Collectibles: A way to invest and have fun at the same time
Desirable objects can soar in value, but you need to know what you are doing to buy and sell wisely.
Saturday 01 May 2010
Are you tired of riding the stock market rollercoaster? How do you fancy putting your money into a crate of fine wine or buying a restored Jaguar E-Type instead? Not only will you get to enjoy the item but you may also be in line for bumper returns.
Welcome to the quirky world of collectible investments. Most financial advisers warn it is easy to lose a fortune if you put money into alternatives, which includes everything from stamps to antiques, but millions of people still include them as part of their overall portfolio.
It is certainly a hugely diverse sector. Some people focus on specialist smaller items like collecting cigarette cards or rare comics, while others like to put their faith in bigger ticket items they hope will make thousands of pounds at auction.
Their argument has been strengthened during the recession with demand remaining strong for really good-quality items, according to Judith Miller from TV's Antiques Roadshow and the co-author of Miller's Collectibles Price Guide.
The idea of buying something tangible, such as a music box or 19th century vase, grew in popularity during the financial crisis as people became increasingly disillusioned with seeing the value of their investments plummet overnight.
"They have done much better than most other investments," she says. "Do you want a piece of paper over which you have no control or something really nice like a table that you can not only enjoy but eventually sell for a good price at market?"
Of course, they are not a guaranteed route to riches. "It is the same as with any other investment," she adds. "If you are forced to sell at a bad time you can lose money, but if you can hold it until the market goes up then you will do well."
However, alternative investments need to come with wealth warnings attached, according to James Daley, money editor at Which? While there is no doubt some items have fetched big money, they need to be treated with extreme caution.
"It might seem like an exciting idea but these investments are only suitable for a minority of investors," he says. "Not until you have a cash reserve and a relatively large portfolio of equities, bonds and property should you even consider them."
Even at that stage people must proceed with care. "You must read the small print very closely as there is not as great scrutiny of these as you get with regular investment funds which means you can be entering the unknown," suggests Daley.
Being able to properly value items can be difficult so research is essential. "You need to ensure you are getting a fair price when you buy – and also when you sell, so you will need to ask plenty of questions before making your final decision," he adds.
So for those people still attracted to the idea, what areas are worth investigating?
If you can resist uncorking the bottles then wine may prove to be a lucrative longer-term investment, but you need to be extremely careful what you buy.
Investors have certainly enjoyed decent returns in the past from stockpiling a selection of the finest wines produced by the top chateaux of Bordeaux and then selling them for a handsome profit.
In fact, some of these examples have passed into wine investment folklore. A case of Le Pin 1982, for example, cost just £200 when it was released, but was worth about £25,000 a few years ago – a staggering increase of more than 12,000 per cent.
However, investing in wine is a very complex subject so you must put time into researching the area before deciding whether to get involved. As with any alternative investment, the golden rule is: only risk what you can afford to lose.
Football is the big seller in this area and demand has remained fairly stable over the past few years, according to David Convery of Convery Auctions. "The right things will sell at the right times because people are still going to matches and collecting memorabilia relating to particular players and clubs," he says.
A good idea is to collect items relating to young players that are being tipped for the top. "Look at the headlines to see who is being courted by the big clubs," he adds. "People like Gareth Bale of Tottenham Hotspur are seeing their stock rise."
However, you need to be fairly selective about the items purchased. The sheer volume of autographs – some genuine, some fake – on eBay has dampened valuations severely, but there is still demand for more unusual items.
"If you can get your hands on a player's actual kit, that is what will bring in the big bucks further down the line," he says. "For example, a replica shirt signed by Wayne Rooney is probably worth about £50 – but a match worn version could make £1,000."
This summer's World Cup could also provide an opportunity to make some money, depending on who emerges victorious. "If you are out in South Africa and get some nice items from the tournament – especially relating to the winners – then they could be worth money if you cash them in straight afterwards," adds Convery.
For the real petrol head, the lure of being able to buy a classic car will be almost irresistible, whether their budget stretches from one of the modest hot hatches, such as the Peugeot 205, to a pristine Ferrari.
The good news is that the market for classics has been extremely buoyant over the past couple of years, according to Tim Schofield, the UK head and director of the motor car department at the auction house Bonhams. In fact, nine out of 10 cars coming under the hammer during the first two sales of this year were found new homes.
"If you have got money earning nothing in the bank, view the stock market as a bit hit and miss, and have petrol in the veins, then why not buy an old car?" he says. "It is a tangible asset that is kept in your garage and you cannot put a figure on the fun you get out of its use. Also, as long as you buy sensibly and it does not end up needing a lot of work done on it, it might increase in value two or three years down the line."
Cars increase in value for a variety of reasons. Sometimes it can be a manufacturer producing great modern cars that rekindles interest in their predecessors, while others shoot to prominence celebrating an anniversary for a particular model.
Recently, for example, Maseratis from the 1960s and 1970s have been in demand, as well as Porsches from the 1980s, while Aston Martins have consistently enjoyed decent valuation growth.
"My advice is to do your research and ask questions," says Schofield. "If you have narrowed your sights to a particular make, model and type, then go and see the best car you cannot afford and use this as the benchmark on which to judge the others."
The future success of the sector depends on new people getting involved. "The lifeblood of any business is to keep your established clients happy and attract new people into the sales rooms," he adds. "This year, up to a third of people attending our auctions are new clients to Bonhams, which can only be good news."
Building a stamp collection may involve a trip down memory lane to your childhood – but pick wisely and it could end up being a lucrative journey with some unique examples selling for millions of dollars.
According to Geoff Anandappa, investment portfolio manager at Stanley Gibbons, the rarest stamps have delivered annual average returns of around 9.7 per cent, with the prices being driven mainly by collectors.
"These stamps can be a good way of diversifying your portfolios because they do not correlate closely with any other asset classes," he says. "Collectors are buying and selling millions of pounds worth of stamps every day."
The most expensive – valued at US$2.97m – is the 1868 1c Benjamin Franklin Z-grill, owned by the PIMCO fund manager Bill Gross. There is also Sweden's Treskilling Yellow stamp which is coming up for auction next month in Switzerland.
However, even smaller value stamps have performed very well in recent years, according to Anandappa, who cites the Penny Black – the world's first stamp – as a prime example.
"It is not rare as 60 million were printed but unused examples have increased in value," he says. "Five years ago we were selling them for around £4,000 but now they are going for £10,000. However, this is not unusual for rare stamps."
So how should people start? The key is finding a reputable dealer that can help guide you through the process. "I would advise people against buying on eBay or via auctions as they really need to know what they are doing," adds Anandappa. "For example, we have about three million stamps in our London shop but only 150 are recommended for investment purposes."
* Miller's price guides
* Invest drinks
* Convery Auctions
- 1 Which country would be hardest to invade?
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
- 4 How the language you speak changes your view of the world
- 5 Royal baby girl born: Duchess of Cambridge's second child will be a princess thanks to Queen
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...
Day In a Page
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park