Have you ever considered adding high-value items to diversify your portfolio? Collectables investment is an alternative form of investing where unique items are acquired and kept until they increase in value over time. As a new investor, this can give you high returns and protection from inflation.
According to Burton and Jacobsen, almost all case studies demonstrate a positive return on investment for collectables, with only a few exceptions in specific submarkets. While they also observed a few negative real returns, those were not significantly large, supporting their belief that investing in collectables can be a safe and profitable strategy.
As traditional investment markets become volatile, you should start looking for good collectables to invest in to diversify your portfolio. This article will teach you the fundamentals of collectable investments and list specific examples of items you can start acquiring.
- Fine Art Collection
- Fine Wine Collection
- Luxury Watch Collection
- Sports Memorabilia
- Non-Fungible Tokens (NFTs)
Reasons for Investing in Collectables
The pursuit of collecting has consistently delivered personal enjoyment to collectors, as highlighted by a wealth management company, Atomos. From uniquely shaped stones to well-known toy action figures, the process of searching, acquiring, and organising gives them a sense of purpose and pleasure.
Aside from the thrill of the hunt, some collectors gather items to capture significant memories or milestones, as noted by a management agenda platform, Practice Business. That could be a childhood toy, a memento from a special occasion, or a family heirloom. Collecting brings them a sense of nostalgia, or triggers an emotional experience.
According to a collectable dealer, Paul Fraser Collectibles, some collectors are compelled by the historical significance of the items. They may see themselves as custodians of artefacts, vintage documents, or relics that carry a piece of history. Their role is to preserve these tangible connections to the past for future generations.
However, some view rare items as a strategic investment opportunity, as noted by personal finance resource Money Crashers. This group of collectors understand market trends and performs research to predict if an item will likely appreciate over time. Hence, potential financial returns are the driving force behind their investments.
Top Collectables Worth Investing In
As mentioned above investors have varied reasons for collecting. Regardless, what makes these items investable is ultimately their market value. Collectables have a transformative nature – what was once a simple family keepsake could, years later, become a highly sought-after item in an auction house or gallery.
Below are examples of items you should consider adding to your high-value collection.
1. Fine Art Collection
Fine art refers to visual creations appreciated for their beauty and meaningful expression such as paintings, sculptures, or drawings among others. Collectors who have their eyes on these types of art often prioritise aesthetic value rather than functionality.
Fine art has become increasingly popular among investors, with certain pieces fetching exceptionally high prices at auctions. For instance, the painting Dame mit Fächer was sold for £85.3 million at a European auction house in 2023. This highlights a strong demand for art collectables.
Nonetheless, before acquiring paintings and artworks from local galleries, remember that the value of art is subjective. The worth of each piece largely depends on current art market trends and the evolving tastes of society.
If you already have art pieces in your collection, ensure complete documentation of essential information about each artwork, such as the artist’s name, purchase price, current valuation, and the history behind the piece. Maintaining an organised archive of this data will be invaluable once you decide to sell a piece or display it in your gallery.
2. Fine Wine Collection
Fine wine generally refers to high-quality wines often considered superior in terms of complexity, balance, and overall excellence, according to a wine website, Wineanorak.
Westgarth from Forbes notes a strong demand for fine wine as an investment, particularly since supply decreases over time.
Wine collectors typically focus on the long-term benefits of investing in this product. At the same time, they likely have wine cellars or space that can preserve the quality of their bottles.
Fine wines are sensitive to changes in temperature, humidity, and light, thus proper storage conditions must be considered to protect your wine, as highlighted by Dunavox GB.
At the same time, you will have to keep detailed records of your wine’s purchase dates, vineyard information, or tasting notes to track provenance and monitor the ageing process.
3. Luxury Watch Collection
Watches are functional accessories that enhance one's fashion or professional appearance. They are also considered a lucrative investment, as certain timepieces appreciate over time.
Hence, when choosing an investment watch, consider buying from well-known brands like Rolex. This brand is famous for utilising top-notch materials like 18-karat gold or stainless steel, raising the watch’s price over time.
For instance, in 1970, a Rolex Submariner 5513 was sold for $230 (£181), but today, its starting price is $10,000 (£7,876). This demonstrates that investing in watches from reputable brands is not just about owning a statement piece, but also acquiring a reliable asset that can appreciate over time.
Perhaps the biggest threat to entering the watch market is counterfeit products. Replications of luxury watches can be very convincing, making authenticity checks crucial before purchase. In this case, always buy from the brands' official stores or authorised dealers to guarantee an authentic watch.
