'You can't make money from collectibles…'
'You can't make money from collectibles'
Paul puts the record straight on misconceptions about investing in collectibles
I received an email this week I need to share with you.
Paul - I read on your website all the time about how great it isto invest in memorabilia/collectibles. I have been collecting (furniture/porcelain/coins) for half my life. Let me tell you it is very very hard - almost impossible! - to make money in collecting.
Reprinted with permission.
And you know what? He's right.
Up to a point
Let me put the record straight once and for all.
It is extremely hard to make money from collecting if you lack the expertise and/or fundsto buy the right pieces. But when done right, it is hugely rewarding - both financially and emotionally.
I estimate 99% of all collectibles, probably more, will lose you money over the long-term. So you're looking at a one in 100 chance of buying an item that will make you money. Those odds are scary.
The Tyrian Plum - a collectible that can make you serious money
What's more, if you don't have a significant amount to spend - forget it. Yes, you'll read occasionally in the papers of the 10 artwork found in the charity shop that turned out to be a Picasso. These are exceptions, and they require a lot of luck.
Only the rarest, most desirable collectibles - the ones every collector wants - have the chance to make you money.
The 1910 2d Tyrian Plum stamp, which grew in value by 10% per annum between 2002 and 2012.
A signed first edition copy of CS Lewis' The Lion, the Witch and the Wardrobe, which grew 33% in value between 2010 and 2012.
The 1890 US $1,000 Grand Watermelonbanknote, which was up 14% per annum in value between 1970 and 2013.
Investment-grade collectibles such as these exist in such small quantities, and have such a large number of suitors, that they have a strong chance of growing in value over time.
And to obtain them you need to spend.
How much? It's hard to be precise, but be prepared to pay a minimum of 3,000 ($5,000) per item. Around that mark you could buy you a rare John F Kennedy poster (4,000), a Damien Hirst original (3,950) or a Neil Armstrong signed letter (3,500) - all of which offer you long-term investment potential.
These figures may be too much for you to stomach. And I'm sorry if you're disappointed. But better you know the facts now than make a series of speculative investments that can only lose you money.
Yet if you do have the funds to diversify into collectibles, how do you know what to buy? Will any piece over 3,000 do the job?
Sadly not. You need to look for items that will still appeal in 10, 20, 30 years' time. Pieces that are in great condition, have wonderful provenance, and, above all, are genuine.
Finding out you own a fake is just about the most upsetting thing that can happen to a collector.
I'm going to be blunt here. Unless you are an expert in your field, can you be 100% sure that the Marilyn Monroe autograph, or Babe Ruth game worn jersey you're thinking of buying is legit?
Is it really a sound investment? Is it the "one in 100"?
Do you ever find yourself asking: 'Shouldn't I be consulting with an expert before I take the plunge?'
I've been investing in collectibles successfully for 35 years.
And if you have the means, and the right people on your side, investing in the sector could be one of the best decisions you ever make.
If you would like to chat about what items to invest in, call or email me on +44 (0)117 933 9500 or firstname.lastname@example.org.
There will be no obligation on youto do anything.
You can also browse our investment portfolios to see if anything appeals. I've picked all these items for their investment potential. They all come with my Lifetime Moneyback Guarantee of Authenticity.
Thanks for reading,
P.S Want to find out more? 10 reasons to invest in collectibles.