This article was originally written by Alexis Rhiannon and Lakshmi Varanasi for Business Insider and published on July 27, 2022.
- Collectible investments are physical objects that can appreciate in value and diversify your investment portfolio.
- Collectibles can be anything that anyone collects, but a few categories have offered reliable returns, such as stamps, coins, jewels, and fine wine.
- Amid persistent inflation, collectibles have become an increasingly stable investment option.
There are stocks, there are bonds … and then there are alternative investments, a motley collection of all other asset types. Within the umbrella of alternative investments, some of the most exotic are collectibles.
A collectible can be any physical object that people can and do collect: from fine china to bottles of wine, from rare manuscripts to vintage cars — and everything in between. Collectors gather these “tangible assets” because they love them. Investors hang onto them in hopes that they’ll increase in value over time.
As with any investment, there are no guarantees which will appreciate and which will not. And because they are so diverse, collectibles are an extremely unpredictable group. Sometimes the most throw-away items are the ones whose prices skyrocket, while hyped-up items like Beanie Babies soar one year, then become almost entirely worthless.
Still, there are some collectibles that are considered pretty savvy investments, year in and year out. They have some or all of the qualities investors crave: reputable, liquid, transparent, or trackable. Naturally, the value of any individual item will always be based heavily on its rarity, how close to mint condition it is, and whether you can find a buyer — all factors which create quite a bit of variance.
But in general, these are five categories of collectibles that — based on their history — seem the most likely to offer solid returns in the future, as well as some pleasure in the here and now. Here’s an overview of how they’re defined and how to approach collecting them.
You’ll often see stamps at the top of investible collectibles lists, because they exist right at the center of many overlapping qualities that make collectibles excellent investments. Stamps are:
- Small and lightweight, which makes them inexpensive to store
- Low-cost (at least, with initial investments)
- Frequently released in limited-run batches, which drive up value over time
Plus, they’re easy to identify in catalogs, so you don’t need too much technical know-how to jump in.
The philatelic market (“philately” being the collection and study of stamps) has declined somewhat over the past few decades, but the sticky little pieces of paper are still considered one of the most reliable collectibles around, with prices increasing by over 13% annually since 1991. (This is according to growth in the GB250 Index, which tracks the performance of the top 250 stamps in Great Britain.)
Whether you’ve inherited a ready-made collection that you wish to expand, or are starting your own, the Stanley Gibbons Simplified Catalogue “Stamps of the World” is an excellent place to start. It lists all of the stamps issued globally, along with their prices, and can either be purchased or borrowed from most libraries.
There’s more to coin collecting than just saving up your spare change. Numismatics, as it’s termed, refers to the collection and study of currency — specifically, specie that’s no longer in circulation. The value of any given coin often has very little to do with the amount originally stamped on its face. The Flowing Hair Silver Dollar, for example, was minted in 1794, and by September 2020, was valued at over $10 million, making it the most expensive coin in the world.
But the coin collecting market is still worth getting into even if you don’t have that kind of change lying around. With a market share estimated at up to $3.8 billion in 2018, there’s more than enough room for investors at every level.
Be careful not to confuse numismatic coins with bullion coins. These are released by government mints specifically as a way to invest in gold or other precious metal. Although some could conceivably become rare in the future, their value mainly reflects the price of the metal itself.
When starting out, try to snap up commemorative coins with limited runs or coins with errors, and prepare to hang onto them long term. Rare-coin dealers and auctioneers, like the venerable Stack’s Bowers Galleries, are a good bet — maybe no bargains, but they usually can provide a coin’s provenance and proof of authenticity.
Some precious metals dealers like JM Bullion also offer up coins for purchase, as well as tracking prices for helpful transparency.
This category of childish things contains everything from comic books, to model cars, baseball cards, and dolls and figurines, which can sell for impressive sums far beyond their original sale prices. The United States’ collectible toy market is expected to swell to $35.3 billion by 2032, with a compound annual growth rate of 10.1%.
Not every item will soar in value, of course, but the made-to-scale model cars from Dinky Toys, original Star Wars toys from 1977, and comic books published between the 1930s and 1970s have proved lasting bets. A good rule of thumb is to check the price on the front of the comic book — anything originally costing 25¢ and under is probably worth a little something (certainly more than a quarter).
No matter the item, the trick is to keep playthings in mint condition with plastic sleeves and holders, preserving original tags and packaging wherever possible. Then, hold onto them for at least 20 years to give the nostalgia-driven market time to work its magic. To track pricing, refer to resources like the Overstreet Comic Book Price Guide or search auction archives to determine what similar items are currently selling for.
