Buy with your heart, as well as your head

view gallery VIEW GALLERY

Instead of lining bankers' pockets, put your cash into something you can love, says Chris Dearden

The 0.05 per cent my bank is offering for the privilege of looking after my very modest fortune seems pretty typical of the system's generosity to anybody not in their employ. It probably also explains my general reluctance to entrust my life savings to them right now. That other traditional safe haven for spare cash, bricks and mortar, seems even less attractive at the moment. So perhaps it's not surprising that investors worldwide are looking for somewhere, or something, that will give them a safe and reliable rate of return on their money, and are wondering if classic cars could provide the answer.

Wait a minute. Haven't we been here before? Many of us still remember the classic car boom of the Eighties and Nineties, where anything that could reasonably be called a classic, and much that frankly couldn't, would have briefcases full of cash thrown at it. That boom saw the values of some fashionable cars double each month, and fortunes were paid for cars of dubious quality and even more dubious provenance. This kind of boom has only one ending. Sure enough, speculators who had seen the cars akin to shares on wheels unloaded them unceremoniously when the market began to turn, and the speed of drop in values made the earlier rises look pedestrian. Many investors lost everything.

One member of the British aristocracy who had built up a collection of hugely desirable Ferraris decided that his financial situation simply couldn't stand the overnight slashing to the value of his investment, so he came up with a novel solution. He cut the entire collection into small pieces and dropped them into a very large pit he had dug in the grounds of his estate, claiming on his insurance at the original inflated values. He was given five years in custody to ponder whether he might not have come up with a better plan. Nevertheless, the story illustrates simultaneously both the old maxims that investments can go down as well as up, and that money and good sense don't always go hand in hand.

So what makes us think that things could be different today? For a start, the market is now clinically analysed in a way that we are more used to seeing with currencies or precious metals. In 2008, two former bankers set up Historic Automobile Group International (HAGI) with the sole aim of providing a rigorous independent index of classic car prices. The HAGI index for 2010 shows an increase of 7 per cent on a basket taken from all classic cars, and the increase in the HAGI Ferrari index for 2010 was more than 9 per cent. These are solid, respectable figures, unlike the dramatic amounts of the Eighties.

Another sign that classics are respectable again could be found in the announcement this month of the IGA Automobile Fund, which aims to launch in April with the intention of trading in the world's most desirable and iconic collectors' cars. Fronted by some respected names including McLaren designer Gordon Murray and Pink Floyd drummer and car collector Nick Mason, the fund has a list of 25 cars it plans to target, including the Ferrari 250 GTO and Aston Martin DB4 Zagato. While the fund is aimed at wealthy investors with a minimum stake of $500,000 (£333,000), some large financial institutions are also having a close look, presumably based on some hard-nosed investment criteria. The fund aims to make a return of 15 per cent a year, and as a bonus, investors will be able to participate in regular events that use the fund's stock. Not that I can see them lending out the Zagato for a weekend.

As a purely financial investment, with a touch of added excitement from the commodity in question, this could really make sense. But I can't help thinking that it misses the point of investing in classic cars – buying with both your head and heart. Something from which you will get the intense pleasure that comes with ownership and which, if you are lucky and have bought well, might make you a profit later on.

Maybe Chris Evans had this in mind when he paid £12 million for his Ferrari 250 GTO. He is very much a head-and-heart investor, buying shrewdly but only what he loves. You might assume such speculation in classic cars is the preserve of the financially well-heeled. At the top end of the market it is, but a recent US survey discovered that of the 25 classic cars with the greatest appreciation in value over the year, 16 were valued at under $10,000 (£6,600). A sum of money that might be languishing in a savings account could instead be buying a top 25 appreciating classic car.

Now if that thought has got you reaching for your cheque book and the small ads in Classic Cars, there are some golden rules to remember. First, decide on the car you want, then buy the best example of it that you can find. Unless you are looking for a DIY restoration project, look for something where all the work has already been done, particularly on the bodywork, which is labour intensive and therefore expensive. Second, make sure you are actually buying what you think you are buying. Anybody who thinks forgery is restricted to banknotes and fine art should note that even though only 33 Ferrari 250 TRs were originally built, there are 46 hotly disputed examples in circulation today.

The only factor in common with the top three best buy cars is that good returns can probably be made on all of them if the right example can be found. In third place is the beautifully brutal TVR Griffith, with supercar performance for £10,000 upwards. Check the chassis carefully, buy the youngest five-litre model you can afford and never drive it in the wet, unless you're very brave. Second is the more gentle Triumph Roadster. Where else could you get a nice example of Forties style and a dickey seat for £15,000? But in pole position is a foray into Italian exotica, the Ferrari Mondial convertible. A 1980s two-plus-two V8 convertible for under £20,000? Sounds unlikely, but one is currently for sale in Yorkshire that has just been reduced to £10,000. It well illustrates the point that the best gains are found in cars other buyers don't currently want, but probably soon will.

If you decide to take the plunge with a classic car, whatever happens you can be satisfied knowing the money you liberated from your savings account to buy it won't be used to bolster yet another banker's bonus.

PROMOTED VIDEO
Arts and Entertainment
film
Arts and Entertainment
Preening: Johnny Depp in 'Mortdecai'
filmMortdecai becomes actor's fifth consecutive box office bomb
News
peopleWarning - contains a lot of swearing
Travel
travel
Arts and Entertainment
arts + ents
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Investigo: Finance Business Partner

    £45000 - £50000 per annum: Investigo: My client, a global leader in providing ...

    Austen Lloyd: Commercial Property Solicitor - West London

    Excellent Salary: Austen Lloyd: WEST LONDON - An excellent new opportunity wit...

    Recruitment Genius: Florist Shop Manager

    £8 - £10 per hour: Recruitment Genius: A Florist Shop Manager is required to m...

    Recruitment Genius: Appointment Maker / Telesales

    £15000 - £26000 per annum: Recruitment Genius: One of the UK's leading supplie...

    Day In a Page

    Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

    Celebrities call on David Cameron to take more Syrian refugees

    One young mother tells of torture by Assad regime
    The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

    The enemy within

    People who hear voices in their heads are being encouraged to talk back
    'In Auschwitz you got used to anything'

    'In Auschwitz you got used to anything'

    Survivors of the Nazi concentration camp remember its horror, 70 years on
    Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

    Autumn/winter menswear 2015

    The uniforms that make up modern life come to the fore
    'I'm gay, and plan to fight military homophobia'

    'I'm gay, and plan to fight military homophobia'

    Army general planning to come out
    Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

    What the six wise men told Tony Blair

    Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
    25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

    25 years of The Independent on Sunday

    The stories, the writers and the changes over the last quarter of a century
    Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

    Homeless Veterans appeal

    As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
    Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

    Smash hit go under the hammer

    It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
    Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

    The geeks who rocked the world

    A new documentary looks back at origins of the computer-games industry
    Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

    Belle & Sebastian is taking a new direction

    Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
    America: Land of the free, home of the political dynasty

    America: Land of the free, home of the political dynasty

    These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
    A graphic history of US civil rights – in comic book form

    A graphic history of US civil rights – in comic book form

    A veteran of the Fifties campaigns is inspiring a new generation of activists
    Winston Churchill: the enigma of a British hero

    Winston Churchill: the enigma of a British hero

    A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
    Growing mussels: Precious freshwater shellfish are thriving in a unique green project

    Growing mussels

    Precious freshwater shellfish are thriving in a unique green project