Why I Invest in Collectibles
Mr. Wonderful here –
What is investing, really? Is it going Spartan and rat-holing all your money away in bonds or on the market? Does it mean you have to deprive yourself of all luxuries until you hit retirement? I can’t tell you the number of times I’ve heard these questions, and my answer to the people asking them is always the same: you’re dead wrong.
Buying items that you love can be an investment.
Investing can mean a lot of things to a lot of people, and smart investors know to look out for assets that they’re passionate about and which make them happy. Me – I love watches. So do I go out to the mall and blow all my hard-earned cash on crap wristwatches that break after a year? I’d sooner burn in hell. Instead, I purchase collectors’ items. These are your Rolex, Patek, Audemar Piguet – I love them all. Why? Well, they make a statement when you walk into a room, and over time, they can appreciate in value.
This is a lesson I learned as a young boy from my mother Georgette. If you read my recent article on diversification, you know that every year she would save up to buy herself a Chanel coat. Now, did the coats make her feel elegant and beautiful? No question. But were they a frivolous expense? I think you know where I’m going with this – no way. Much like my watches, her coats were one-of-a-kind collectible items, and throughout her lifetime, they became incredibly valuable.
But Mr. Wonderful, what if I’m just getting started?
Don’t mistake me – investing requires discipline. And collectors’ items – which can run into tens or hundred of thousands of dollars and require significant expertise just to source – can often feel out of reach, particularly when you’re starting off. An entry-level Rolex Daytona, for instance, can cost upwards of $17k new. Now, their average resale value is over $30k*, so the returns can be very interesting. But for most people, that kind of purchase is simply not in the cards.
That’s why I’m so excited about platforms like StartEngine, which let you buy fractionalized shares of these items, often for as little as say $100. Growing up were you passionate about comic books or trading cards, or maybe like me, you love fine wines? Well, now you can invest in these collectible assets, many of which have outperformed the S&P 500*, without needing to pony up the big bucks and or develop special expertise to acquire them outright.
Remember my mother, Georgette – buying items, or shares of items, that you love isn’t frivolous. It’s an investment. And by the way, when you’re really passionate about something, that can give you an edge as an investor. So you don’t need to starve yourself to build wealth. The key is to stop buying crap and invest in items that will appreciate instead.
*Kevin O’Leary is a paid spokesperson for StartEngine. View the details here. Please note that these are historical returns, and do not reflect the value of or potential returns on any individual collectible.