12-min read.

Are you considering investing in something other than traditional investments like stocks, bonds, and mutual funds? If so, you might want to consider the collectibles asset class.

While some people view alternative investments as a bit of a gamble - with the potential to yield interesting returns - the Collectibles market has been gaining traction recently as an attractive option for portfolio diversification.

A Collectible investment presents unique investment opportunities to both investors and collectors. Many collectibles are valued for their rarity, historical significance, or uniqueness. Items can be anything from stamps and rare coins to fine art, antique furniture, sports memorabilia, or even vintage cars.

Valuable collectibles have been around for centuries and have always been seen as an easy investment perspective for people to invest their money. However, investing in collectibles can be tricky, and many factors must be considered before taking the plunge.

And while there’s no doubt that success requires careful research and assessment before spending big on valuable collections, it’s easier to succeed than you might think - and often incredibly rewarding too!

This blog post examines what makes collectibles a lucrative undertaking for those willing to embrace their appeal.

 

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What is the collectibles market?

The collectibles market refers to the buying and selling of rare or unique items that are valued for their historical significance, scarcity, or aesthetic appeal.

Collectibles can include a wide variety of physical objects such as fine wines, artwork, comic books, rare gems, vintage toys, and even beanie babies.

The market value for these assets can be driven by a variety of factors, including nostalgia, passion for a particular hobby or interest, or the potential for financial gain.

The intrinsic value of collectibles can fluctuate over time, based on factors such as supply and demand, rarity, condition, and the popularity of the item among collectors.

Some may focus on building a collection of items related to a particular theme or subject, while other collectors may accumulate a variety of assets based on their interests and tastes.

Fun Fact: Heritage Auctions is the world's largest collectibles auctioneer, with annual sales of more than $800 million, through 40 categories.

 

Example of collectible investments

Making a collectible investment is a great way to diversify your portfolio and buy something unique. There is something out there for everyone; let's explore some examples of collectibles for investment purposes.

Stamps and Coins

Stamps and rare coins are two examples of collectibles that have been popular investment options for centuries. Both are items that have a limited supply and can appreciate over time. Collectors often focus on building collections related to particular themes or interests, such as countries, eras, or specific topics like space exploration.

Stamps are particularly attractive to investors because they are small and can be easily stored and transported. Certain coins, on the other hand, are often sought after by collectors and investors alike due to their historical significance and rarity.

Did you know? Featured on over 100 different currencies around the world, the late Elizabeth II is the most featured person on banknotes and coins.

Image credit: NetCredit

Sports Cards & Trading Cards

Sports cards have been around since the late 1800s when they were issued as promotional items by tobacco companies. Cards produced before the 1980s are generally considered vintage. However, cards from before World War II are particularly rare because they were more susceptible to being thrown away or damaged.

Today, sports cards are highly sought after due to their historical significance, rarity, and aesthetic appeal. Baseball cards in mint condition have been selling for astronomical prices at auction houses lately.

A 1952 Mickey Mantle from Topps became the most expensive trading card of all time when it sold for $12.6 million. The 9.5 graded card by SGC had been purchased in 1991 for $50,000.

The previous trading card world record was held by a Honus Wagner T-206 Card, with an SGC Grade of 2, which sold for $7.25 million. Time to check your parent's attic and enter the trading card game!

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Toys

Star Wars, Barbie dolls, Transformers, and G.I. Joes. Although they may seem like just fun toys, highly-graded and sealed items can become valuable types, as they are often associated with nostalgia.

Toys from the past are especially desirable for collectors looking for unique pieces that will stand out in their collections. Many vintage toys remain in excellent condition and can fetch high prices at auction houses or through private sales.

Collectors may focus on specific themes such as characters from animated films or television shows, while others may prefer rare action figures or dolls.

The kids aren't alright! An original GI Joe Prototype (Hasbro, 1964) sold for $200,000. Look at the Heritage Auctions archives to see the kind of prices toys and other collectibles are achieving.

Buy collectibles and amazing goodies from the official Netflix Shop.

Comic Books

The popularity of comics is increasing in the past decade and there is no indication that it will slow down soon. Although low and mid-grade copies are growing in value, high-grade comic books are the ones appreciating the most rapidly.

The world's most expensive comic book is ActionC #1. It is considered by many fans to be the most valuable comic because it includes the debut of Jerry Siegel and Joe Shuster's historic Superman. Although it was originally sold for only 10 cents, four copies have sold for over a million dollars since then.

Trust the Experts: Certified Guaranty Company (CGC) is the world's leading third-party grading service for comic books, trading cards, video games, magazines, concert posters, and more. Their grading fee for a comic book starts from around $25, depending on its value.

