Luxury Collectible Investing
August 13, 2021
Recently, investors are expanding into the realm of luxury collectibles to augment their portfolios. With the right passion and knowledge, high-end collecting can offer potential monetary gains. This decade-long trend is well documented, and it’s easy to see why it has captured the imagination of investors and venture capitalists around the world.
What are high-end collectibles?
High-end collectibles are prestigious items that appreciate over time. They’re making headlines around the world due to unprecedented record-setting bids. No longer are they purchases purely for prestige; they’ve become lucrative opportunities for discerning buyers that have the passion and knowledge needed to succeed.
What types of collectibles are people investing in?
Experts advise choosing collectibles that pique your interests and follow your passions. For many, this is fine art. It’s one of the most well-respected collectibles on the market, and the many mediums available assure a plethora of works to choose from. In the last decade, art has offered steady appreciation values, maintaining a 17% increase in investment gains. Virtual auction houses have started offering potential buyers portions of prestigious pieces, allowing fine art to become a mainstream investment opportunity for those that don’t have the real estate to showcase them properly.
Somewhat surprisingly, fine whiskey has also become a viable investment, exciting connoisseurs around the world by appreciating at the astounding rate of 582% over the last ten years. According to Knight Frank, a company that tracks luxury collectible trends, casks have been selling for millions of dollars, and a single bottle of 55-year-old Japanese Yamasaki sold for $795 thousand in 2020. A record-setting $1.07 million was spent on a 1926 Macallan that same year.
For those looking to enjoy their investments in a more active way, classic and luxury cars have become a popular choice if they have appropriate lodgings. Though these automobiles are more high maintenance than other luxury collectibles, they’re appreciating at a rate of 258% over the last decade, and, unlike other collectibles, car enthusiasts can take their collections out for a spin. The HAGI Top Index, an international automobile group that tracks classic car purchases, is reporting a 500% increase in acquisitions since 2010, and in 2018, a record-setting $42.4 million was spent on a 1962 Ferrari 250 GTO.
While financial consultants are open to talking to their clients about diversifying their portfolios with luxury investing, they make one thing very clear. These investments are not just about obtaining value; they’re also about enjoying the aesthetic. They recommend choosing items that clients are passionate and knowledgeable about because these illiquid assets will remain in possession for years before becoming profitable. If the world of luxury collecting seems like a good fit for you, sit down with your advisor and discuss the advantages and risks of diversifying your portfolio this way.
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