The Art of Investing in Collectibles
What’s the secret behind collectible investments and what can a collector do to make profit? First of all, not every little thing that’s 100 years old is valuable, so before spending money on want-to-be vintages, you should get to know the market. The more you know the higher chances you have to make good money.
The collectible market is based on several key principles – rarity, nostalgia and demand. They say nostalgia lasts in cycles of 20 years; simply put, the items we consider popular and acclaimed now will probably become rare collectibles 20 years from now. Some people would do anything to remember the past, and the best way to reconnect is to invest in collectibles. Of course, we’re not referring to the most trivial, everyday things but about more meaningful items such as jewelry, art, timepieces, stamps, paper money, cars, furniture and wine, just to name a few.
The Fewer the Better
Rarity is turning out to be pretty hard to find since mass production techniques permit companies to (over) pack demand without asking for additional costs. Very few enterprise sell quality and that’s mainly because everyone wants to make more money. In the collectible business, the fewer the items the better the chances a collector has to sell at a high price. It’s not that easy to trade a rare piece either, especially when you can’t afford to pay in order to have it authenticated.
Appeal is yet another tough thing to pin down. You must predict if that item has chances of increasing in value, and that’s something extremely difficult to do if you’re not an expert. Your best shot is to invest in items that one day will be on high demand, and we’re talking here about fine wine, jewelry and art. Many people see collectible investment as lucky investments. Basically, you’re not even investing; you’re spending money in the hopes that at some point the things you bought become priceless.
Reasons to Invest in Collectibles
Collectibles can yield returns provided that the collector knows what he’s doing. It’s important to have a passion for antiques, vintages and history in general to have a shot at making any money with collectibles. The more you know about a certain items the greater chances you have to establish its intrinsic value and thus persuade your customers to buy. Here are 10 reasons that may convince you to invest:
- Collectibles are part of an uptrend market – year-on-year returns and world record prices
- Dominant historical performance
- Tangible assets
- Almost no association to the volatile stock market
- Wide buyer base
- Growing scarcity
- Tax breaks – many types of collectibles (such as fine wine) are named “wasted assets”; because they’re susceptible to increased wear and tear, they’re tax-free.
- Personal control
- Sentimental value
- Inimitability
Before investing in collectibles, you should assess the personal enjoyment and satisfaction you get by owning them. Some may appreciate over time, but you can’t know that for sure. If you’re a wine lover, then by all means, invest in wine and start a collection. But first do it for the pleasure of drinking wine and then for money.
The more information you know about a certain collectible, the higher chances you have to make good profit. That’s not a guarantee though, which is why it’s so important to buy collectibles you actually care about. Be a rational investor; consult with a specialist to make sure your item is an original and make sure all your purchases are from reputable buyers with a track record.
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If you own a garage or attic stuffed with books, memorabilia, old furniture and other related items, you may be sitting on a gold mine. Investing in collectibles is no longer a hobby or a passion, and believe it or not, some collectors would do anything to own a certain vintage item. Most collectors buy old stuff for their personal collections, which means they’re doing it for the sentimental value of the things and not necessarily for money. On the other hand, the market is packed with collectors who are mainly traders; they buy things with the sole purpose of selling them later on for more money.