Do you think people should invest in collectibles, or is it a recipe for disaster?
Collectible investments can look and feel very different depending on the investor. To some, collectibles are very important assets and carry great sentimental value. To others, the collectible might be seen as worthless junk. In this case, beauty truly is in the eye of the beholder.
The first edition of a Batman comic book might well fetch as much as a rare Picasso at an auction, so which one should you choose? I always advise investors to go with what you know. If you have a passion for Harley-Davidson motorcycles or Rolex watches, this may be an area for you to explore.
However, it is still important to remember that these objects are also an investment. It might be fun to show off or admire your collected treasures today, but what about when you are retired and need to use those non-liquid assets to pay the bills? Will you be able to part with your beloved works of art? I am not an expert in collectibles but I can appreciate the investment and presence on my clients’ balance sheet.
When investing in collectibles one should always ask the following:
- “Can my collectible pay the bills when I retire?”
- “Will I be able to liquidate my investment when I need to?”
- “What is the value of my collectible and will it appreciate?
- “Are these collectibles insured and stored appropriately?”
- “What type of diversification is this adding to my portfolio?”
Investing in collectibles can be an emotional minefield. It’s important to discuss these types of investments and the appropriate allocation with your adviser.