Artwork & Fine Art

When it comes to collectible investments, fine art can be a great way to diversify your portfolio. Artwork can range from traditional paintings and sculptures to modern installations and photography.

Artwork that belongs to the category of "blue chip" has shown historical outperformance compared to the stock market, making it a great way to store wealth; although it can be a volatile market

Whether it's from your local auction house or online art gallery, it’s now easier than ever to find valuable pieces, paintings from renowned artists, or limited edition prints from up-and-coming talents.

Related: What are Alternative Investments?

There is an element of personal recognition with art collectors, as it provides the opportunity to enjoy and display the piece in your home or office while potentially earning a return on your investment.

You may not have a collector's keen eye to detect a fake from a masterpiece so invest with caution! A cheaper way into the art world is through fractional ownership, where you pool money with other buyers to acquire a piece of art. Owning a Banksy for a fraction of the retail price? Check out Masterworks or Investables.

Going once, going twice, sold! According to the ancient Greek historian Herodotus, the Babylonians held annual marriage auctions for women around 500 B.C., which is the first recorded auction in history.

Timepieces & Vintage Jewelry

Both timepieces and vintage jewelry have a history and rarity that can make them valuable collectible investments. Luxury watches, for example, can escalate in value over time, particularly those from well-known brands such as Rolex or Patek Philippe.

Luxury watches have been in such high demand lately that in some cases pre-owned versions are more expensive than brand-new models, as some watch retailers have a 3 to 7-year waiting list.

Vintage jewelry, on the other hand, can be valued for its unique design and the quality of the materials used. Get a written guarantee when buying a rare item to verify provenance.

Battery included? The world's most expensive watch ever sold at auction is the Patek Philippe Grandmaster Chime, which was sold at an auction for a whopping $31 million in 2019. This watch has a unique design with two dials and 20 complications, including a perpetual calendar and a minute repeater.

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Antique Furniture & Housewares

Antique furniture and housewares are other options for those interested in collectible investments.

Antique furniture can include pieces from a variety of styles, such as Victorian, Art Deco, and Mid-Century Modern, and can be valued for their craftsmanship, rarity, and historical significance.

Housewares, such as silverware and china, can also be collectible items that can appreciate over time, particularly those made of precious metals.

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Classic Cars

Owning a classic car can be a fun and rewarding hobby. However, investing in classic automobiles can also be a risky proposition, as the market can be volatile and the costs of maintenance, insurance, and storage can be significant.

But investing in classic cars can be a great way to enjoy and appreciate the beauty and history of these vehicles while potentially earning a return on your collection.

Unlike most asset classes, collectors with mechanic skills can add value to a classic car; making it an interesting proposition for auto enthusiasts.

The alternative and collectible investments experts at Alts.co have recently published an in-depth article on Classic Car Investing.

Movie Collectibles

Movie collectibles are a great investment option for those who appreciate the history and culture of film.

Whether it's vintage movie posters, autographed memorabilia, or limited edition props, these items can be highly sought after by both collectors and investors alike.

Figures, statues, apparel, posters, and more. Buy collectibles from your favorite series and movies at the official Netflix Shop.

 

Vintage Clothing

Investing in vintage clothing can be a great way to add some unique pieces to your wardrobe while also potentially making a return on your investment.

Vintage clothing, which includes items from any era before the present day, is highly sought after by fashionistas and collectors alike due to its rarity and historical significance.

Buying vintage clothing requires research, however, as there are many counterfeit copies out there. With careful selection and expert advice from experienced dealers, investing in vintage clothing can be an exciting way to enjoy fashion and make money at the same time!

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Sneakers

Investing in sneakers is an increasingly popular trend among collectors and investors alike. Sneakers have become a hot commodity. From vintage Jordans to the latest Nike releases, sneakerheads can collect shoes from a wide range of styles and brands that are sure to increase over time.

Run baby, run! Research firm Cowen estimates that the global sneaker resale market will reach $30 billion by 2030.

Music Memorabilia

Items such as concert posters, autographed guitars, stage-worn clothing, and original album artwork can all appreciate over time, particularly for iconic and influential artists such as The Beatles, Elvis Presley, and Jimi Hendrix.

The market for music memorabilia is volatile, and the price of an item can fluctuate depending on factors such as the popularity of the artist and the condition of the item.

It is also possible to invest in music royalties. Owning song rights entitles you to royalties which are paid out each time the song is played or reproduced.

Sports Memorabilia

Investing in sports memorabilia is a great way to show off your love for your favorite teams and players while also potentially making a great return.