While most of the items on this list need to be carefully stashed away in order to accumulate value, fine art is a rare example of a collectible that can be appreciated as it appreciates. The $65 billion global art market can encompass any display piece, from paintings to photography to sculpture, with works by living artists such as Jeff Koons, Jasper Johns, Cindy Sherman, and Damien Hirst proving especially popular at the moment.
The tricky thing about fine art is that by definition, most pieces are one of a kind, which makes them simultaneously more valuable and more difficult to value. Ultimately, the market is driven by what buyers are willing to pay for any given piece, although you can get clues by tracking prices at sources like Mutual Art Magazine. The Artnet Auction Price Database is another authority.
For beginner investors, your best bet is to buy low in an emerging category instead of trying to get your hands on pieces that are already highly valued (or overvalued) like, say, the Impressionists. Yes, the latter is more bankable, but they’re also likely to be too expensive to appreciate much.
It’s also better to collect a first-rate artist in one genre or school, even if they are obscure, rather than a second-rate member of a famous school.
It’s safe to say that sneakers are having a bit of a moment: The market was valued at $69 billion in 2021 and is forecasted to reach $113 billion by 2025. But don’t expect to be able to turn in your favorite, well-worn kicks for a hefty profit. When it comes to collectible footwear, you’re looking for supple leather or fabric uppers, spotless soles, and zero scuffs. In short, you’d be best off if the shoes have never actually touched your feet, let alone been worn outside.
Collectors are partial to brands like Nike, Air Jordans, Yeezys, and Adidas, with limited-edition drops proving especially popular. And valuable: the Nike SB What the Dunk originally cost $120, and now most sellers aren’t offering it at a lower price than $10,000.
Prices can be tracked through resources like eBay, GOAT and StockX, and aspiring sneakerheads are advised to start small and follow their own tastes.
Emeralds, rubies, precious stones, and of course, diamonds — Dana Auslander, a former Blackstone managing director, has been collecting gems since 2011. In early 2023, she’s gearing up to launch LUXUS, a platform for investing in rare gems, jewelry, and watches.
Auslander initially thought her target audience would be luxury retail customers looking to invest in jewelry. Over the past year — amid the rising rates of inflation, the Russia-Ukraine War (which shorted diamond supply), and a growing mistrust in crypto — Auslander realized that gem and jewelry investing might have a wider base of investors than she initially expected.
“I started noticing that in other parts of the world, especially in emerging economies, people were investing in diamonds,” Auslander said. “The best hedge against inflation is precious metals.”
Fine wine is a category best suited for an investor with patience. It can take years, if not a decade, to see returns on a vintage Merlot.
Still, wine is becoming an increasingly attractive alternative asset class due to its dependable returns. According to the Liv-ex Fine Wine 1000 — an index which tracks 1,000 fine wines around the world — fine wine has demonstrated an average return rate of 10.6% over the past 15 years.
Categories like wine have also become easier to invest in over recent years.
In 2015, the Securities and Exchange Commission expanded the rules for investing in alternative assets like wine through the establishment of Reg A+. Startups like Vint have capitalized on this expansion. The company released the first SEC-qualified wine and spirits collection in May 2021.
Other popular wine investment platforms include Cult Wine Investment, Vinovest, and Cavissima.
Tips on investing in collectibles
- Invest in something you love, or that you at least have a vested interest in. That way, even if it never appreciates much in value, it can still bring you joy.
- Be aware that unlike much of the financial market, which is regulated by the SEC or FINRA, there’s no overarching authority stabilizing prices or protecting consumers when it comes to collectibles. Which means no one to complain to if something goes awry.
- Remember that these items don’t trade on public markets, making pricing opaque and increasing the risk of being taken advantage of as a new investor.
- Have patience. As an asset class, collectibles are pretty illiquid. Markets and demand can be small, and sales can take a long time.
- When you do invest, it’s crucial to know how to care for your collectibles. Consult an expert about how store your items safely, to retain their condition and value, and don’t neglect documentation and insurance. Also, keep your loved ones well-equipped with knowledge about your collection to avoid your treasures ending up in a yard sale for another keen-eyed collector to snap up.
The bottom line
While investing in collectibles can be a great way to diversify your portfolio while exploring your own interests, it does have its drawbacks. As with any asset, there are no guarantees when it comes to appreciation.
And appreciation is all a collectible offers. There’s no way to cash in on dividends or collect interest while you’re holding the item. The only way to make money off of your collectible is to sell it or borrow against it.
That said, it’s an asset class that has immense potential for growth. So if you can find a category of tangibles where your passions overlap with a promising profit opportunity, start curating your own unique collection. It can be an incredibly rewarding experience — in all senses of the word.