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What Are Collectibles?
A collectible is an alternative asset often defined as an item that people want to own.
The value of your collectible investments is affected by many factors, including scarcity, the overall condition, and desirability. There are many different types of collectibles, and almost anything is capable of becoming a collectible, provided people want to possess it.
Benefits Of Investing In Collectibles
Collectibles are a unique type of alternative asset that offers several notable benefits:
A. You can invest in something you’re passionate about
While there’s nothing wrong with owning stocks and bonds, they’re bought primarily for the income they generate.
When collectible investing, just having the physical asset in your possession may be worth the investment for many. According to industry experts, this should be your primary reason for investing in collectibles.
B. Portfolio diversification
Investing in collectibles offers you an excellent means of diversifying your investment portfolio as collectible items share a minimal correlation with assets like stocks and bonds.
In other words, price fluctuations in the stock market have a negligible effect on the price of collectibles.
While accurately gauging the correlation between stocks and collectibles is tricky, one study found an insignificant correlation between collectibles and almost every other index.
C. Potential for strong returns
While not every collectible item will appreciate, some collectibles have provided investors with high returns. For example, experts have stated that 1980s Star Wars memorabilia has consistently appreciated over time and will continue climbing as the fan base grows.
7 Collectibles You Should Consider Investing In
Collectibles can be a tricky asset class to understand.
Not every item will appreciate, and trends can change.
With that being said, a few collectables have remained popular among investors and should be part of your investment strategy.
Some of these include:
Coins are a popular collectible item. There are a wide variety of coins available, but if you manage to get the right one, it could benefit from excellent appreciation.
Minted in 1794, the Flowing Hair Silver Dollar was valued at over $10 million in September 2020, making it the world’s most expensive coin.
Coin collectors note that the most valuable collectible coins are no longer in circulation or are commemorative and rare coins, such as the Kew Gardens 50p coin with a mintage of just 210,000.
If you invest in coins, be sure you understand the difference between numismatic coins (coins used as a medium of exchange) and bullion coins.
A bullion coin is typically a gold coin released by government mints as a way to invest in gold, and most of its value stems from the precious metal itself.
2. Toys and comic books
Toys include plush dolls, model cars, and action figurines, all of which can provide impressive returns. Similarly, rare comic books such as ones from Marvel’s Golden Age can also provide handsome returns.
By 2023, the size of the US toy market is expected to grow to $3.75 billion.
Of course, not every toy will experience astronomical appreciation.
Similarly, with time, older comic books are becoming more rare, driving up their value.
For example, in 2014, an Action Comics #1 Edition sold for $3.2 million!
One of the more collectible toys available are Beanie Babies. While many haven’t experienced great appreciation, some, like the Princess Diana Beanie Baby, are listed for over $700,000 on eBay.
RallyRd is an excellent platform for investing in comic books. With a minimum investment of just $5, you can start investing in your favorite comic books today.
There’s also Mythic Markets, an investment platform where you can invest in some of the world’s most iconic pop culture items with as little as $25. Mythic Markets targets annual returns of 9% - 12%.
3. Sports memorabilia
Whether it’s trading cards, your favorite athlete’s autograph, or a game-used item, sports memorabilia is a $5 billion market and one of the fastest-growing asset classes today.
Early in 2021, an autographed Luka Doncic NBA rookie card sold for an astronomical $4.6 million, becoming the most expensive basketball card ever sold.
And if you’re looking to take advantage of lucrative sports memorabilia investments, consider Collectable.
Collectable provides investors with the opportunity to invest in valuable and culturally significant sports memorabilia. The beauty of Collectable is that you don’t need to have large sums of money lying around to take advantage of these lucrative investment opportunities.
Collectable offers you fractional ownership, meaning that you buy shares in the items.
You earn once Collectable sells an item or by trading your shares on their marketplace. As a result, your returns will vary according to each investment.
For example, Collectable sold a 1955 Sandy Koufax baseball card for $100,000 in March 2021, providing investors with a return of over 159% in just over 2 months.
When looking at collectibles, sneakers may not be the first thing that comes to mind.
However, the sneaker market is booming.
Although it’s unlikely you’ll make a fortune through sneakers, you can benefit from gains of 30% to 50% almost immediately.
