Creative investments: Beyond stocks and shares
Pick the right handbag, invest in an artwork or splash out on some scrubland and you could be on to a nice little earner
Wednesday 01 April 2009
Vintage fashion: ‘Buy the dearest things that you can afford’
The last few years of heady consumerism have enabled even those without much money to indulge in the very latest fashions. Clothes are barely off the catwalk by the time racks of lookalikes are delivered to the high street. Who knows whether these straitened times will change the age of throwaway fashion; what is clear, though, is that such a cycle is rarely spoken of as investment. But are we missing a trick? High-end fashion is certainly ripe for investment potential – Kerry Taylor confirms it, and she should know. The doyenne of vintage fashion, she presides over Kerry Taylor Auctions, Europe's leading fashion auction house: since the downfall of Lehman Brothers, she's held three sales, and they've all been a success. Two weeks ago, her most recent auction – which contained clothes by Biba, Pucci and Yves Saint Laurent – saw 98 per cent sales, and all just below the top estimates. Her tip for investors? "Buy the most expensive things you can afford."
If you're going to do that, however, a discerning eye is required to ensure maximum returns. Buy a good designer at their peak, she says – if the label says Dior, you want it to be by Christian himself rather than by Marc Bohan, who took over in 1962. If the piece of clothing is by Yves Saint Laurent, it's haute couture that will accrue the most value in years to come, not Rive Gauche (from the Seventies and Eighties), or Variations (from the Nineties) – both are still too recent to hold the same cache. And even if those criteria are fulfilled, avoid anything that has serious staining or alterations, which seriously decrease the value. Store the pieces out of sunlight (fading is a no-no), and start to get paranoid about moths, damp and mildew.
Now, it seems, is the time to invest: museums are trying to buy as much as they can for their archives, so free circulation of this standard of clothing is diminishing. As well as the professional collectors, there still exists a body of monied people, untouched by the recession, who will think nothing of going to Paris and spending £30,000 on limited-collection haute couture tailoring.
As far as jewellery goes, wisdom is that signature pieces are key: whereas clothing requires a famous label, stylistically strong pieces from the 1920s and 1930s don't have to be Cartier to be of value. "Rather than the value of the stones, it's the dynamism of the design that's key for me," Taylor says, pointing out that jewellery is very much part of high fashion. If you're lucky enough to come across a jewellery set from the 1860s in its original box, say, or a barbaric 1970s collar, the appeal for collectors will be intrinsic.
If your investment potential doesn't stretch to haute couture, there is still much to be said for starting small. After all, who would have thought people would pay so much for a handbag? And yet, the "It Bag" culture is still going strong, with more than £1,000 being the average price for the latest design. Thus, truly classic bags – by Hermès, for instance – will always have a market. And working on the premise that today's new wardrobe staples are tomorrow's covetable purchases, if you can stow away modern collectables – Chloé's Paddington bag, or a Fendi Baguette – it will be money well spent. This theory of demand for exclusivity filters down on to the high street, too, if your budget is a little more bijou. Julia Hutton-Potts, eBay's pop-culture specialist, points out that eBay reflects the demand you get on the high street: so if you pick up some of-the-moment high-demand fashion – the collaborations H&M does with big-name designers such as Stella McCartney or Comme des Garçons, for instance – you are almost guaranteed a return for your money.
As the outlay is not as great as that in high fashion, it makes sense that the profit margins won't be as high, but it also makes sense to start somewhere, accruing capital that you can then put into more expensive wares. The populism of eBay means that an item of women's clothing is sold every three seconds in the UK, and a pair of shoes every 10 seconds, so the market is ripe.
A sharp eye for detail, the knowledge of what name counts on a label, and a great deal of patience are required if you want to start making fashion work for your bank balance. Shopping to make money necessitates something of a mental shift, it's true, but if you can bear to buy fashion that you will never wear, a potential goldmine awaits.
The next Kerry Taylor auction on 28 April is Amanda Wakeley Archive Liquidation Auction www.kerrytaylorauctions.com Clare Dwyer Hogg
Property and land: 'Remember, there is more than one way to make money from a property'
Phil Spencer's home-finding firm has gone bust, developers have downed tools worldwide and The Apprentice hopefuls include an estate agent seeking a career change. It doesn't sound an ideal time to try to make a profit from property, does it? Yet we may look back on spring 2009 as the moment when we should have acted.
"We've seen precipitous falls over an extremely short period. Many [homes] are selling at 30 per cent less than the heady 2007 levels. A new raft of buyers is getting ready to pounce on correctly priced property," says James Greenwood of Stacks, which finds homes for buyers and bargains hard with sellers to slash asking prices.
"The fear of a total collapse in property prices has now passed," Greenwood claims. If that is right, canny buyers will purchase at the bottom of the market – and may remember that there is more than one way to make money from a property. For example, land prices are down 40 per cent or more. A 0.2 acre plot like the one at Abbotscroft near Melrose in the Scottish borders (knightfrank.com 01578 722 814) costs £125,000 and comes with planning consent for a house and garage. If you build during the recession you could make a profit of 25 per cent.
