. Get it away from your sticky mits in a bank account where you have to go to the branch to make a withdrawal.
More information: The money sections in the serious newspapers now have regular collecting columns covering everything from high-end antiques and art to the off-beat and wacky. You can also try Amazon for their selection of collectables. |
Print this page