From vintage jerseys to autographed balls, sports memorabilia can range from very affordable to extremely rare and valuable.

Whether it's baseball cards or signed photos, many different types of sports memorabilia could become highly sought after by both fans and investors alike!

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Celebrity Memorabilia

From autographed movie posters and limited edition albums to signed scripts and rare photographs, investing in celebrity memorabilia can be both exciting and profitable, while enjoying some of the most iconic items from pop culture.

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A few things to remember when investing in collectibles

There are a few things you should keep in mind when investing in collectibles:

• Understand how to value the item you are considering and do research on its potential appreciation or depreciation over time.

• Buy from reputable dealers or auction houses to ensure that you are getting a genuine item.

• Consider purchasing insurance for your valuable items, as they can be easily damaged or lost without proper care. Costs of storage, maintenance, and special care requirements should not be ignored.

• You should also have a long-term investment strategy and be prepared to hold onto the item for several years to allow for appreciation in value. Collectibles should be seen as part of a well-diversified investment portfolio.

• Remember that most collectible investments are illiquid - meaning it may take some time before you can convert them into cash if needed.

With these considerations in mind, collecting could become an enjoyable hobby that pays off financially as well!

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Are valuable collectibles a good investment?

Collectibles generally can be attractive options for some people, but it is important to approach this type of investment with caution and to have a long-term strategy in place.

Collectibles, such as artwork, commemorative coins, vinyl records, or classic cars, can increment in value over time due to factors such as rarity, historical significance, and the condition of the item.

However, the market of these assets can be volatile, and the price of an item can fluctuate depending on a variety of factors.

In addition, they may not provide the same level of liquidity as public markets assets, such as stocks and bonds.

Therefore, a collectible investment should be seen as a part of a well-diversified portfolio, and investors should do their research and buy from reputable dealers to ensure that they are getting a genuine and valuable item.

How to limit risks with collectibles?

Here are a few tips to invest in collectibles without taking on too much risk:

1. Do your research. Before investing in a collectible, research its history, market trends, and potential value. Speak to experts in the field and attend auctions and exhibitions to get a sense of the market.

2. Buy from reputable dealers. When purchasing a collectible, make sure you buy from a reputable dealer who has a proven track record of selling authentic items.

3. Protect your investment. Make sure your collectibles are stored in a secure location and insured against theft, damage, and loss.

4. Diversify your portfolio. Don't put all your money into one type of collectible. Instead, diversify your portfolio by investing in a range of items, such as art, antiques, and sports memorabilia.

 

Disadvantages of collectible investing

One of the main risks is that the value of the collectible can be subjective. Two people collecting the same item from the same period may not pay the same price. This is because what one person thinks is valuable, another might not.

Additionally, their market can be unpredictable. Just because a collectible has appreciated in the past does not guarantee that it will continue to do so in the future.

Another risk is the potential for fraud. Collectibles are often sold through private transactions, and it can be difficult to determine the authenticity of an item. This is particularly true for items that are hundreds of years old, as they may have been repaired or restored over time.

Advantages of being a collector

One of the main advantages of collectible investments is their potential for appreciation. Unlike stocks and bonds, which suffer in a down market, collectibles tend to hold their value or even appreciate over time. This is because their supply is limited, and as they become more rare, their value increases.

Another advantage of collectibles is that they can be tangible assets. This means that you can physically see and touch your investment, which can be reassuring for some investors. It also means that you can display your collection in your home or office, which can be a source of pride and enjoyment.

Are collectibles riskier than the stock market?

Collectible investments can be riskier and more speculative than investing in the stock market. While items such as trading cards, fine art, or even star wars memorabilia can gain value over time, their market can be highly volatile and unpredictable.

You would need in-depth research and experience to be successful in this venture. Investing in collectibles should be seen as a part of a well-diversified investment portfolio.

Final thoughts on collectible investments

Investments can come in many different shapes and sizes, and collectible assets are no exception. These offer the chance to not only grow wealth but build a unique collection that will be treasured for years, potentially even generations, to come.

In addition to being a fun and potentially lucrative way to diversify a portfolio, both investors and collectors may find fulfillment in exploring their interests and learning more about their chosen collectibles, with the most accessible to the non-accredited investor.

So if you’re looking for a different way to build your portfolio or personal “collection” then why not consider collectible investments?

After all - what could be more exciting than finding something truly special?

What collectibles are you interested in? Let us know in the comments down below; we’d love to hear from you!

No Financial Advice. This article does not provide personal finance advice and has been prepared without taking into account any person’s investment objectives, financial situation, or particular needs.