Another plan would be to buy a period apartment in one of the central London private estates on a very short lease – say under 20 years – then extend the lease and thus add 10 per cent to 40 per cent to the property's value. This tactic is not for the faint-hearted as you must live in the flat for a short while to qualify and then negotiate the lease extension directly with the freeholder. The cost depends on the freeholder's willingness to extend, on how much a longer lease could add to the value, plus compensation to the freeholder that is worked out by complicated formulae. But every year about 400 people do it and make money.
Another option is to buy a home with viable integrated business. West Cottage Café at Cley-next-the-Sea, Norfolk, is a fine example. On sale for £575,000 ( savills.com , 01603 229 229), it sits in a busy tourist area and boasts a £60,000 annual turnover, of which £42,000 is profit. It is ripe for improvement. You could use its four bedrooms as a B&B or expand the café, or both, of course.
Then there's buy to let – with a twist. Purchasing a flat in a city centre already saturated with identical apartments is the equivalent of burning £20 notes, but buy a carefully chosen student property and you may do well. Student numbers across Britain have grown from 1.8 million in 1997 to over 2.5 million. "The recession has led to a surge in college applicants keen to avoid entering the current job market. Investors who purchase apartments in private university halls or invest in shared student houses can enjoy high net yields of 5 to 6 per cent" says Stuart Law of Assetz property investment consultancy.
All of these investments come with the usual health warnings. Prices may drop further, and make a bad choice of location or property and that profit could turn into a loss. If the recession becomes a depression, everything is up for grabs.
Even stronger health warnings apply to overseas property. There are bargains aplenty, but you need excellent independent research and a good solicitor to check contracts before you sign. Spread your risk by buying property where prices have dropped (so may be about to rise) and which can in any case produce a separate income.
Le Manoir de Raynaudes is a boutique guest house near Albi in south-west France, where prices are 20 per cent down but unlikely to fall further due to resilient demand from Britons seeking a lifestyle change. The hard work has been done – transforming this from a wreck to a hotel in US Travel and Leisure's Top 500 guide took 15 builders and two years of sweat – but the business has a large turnover and a global reputation. The downside? It will cost you €1.55m (£1.44m) ( savills.com , 020-7016 3740).
If terroir is your thing, buy a vineyard. For €700,000 you get 15 hectares of vines near Bergerac with cabernet sauvignon, merlot, cabernet franc and sémillon grapes ( french vineyards.fr , 00 33 556 2714 01). There is a large farmhouse needing modernisation and buildings to convert to holiday homes.
More traditional property investors can look for that elusive "emerging market", but be very careful. Rewards will be high for those brave enough to buy early and who manage to sell quickly if their chosen area becomes a hotspot. But remember, many sellers in Dubai and Bulgaria waited too long and are now seeing prices fall thanks to a glut of homes on the market, with very few buyers in sight. One new area is the Philippines. The Blue Coral resort has apartments from £63,425 with what the developer calls "a guaranteed net income of up to 20.9 per cent" ( experience-international.com , 020-7321 5858). Another new location is Poland, tipped to rival Germany and Britain as Europe's economic powerhouse in the 2010s. Flats and commercial properties in Lodz – to which computer giant Dell has relocated from Ireland – are on sale from £54,500 ( knightknox.com , 0161-727 1327).
If all this smacks of an era when agents' details hinted at untold wealth in lands you hadn't heard of, then your home in Blighty can still make money for you. Whether you rent a flat or own a mansion, you can get a lodger. The Government's Rent a Room scheme allows you to receive up to £4,250 a year tax-free, provided the dwelling is your main or only home. "In the final quarter of last year, there was a threefold increase in the number of landlords registered with us looking for lodgers," says Tamara Smith of easyroommate.com, one of many websites helping match home owners and would-be lodgers. Or use a home exchange agency to get a low-cost holiday. Advertise your property on services such as homebase-hols.com, which gives you access to thousands of other homes worldwide. Identify a place and home you like, email the owners and strike a swap deal for anything from a weekend to a month. The result? A holiday without the accommodation costs.
If all else fails, buy a property and live in it until it rises in value – which it will do, eventually. "But it's a long-term play," says Camilla Dell of Black Brick, a home buying agency. "Anyone thinking they can buy and sell in 12 months' time for huge profits is not realistic. The market will take at least five years and maybe longer to recover."
You could put your money into shares, bonds or gold. But they don't sound as much fun as cultivating a vineyard or running a café, do they? Graham Norwood
The art market: 'The key is to be bold'
Is this a good time to buy art? Of course it is! When money looks dodgy, what better way to secure your future than by investing in an unbudgeable object such as a painting or a sculpture? But if you don't have a lot of money, don't necessarily go for the more obvious things such as large-format oil paintings. Start by looking at something less fashionable – watercolour paintings, etchings, woodcuts, linocuts and ceramics, for example, are all good investments.
