Are Collectibles Good Investments?
One of the justifications my husband uses when purchasing collectible Christmas tree ornaments is as follows: "If we're ever in a tight spot, we can sell these at a profit. They're an investment!"
Fortunately for our future, I don't plan to rely on the many collectibles that my husband purchases--from action figures to movie cards with fabric swatches attached to those Christmas tree ornaments--to fund our retirement.
The reality is that these types of items, whether you collect art or are trying to build the world's largest sports card collection, are highly subjective in terms of value. You never know when something is going to appreciate, or whether it will appreciate enough to be worth the price you pay.
How Much Did You Pay in the First Place?
There are plenty of items that most people can agree are "valuable." The first issue of a comic book featuring a popular superhero or an original painting by one of the Old Masters of the art world, for example, would easily bring a high price.
The problem with investing in these items is that they are already so expensive. Yes, when you purchase these items they are valuable, but will they appreciate enough to justify your investment? You never know; it depends on the market, and whether someone wants to pay even more later on down the road.
Whenever you purchase a collectible item, it's important to carefully consider the chances of significant appreciation over time. If you pay a small amount of money for the item, you have a better chance of seeing a decent return. After all, if you spend $5 for a pack of sports cards, and are lucky enough to get the rookie card of a player who goes on to do well, you might be able to sell the card for $20 (or more) down the road.
What Makes Art, Collectibles, and Cards Valuable?
If you are serious about viewing your tangible items as investments that will gain in value over time, you need to choose carefully. You need a knack for figuring out what people want, as well as what objects are likely to have staying power. Remember when Beanie Babies cost almost $20 apiece? Some of the more popular versions were going for even more. Now you find them for less than a buck on eBay.
Part of the problem is predicting future value. A surge of interest in older baseball cards during the 1980's sent values for certain players (like Mickey Mantle and Babe Ruth) soaring. Right now, early issues of comic books are popular as geek culture reigns supreme.
Predicting what will take off is difficult. It's even more difficult to determine whether you will end up with something genuinely valuable. An up-and-coming artist might amount to nothing after you have "invested" $1,500 in an original painting.
Here are some of the qualities that make art, collectibles, and cards valuable:
--Rarity. The rule of scarcity is that if there isn't a lot of something, it's likely to be worth more. Mass-produced "collectibles" like Precious Moments figurines and Hess trucks probably won't be all that valuable later on down the road.
--Condition. My husband is very picky about the collectibles and cards he buys online. He wants only "mint" condition. The better condition something is in, from an antique armoire to a sports card, the more it will be worth.
--Authenticity. An original painting is worth more than subsequent prints and copies. If you can prove that a well-known person owned something (think George Washington's dentures), that's worth something more as well.
--Age. Old age can add value to an item, especially if it is rare, and in reasonably good condition. The older the better in some cases.
Even if something is popular for the short-term, like the Beanie Babies, they can easily fall out of favor. Unless you plan to stock up and then make a quick buck during the holidays, or try to capitalize on a trend, it can be very difficult to turn a profit, long-term, with art, collectibles, and cards.
Miranda is a freelance contributor to several investing and personal finance web sites. She also writes for her own blog, Planting Money Seeds.
