Investing can take on many different forms. Most commonly the word “investing” is seen as synonymous with buying stocks and shares, or perhaps purchasing a buy-to-let property. But there is a whole world of other investment opportunities for those with the knowledge and passion (not to say confidence) to capitalise on them.
One such market is that of “collectables”; from antique furniture to stamps and art.
But how much money is really being made by investors in such assets?
That’s exactly what a new survey by global realtors Douglas Elliman and Knight Frank aimed to uncover. They examined everything from investing in wine to Chinese ceramics in order to assess how each group has performed.
Many have done surprisingly well; on the whole high-end watches have increased in value by 49% over the last five years, for example. In the same time frame wine has increased by 45%, though problems with the Chinese economy are expected to have a serious impact on wine values in the medium term.
Worryingly, antique furniture has performed least strongly out of those investments analysed; the average price has dropped by an unfortunate 22% over the last five years.
However the biggest gains have been experienced by classic cars, such as hard-to-find Ferraris. The value of classic cars has on average increased by a jaw-dropping 111% in that same time period.
Indeed, the most expensive car sold at auction this year was a 1962 Ferrari 250 GTO with raised an eye-watering 38.1 million dollars.
However before you race out looking for a Ferrari to invest in experts are keen to warn us that it isn’t all unicorns and rainbows. Historically collectables like cars and art have suffered from two core issues.
Firstly, they’re typically far more illiquid than more “typical” investments like bonds or stocks. This can lead to long buy-and-hold cycles before buyers are in the right frame of mind to start shopping again.
Then the collectables market typically shows far more volatility than property or stocks, meaning that these are not investments for the risk-averse.
One final point worthy of consideration is just how far the market for classic cars will continue to grow in the forthcoming years. Certainly wealth created in Russia and Asia are having a positive impact on luxury goods, but in reality you only really make your money when you sell. If the classic car market is reaching its peak (and opinions vary) it may prove far more difficult to make money with this investment vehicle (pun intended) in the future.