Last week was the first week in my new Investment Series, and we kicked it off with a post on Closed End Funds.
We’ve spent a lot of time in the Bullhunter blog talking about all the different types of Investment Strategies that every investor should at least know about. The idea behind this is to expand your concept of investing beyond just the stock market, and at the same time, gain a greater understanding of that market by analyzing its competitors and alternatives.
Investing In Collectibles
In this particular entry, we’re going to talk about something of significant interest to many people, which is investing in collectibles. This is something that’s not only potentially profitable, but also a lot of fun for many people because it entails the acquisition of physical objects rather than electronic shares.
Simply put, investing in collectibles is the process of putting your money into the acquisition of some physical goods that are predicted to increase in value over time. Then, at a later date, you’ll be able to sell them for more than you paid for them.
Whether you’re investing in fine art, stamps, or antiques, there is one clear advantage here, which is that the value of these objects will always be tied to inflation. Therefore, unless an object actually depreciates in value, you’ll always be getting, at the very least, a fair price.
Disadvantages Of Collectible Investment
That said, there are a number of disadvantages as well. The most obvious is that you don’t “earn interest” on collectible investments, and you can’t collect dividends on them either. There’s also the matter that you’ll need somewhere to store these physical objects which can be a big expenditure in and of itself. Furthermore, there is always the potential that these items could be damaged by various circumstances, and if this happens, your investments could be totally destroyed.
If you’re going to make an Investment in collectibles, be sure that you know all the risks and benefits that are present. It can be a very rewarding experience, if you know what you’re getting into.
See you next week for part 3 of Investments.
Sean Rasmussen
The Bullhunters Guide
Universal Wealth Creation © 2004 – 2009
{ 4 comments… read them below or add one }
Most of us would have items of value lying around our homes, maybe stowed away in the shed or thrown in the cupboard or even displayed in a cabinet or on a shelf, items that we have collected over the years or inherited from a member of our family and have never considered their true worth. The next step would be to have them valued – what an interesting exercise – thanks for the thought Bullhunter.
Hi Rob,
I agree, there would certainly be a lot of people out there who have valuable collectibles tucked away. They may not even realise the items hold value, so in this hard economic time, it may be a good idea to have a look around and see what you can find!
If you do invest in collectibles, be sure to have them valued and insured against loss.
Hi Sean,
So, Nan’s obsession with collecting cookie jars just might pay off? Seriously, a lot of people collect stuff and have a lot of fun doing it. I think for it to be profitable, you’d really need to know what the goods you’re collecting are valued at.
I think it takes a certain type of personality to be a collector.
I am not into collectibles at all. I like to have a big clean out every year and get rid of anything surplus. I don’t like junk and clutter.
Like Jazz says, maybe it takes a certain personality to be a collector.