Investing in collectibles offers a wealth of benefits such as diversification, growing demand, long term performance, and liquidity. As a rule, any item or piece of art that is worth more than its original price is considered a collectible. Their price depends on overall condition, popularity, and rarity. Common collector’s items include stamps, coins, toys, antiques, periodicals and books, and brand name products.
Why Invest in Collectibles
The collectible market is ruled by supply and demand. Depending on type and how rare they are, collector’s items can be a valuable investment. The more years pass and some pieces become damaged or lost, the scarcer collectibles are. They offer diversification benefits when chosen wisely, and it is generally wise to keep about 5 percent of your capital in collector’s items. Collectibles have a good appreciation potential and tend to increase in value in the long term.
There are some downsides to investing in collectibles, one being their high storage and handling costs. Counterfeiting is also a serious problem, especially for items such as antiques, sports memorabilia, and autographs.
In addition to approaching collectibles for investment purposes, there are less obvious benefits to building a collection, like enriching your community and connecting with people from different background and walks of life. Over time, making friendships, connecting with people who share similar interests, and learning something new may turn out more rewarding than capitalizing on your investments.
Types of Collectibles
While gold coins can be a valuable addition to your investment portfolio, diversification is key to minimizing risk. The most widely available coins are American Gold Eagles, Canadian Maple Leafs, and South African Kruggerands. Yet, a diversified portfolio should include a good selection of coins to hedge against market fluctuations. Top coins for investment purposes are also the Australian Gold Kangaroo, British Gold Britannia, and Mexican Libertad. Issued in 2013, the Gold Britannia has good liquidity and holds excellent value due to its beautiful design. The Mexican Libertad features the Mexican shield and Winged Victory and is a famous and sought-after coin due to its limited mintage. The Gold Australian Kangaroo is not only highly liquid but is also a beautiful artwork featuring a bouncing kangaroo in diverse natural settings.
Investment-grade antiques are made from exotic woods, expensive textiles, gemstones, and precious metals. Many items, including fountain pens, wristwatches, silverware, and jewelry, are made, completely or partially from precious metals. The antique market also covers items such as clocks, furniture, barber chairs, Depression glass, and hunting decoys that are at least 100 years old. Valuable antiques to look for include novelty barware, leaded and stained-glass windows, and cast-iron doorstops.
Antiques are a worthwhile investment as they have almost quadrupled in prices over the last 15 years. At the same time, the market across multiple categories has been in steady decline, including antique furniture, porcelain, glassware, and memorabilia. This is so because they tend to be the most frequent collectibles of the middle class which has been in decline since 2008.
Also, fewer 18th century antiques, including Georgian, Neoclassical, and Rococo artworks are accessible to investors today. As supply dwindles, demand and prices are set to increase in the future.
Stamps make for an excellent investment because they are lightweight and small in size, easy and inexpensive to store, and have a proven track record of worldwide interest and value appreciation. Stamps are typically released in limited-run batches, which steadily grow in value, and prices rarely fall, even during periods of stagnant economic growth. What is more, stamps are already the 3rd most sought collectible category on eBay, with more than 30 million active investors. This shouldn’t come as a surprise, as stamps have similar returns to shares, stocks, and real estate. As demand is growing in countries such as China, India, Russia, and Brazil, prices are expected to rise. The market is both liquid and international, with collectors selling and buying stamps over the Internet easily and quickly. With astute buying, investors can build a collection that produces excellent returns. Yet, those who are set about investing should learn more about the history of stamps and postal services and how they fare in terms of returns. Also, there are different types of stamps such as definitive, commemorative, airmail, postage due, etc. You may come across rare collectibles as well, like the Mauritius “Post Office”, Treskilling Yellow, “Inverted Jenny”, and Hawaiian Missionary Issue stamps. In any case, when buying stamps for investment purposes, it is wise to get in touch with an experienced philatelist, dealer, or auction house. Keep in mind that stamps are considered an alternative investment and an addition to a balanced portfolio across more traditional sectors such as real estate and the stock market.
How to Invest in Collectibles
Investing in collectibles for profit is about buying low and selling high. At the same time, if you get involved too fast, you may lose interest. It is best to start small. Once you build a collection, you need to keep a detailed catalogue or inventory, including for how much, from whom, when, and where you bought them.
Storing Your Collection
To preserve your collection, you should take proper care of your collectibles so that you can capitalize on the items you bought should they increase in value. Consider arrangements for safe, long-term storage, contact a certified expert to make an appraisal, and purchase specialized insurance. If you have coin collections, you need to maintain low humidity and steady temperature to prevent tarnishing and premature aging. When collecting stamps, you want to keep them on collection cards or in archival sleeves so that they don’t degrade in value. Handle your collection with dry and clean hands or use special stamp tongs. Keep away from direct sunlight to prevent colors from fading.
If you’re collecting toys, action figures, or dolls, it is best to keep them in their original packaging. If they are already opened, keep your action figures and antique dolls away from sunlight to maintain their colors. Avoid high humidity and hot climates so that your collectibles last longer. Humid conditions such as in your basement, laundry room, and bathroom could cause toys to break off, peel, or chip. Store in a closed box to prevent damage due to oils, dirt, and dust building up. To protect delicate items, you want to wrap them in bubble wrap and keep in a closed box for added protection.
Lastly, if you have a comic book or trading card collection, it is best to keep your books or cards in hard plastic cases or plastic sleeves. It is best to use sleeves with rigid support such as cardboard or heavy stock paper to protect them from folding, creasing, and bending.
As a rule, whatever items you are collecting, avoid direct sunlight, keep consistent humidity and temperature, and limit handling and physical touch as much as possible. As valuable collectibles are often targeted by thieves, it is best to store them in a secure environment.
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