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What if you could transform your interest into an investment strategy?
Many people find ways to sink money into objects that only grow in value over time.
These objects, known as collectibles, present an exciting investment opportunity for those investors eager for alternative ways to store and grow their wealth.
There are many types of collectibles, and this guide explores the most common collectible categories you might invest in today.
General Pros and Cons of Collectibles
The economy will always ebb and flow, which is why diversification is one of the most important ways to protect your investments during times of inflation.
Keeping all your money in one place is just asking for that place to suffer some catastrophe that utterly destroys your hard-earned wealth. In addition to stocks, bonds, and index funds, your portfolio should contain assets like real estate and perhaps a few items of value — like collectibles.
Some collectibles have been sold for millions of dollars, which more than justifies the act of collectible investment.
Other pros for investing in collectibles include the personal satisfaction that comes with amassing a collection.
Plus, collectible trades tend to be unrecorded, so you can maintain confidentiality while growing your wealth.
However, there are some potential downsides to investing in collectibles.
Collectibles tend to experience extreme price volatility; everything from cultural attitude to market behavior can affect a collection’s value.
What’s more, collectibles are not necessarily easy to liquidate.
To get the cash out of your collection, you must verify authenticity, arrange an appraisal, navigate selling options, find buyers, and organize transfers, all of which can take months with certain types of objects.
Finally, while other types of investments may exist as bits of digital data, you must provide your collection with physical storage space, which may involve expensive equipment for security and quality control.
Before you decide whether investing in collectibles is right for you, consider your interest in any of these common categories of collectibles.
Coins
Numismatics, or the study of coins, is among the most well-known collectible hobbies, and for good reason.
Some of the world’s most valuable coins will fetch millions of dollars at auction.
However, building a valuable coin collection can be difficult because it is so large and competitive — and because of the ease of counterfeiting.
You might start a rare coin collection only if you have significant capital to invest in authenticated coins of known value.
Stamps
Another quintessential type of collectible is stamps, which are readily available, but they aren’t necessarily a good investment.
Though certain rare and historic stamps can carry value, few stamps will generate a positive return.
Unless you are passionate about stamp collecting as a hobby, you might not want to bother with this collectible category.
Wine
The more you know about wine, the better you are at picking which bottles are valuable — and valuable bottles of wine can go for hundreds of thousands of dollars.
In fact, Sotheby’s Wine Index has consistently outperformed the S&P 500 since 2005, demonstrating the persistent and universal appeal of a good vintage.
Unlike coins, starting a wine collection can be as easy as cultivating a good nose, but you will need to have a dedicated storage space to keep your wine in good condition.
Art
Before you drop any money on pieces at your local art fair, you need to understand that collectible art tends to have certain features, such as history and popularity; at times, quality and beauty have nothing to do with a work’s value on the art market.
As tempting as it might be to collect works of art you want to hang in your home, if you are going to use art as an investment, you need to learn market trends, which may involve leaning on expert opinions as you get started.
Books
With the rise of eBooks, physical books have become something akin to art objects, and many rare volumes are immensely valuable to collectors.
However, like stamps, there are a huge number of books available for you to buy, and very few of them carry enough value to be worth your investment.
Again, unless you are happy to keep a vast library full of books in perfect condition just for fun, you might not count on this category of collectibles to increase your wealth.
Vintage Cars
Contrary to popular belief, not all cars immediately lose value when you drive them off the lot.
In fact, there are many makes and models that grow in value over time, as demonstrated by the lively market in vintage cars.
Of course, car collecting is an expensive hobby; you might only be able to keep one or two vehicles in your collection, whereas high-net-worth individuals like celebrities might have garages full of impressive car collections.
Vintage vehicles also require extensive upkeep, which you might be able to perform yourself if you are a committed gearhead.
Trading Cards
Sports cards are the typical go-to when one thinks of collectible trading cards.
However, other types of valuable cards have emerged, including Pokémon and Magic the Gathering cards.
Trading card collections almost always start as a passion project, but certain rare cards can become immensely valuable.
To maintain value in your collection, you need to keep your cards in as pristine condition as possible, especially if you are unsure which cards will grow in value over time.
Memorabilia
All sorts of memorabilia can form the foundation of a collection, from music memorabilia like albums and concert merch to film memorabilia like props and posters to sports memorabilia like jerseys and signed equipment.
Like trading cards, investing in memorabilia can be somewhat risky; it isn’t always clear which recording artists, films, or sports stars will develop a cult following until after the memorabilia is extremely expensive.
However, because certain memorabilia can be extremely rare, this type of collectible can be extremely lucrative.
Anything can become a collectible — toys, jewelry, shoes, silverware.
However, not everything becomes more valuable over time. If you can develop specialized knowledge about certain types of objects, you might be able to leverage it to create a collection that stores and builds your wealth.
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