Try a place such as London's Bankside Gallery, about 50 metres from Tate Modern, facing the Thames. It's a marvellous place to rummage – works are usually stacked up the walls. Artists who were selling excellent work there relatively recently include Royal Academician Peter Freeth, for example, who has a marvellous, haunting way with images of dogs, and the printmaker Anthony Dyson. Dyson makes wonderful homages to the Renaissance masters, beautiful, meticulous prints at very affordable prices – a print by him, framed, could cost you as little as £75.
A lot of the artists who exhibit at Bankside are also members of the Royal Society of Painters-Printmakers, or the Royal Watercolour Society, which sound a bit nose-thumbingly posh, but are often a guarantee of real quality. Check out their websites.
Another way in is to poke around in one of the enterprising younger galleries, such as the Rokeby Gallery in Store Street, London. The Rokeby operates an excellent scheme in conjunction with the Arts Council which enables you to get a modest loan to help you start your own art collection. There are some excellent younger artists in the Rokeby stable whose work will only grow in value – look at the paintings by Sam Dargan or Simon Keenleyside, for example. In Dargan's last show, he had a lot of very small paintings. Small is not always beautiful but, given the fact that many artists price their works by size, it is a way in to collecting first-rate names for relatively modest sums of money.
Even the bigger galleries display a range of prints. Worth a look is Flowers East in Kingsland Road, Hackney, which usually has a big range of prints at good prices. Flowers' stable of artists includes some well-known names – Maggi Hambling, for example. A few weeks ago, Flowers was selling a work by her called "Sexy 2008" for £1,500. Another artist from the Flowers stable who can only increase in value is the sculptor Glenys Barton, who makes haunting, seductive, highly finished portrait heads and entire bodies which always manage to possess an extraordinarily ghostly aura. A few weeks ago you could buy a sculpture by her for £2,500.
The key to all this is: be bold. Ask to see the stock. If there is an oil on the walls which is way beyond reach, but which has huge appeal for you, ask what else that same artist may have done. What about the working drawings? Are they for sale? If it's a sculpture, what happened to the maquette? Be cheeky. You may well turn up something interesting. And as for ceramics, it is almost always possible to pick up a bargain in this area because the foolish rigidities of the art market mean that the medium of ceramics is still regarded as slightly less important than works made from other materials.
So go to Barrett Marsden in Clerkenwell, a gallery which specialises in glass and ceramics. If they seem snooty, laugh; it will create a better atmosphere. Michael Glover
Spread betting: 'Utterly addictive, and I gained a reliable profit'
When Mark Ramprakash was playing for England during the long, hot Ashes summer of 2001, his visits to the crease became one of my most reliable sources of income. Spread betting was to blame. This addictive form of gambling allowed me to turn a profit from Ramprakash's longstanding tendency, at Test-match level, to throw away his wicket after batting beautifully.
Today, "spreads" have become an accepted form of tax-free investment. They can be applied to any event, or course of events, quantifiable by numbers – making them a perfect means for speculating on financial markets.
They work by a system of "buying" or "selling" the predicted outcome of a future event. Let's pretend that the FTSE-100 is at 6400. You think it is going to rise tomorrow. A spread betting firm will offer a "spread" on its price at the end of the day, say from 6390 to 6410. You "buy" the spread at its highest amount (6410) for whatever you want to stake; say £10-a-point.
If the FTSE does rise, you make £10 for every point it ticks over 6410. If it closes at 6500, you would win £900. Conversely, if it closes down, you lose £10 for every point it falls below 6410. The more right you are, the more you win. The more wrong you are, the more you lose.
This has advantages over owning shares. Income from spread betting, like all gambling, is tax free. And it's flexible: you can bet 24 hours a day, on anything from movements of housing markets, to the price of individual shares, to fluctuations in exchange rates.
You can make short-term bets, covering 24 hours, or bets that run for several months. You can sell out (or "close") a bet at any time, taking whatever profit (or loss) is standing. You won't have to pay commissions to stockbrokers; instead, there is a small charge for trading.
The biggest advantage to spread betting is that you bet on a market going up or down (stockholders only make cash when shares rise). So, if, following the example, you thought the FTSE was going to fall, you'd "sell" the spread at its lowest (6390). If it closed at 6250, and you'd bet £5 a point, you'd win £700. If it closed at 6450, you'd lose £300. Smart investors often use spreads to "hedge" against falls in the market. Suppose you've £50,000 invested in oil firm shares. A spread bet, "selling" the future price of oil, means that if oil gets cheaper (hitting the value of your oil shares) your bet wins. If it rises, your bet will lose, but the shares you already own will be worth more.
It's complex. You are running a freelance hedge fund. This requires attention, and some experience. Beginners should make small bets at first – most major firms accept stakes as low as 20p a point – before taking a serious plunge.
The downside is the prospect of getting things wrong. A potential loss in spread betting is limitless. It's always advisable to include a "stop loss" – a maximum amount you are prepared to lose – on each bet. If the market you are trading in hits that point, your bet is closed – the cricketing version of "retired hurt". Guy Adams
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