An example of sneakers offering a fantastic return is the Yeezy Boost 350 V2 which provided owners with an opportunity to make a 500% profit just weeks after it was initially released.
And if you’re looking for an easy way to invest in sneakers, there’s Otis.
All assets offered by Otis have been scrutinized by the SEC and have undergone rigorous quantitative analysis. Investors can then buy shares in these items, which include sneakers, art, and other collectibles.
Potential returns will vary with each asset and investors earn once Otis sells an item. Typically, Otis holds assets for the long term but offers a secondary market where investors can buy and sell their shares.
Additionally, Otis looks to generate cash from other sources, such as loaning the item for display. Investors will receive a portion of this cash on a pro-rata basis.
While most cars depreciate from the moment you buy them, some have offered investors outstanding returns.
For example, if you bought a McLaren F1 in the 90s for $1 million, you could sell it for upwards of $15 million today.
However, the downside of investing in cars is the high capital requirements as cars aren’t cheap and investment-worthy ones even less so. Additionally, storing, maintaining, and insuring these vehicles is incredibly expensive.
Fortunately, there's a much more affordable way for individual investors to take advantage of highly-valued cars: RallyRd.
RallyRd is an investment app where investors can purchase shares in collectibles like cars, watches, comic books, sports cards, and more.
Investors primarily earn through asset appreciation, but RallyRd offers a secondary market where they can trade shares should they need to cash out. RallyRd targets annual returns of 9-12%.
It’s important to note that because RallyRd has such a wide variety of assets on offer, your expected returns can vary.
Investing in fine art can be incredibly lucrative and risky as each piece is unique. The artist’s reputation and the economy often play a prominent role in the art’s value.
With that said, well-known art pieces can fetch a fortune.
For example, in May 2019, Monet’s Haystacks sold for $110.7 million. Aside from high net worth individuals, most investors don’t have this kind of money for an iconic piece.
Fortunately, there are still opportunities to invest in some well-known artists at a fraction of the cost with Masterworks. Masterworks is the first investment platform to allow investors to purchase shares in some of the world’s most iconic artists, like Banksy, Andy Warhol, Claude Monet, and more.
You earn through appreciation of the asset, with your returns realized after selling an item. Alternatively, Masterworks offers a secondary market where investors can trade their shares.
Masterworks targets annual returns of between 9% and 15%.
Investing in certain wines can lead to massive gains. Since 2004, wine has returned a total of 247% versus the stock market’s 129%, with an annual return of more than 8%.
If you want to invest in wine, consider Vinovest. Vinovest is an online wine investment platform that lets you invest in a wide variety of investment-grade wines.
You can earn by selling your wine after it has appreciated. Vinovest’s annualized return on their Moderate Plan is 12.4% and 16.6% on the Aggressive Plan.
3 things to keep in mind before investing in collectibles
While collectibles offer a host of unique benefits, there are certain things you should be aware of before investing in collectibles.
1. Valuing an item can be difficult
When you trade more conventional assets like stocks, bonds, real estate, or commodities, it’s relatively straightforward to determine their value.
However, determining the value of a collectibles investment is far more difficult as they can go decades before suddenly appreciating significantly .There may also be no established collectible market for the item.
When trying to value an item, it’s always worth looking at a comparable collectible or antique.
2. There are tons of secondary costs
Since collectibles are a tangible asset, you need to consider handling, storage, and insurance costs. You’ll also need to consider paying to have the item maintained or restored.
If you’re purchasing more expensive items, you should consider having them appraised, which involves additional costs. Many of these fees aren’t one-off, meaning you’ll pay for them for as long as you hold collectibles.
3. Collectibles are largely illiquid
Unlike with mutual funds, futures contracts, or an even ETF, it can be difficult to cash in on your investment.
Be prepared to wait a long time before a suitable buyer emerges or lowering your asking price. Fortunately, some of the platforms we mentioned earlier offer a secondary market to sell shares in collectibles, streamlining the liquidation process.
Investing in collectibles can provide investors with several unique benefits that traditional assets can’t. And with modern investment platforms, the illiquidity issue generally associated with the collectibles market is also mitigated.
If you’re interested in learning about more such alternative investments, consider taking the MoneyMade Investor Quiz. Answer a few simple questions, and MoneyMade will generate a list of suggestions that suit your investment needs!