4. Sports Memorabilia
Sports items like signed jerseys, game-used equipment, and rare trading cards can increase in value over time, especially when linked to iconic athletes or significant historical events in sports.
Today, sports memorabilia value is estimated at £178.5 billion and is expected to reach £178.5 billion in 2032, as noted by Forbes.
However, one of the challenges of investing in sports memorabilia is the unpredictability of market demand because of shifts in popular athletes, sports trends, or fan sentiment. One way to minimise this risk is to diversify your sports memorabilia collection.
You can include items from various athletes, sports, and eras, and just make sure your collection is well-organised or grouped accordingly to easily retrieve information.
5. Non-Fungible Tokens
One of the latest trends in the world of cryptocurrency is non-fungible tokens also known as NFTs. According to Investopedia, these digital assets are one-of-a-kind and are stored on a blockchain with a unique code, making them impossible to replicate.
One iconic NFT is the CryptoPunks, boasting a market capitalisation worth roughly $872 million (over £666,000,000), according to a global data and business intelligence platform, Statista.
Yet, one of the downsides of investing in NFT is the potential for fraud, scams, and money laundering. Some cases involve fake NFT sales, where copied digital assets are passed off as real.
To avoid fraud, scams, and money laundering in the NFT space, make sure you conduct extensive research. This includes the NFT project, the associated blockchain, and the creators involved. Verify the authenticity and reputation of artists and platforms before making any purchases.
Why You Should Start Investing in Collectables
Investing in collectables offers you some advantages, including:- The collectable investment gives excitement and satisfaction as collectors acquire rare art, wine, sports memorabilia, or NFTs.
- A personal connection and appreciation for the items turn the investment journey into a meaningful experience.
- Collectables serve as another valuable form of assets that help diversify their portfolio.
On the other hand, the value of collectables could rise and fall erratically. If you have never invested in collectables, you should weigh the benefits and challenges listed below.
Benefits of Investing in Collectables
- Rare and unique items have the potential to have a high return on investment.
- Some collectables tend to increase in value over time – acting as a hedge against inflation and economic downturns.
- Collectables are valued for being one-of-a-kind or limited edition, which increases their exclusivity and potential value.
- Collectors gain a sense of ownership and personal gratification from collecting.
- Collectables are material possessions that can be left as a legacy or inheritance.
Challenges in Investing in Collectables
- The value of collectables is known to be unstable and highly dependent on subjective taste or preference.
- Collectables may lack liquidity, making it difficult to sell them quickly.
- Collectables can involve high transaction fees.
- Storing and handling delicate collectables such as wine or figurines can be costly.
- There is always a risk of buying counterfeit items when collecting, which can lead to financial losses and disappointment.
Diversify Portfolio with Collectables
In conclusion, investing in collectables does have the potential to be extremely profitable. However, it is essential to conduct research, understand the dangers and benefits, and ensure your purchases are legitimate.
With the proper information and strategy, collecting rare goods may bring financial rewards while providing personal satisfaction and a sense of ownership.
Collectable Investment: Frequently Asked Questions
1. What types of collectables are good for investment?
Collectables that have good investment potential often include rare or unique items, limited editions, and those connected to famous individuals or significant historical events. Some examples of these are art, watches, sports memorabilia, wine, and NFTs.
2. How Do I Determine the Value of a Collectable?
A collectable's worth can be calculated using research, expert opinion, and auction sales data. It can also factor in other considerations like rarity, condition, demand, and provenance.
3. Where Can I Buy and Sell Collectables?
Collectables can be purchased and sold through a variety of channels, including auction houses, online marketplaces, specialist shops, and private collectors.
4. How Can I Ensure That the Collectables I Purchase are Authentic?
Purchasing collectables from reputable dealers or authenticators who have experience and expertise in determining the authenticity of items is one way to guarantee their authenticity.
5. Do Collectables Appreciate?
Collectables can gain value through time, but market developments and demand shifts may also impact their value.
Organise Your Collectables with MyAssets
Whether you collect fine art, luxury watches, sports memorabilia, or wine, organising your valuables becomes easier with tools like MyAssets.
With MyAssets, you can elevate your collecting experience. It is an advanced asset management platform designed to streamline your collection management.
Secure your valuable collectables – from fine art to NFTs – by recording all important information in a central database like MyAssets.
The platform can be explored in detail at app.myassets.com.
