Investment Collectibles

There are always popular collectibles that don’t sustain their value.  Remember Cabbage Patch dolls and Beanie Babies?  Some baseball cards have held their value (Honus Wagner anyone?) while others have gone down faster than their real life people have returned to the minor leagues!  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.

Stamps often lead the list 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

Since they’re easy to identify and value in catalogs, so you don’t need too much technical know-how to jump in.  The philatelic market has declined somewhat over the past few decades since King George V spent all his spare time with his stamp collection, but stamps 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.)

Numismatics refers to the collection and study of currency — specifically, currency 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.

The market for rare United States coins enjoyed a banner year in 2022 with many hundreds of price records set for individual coins, according to an analysis by CDN Publishing (www.greysheet.com), publishers of the Greysheet family of numismatic market price guides.”Continuing the momentum from 2021, we estimate the overall U.S. rare coin market exceeded a record $6 billion in total volume for the year in 2022,” said Patrick Ian Perez, CDN Vice President.

“Going into 2023, the market for U.S. coins starts off with a solid foundation, but there are indications of cooling off, as well,” said CDN Publisher John Feigenbaum.  “However, it is also clear that the numismatic market has been spared the severe pricing spikes and declines that have befallen other popular collectibles, like sports cards, sneakers, NFTs, including even crypto-based investments.”

When starting out, experts recommend that you try to snap up commemorative coins with limited runs or coins with errors, and prepare to hang onto them long term.

The toy category contains everything from comic books to model cars, baseball cards, and dolls and figurines.  How many of us wish we had kept our old Archie comics, Barbie dolls and GI Joe figures and of course baseball cards.  My son tells me that the GI Joe air craft carrier I refused to buy him is not worth thousands of dollars.  (It still is 6 feet long!)  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%.  At least this investment collectibles category is fun and nostalgic!

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 in this niche toy market.  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 investment collectibles 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.  Imagine the fun you will have if you are the one who finds the next great artist and you paid a small fee to acquire the piece!  Remember Claribel and Etta Cone of Baltimore who went to Paris in the 1910s?  Their social circle included Henri Matisse, Pablo Picasso and Gertrude Stein. They gathered one of the best known collections of modern art in the United States at their Baltimore apartments, and the collection now makes up a wing of the Baltimore Museum of Art. Their collection was estimated to be worth almost a billion US dollars in 2002.  Another pair of collectors who were “there” at the right time are the Rubells of New York City. Shortly after Mera and Don Rubell married in 1964, they started visiting artists’ studios and collecting art in New York. Don was in medical school and Mera was teaching at Head Start.  They acquired their first work after a studio visit and were only able to do .so by paying on a modest weekly installment plan. They now have two museums, one in Miami and another in Washington, DC. The collection has been noted for its strong holdings of art by African American, Latin American, and Asian artists, and the Rubells have been recognized for investing early in emerging artists, many of whom would go on to become widely known. Their collection reflects recent contemporary artists like Keith Haring, Jeff Koons and  Jean-Michel Basquiat. 

I can’t wait to see what kind of art you decide to purchase!

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.

Wine is said to offer a unique source of diversification because its value is based on factors that have little relation to the performance of the economy, interest rates, corporate earnings or conventional investor sentiment.

The value of wine responds to factors such as weather patterns, harvest yields, vintage and consumer trends, all of which together intersect with supply and demand. Because these factors are unrelated to the overall stock market, wine investments can complement a traditional portfolio.  Honestly, I don’t fully understand the purpose of wine investments, since I assume that someone is expected to drink it at some point but hopefully at a higher price than you paid for that bottle.

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.

Have patience if you decide to invest in collectibles.  Investment collectibles are pretty illiquid and the markets and demand can be small.  The items typically don’t trade on public markets, so pricing is difficult and there is always a risk of being scammed as a new investor. The investment collectibles are not regulated by the SEC or FINRA, so there is no one regulating the markets.   Invest in something you love, or that you at least have an interest in. That way, even if it never appreciates much in value, it can still bring you joy.

When you do invest, have your storage set up ahead of taking possession of the items.  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.

Just remember, investing in collectibles can be a great way to diversify your portfolio while exploring your own interests, but it does have its drawbacks. As with any asset, there are no guarantees when it comes to appreciation.

If you want more information about possibly valuable collectibles in your attic, just click here! 

On the other hand, if you decide you would rather invest in real estate, we should definitely talk!  You can reach me at 240-401-5577 or email me at lise@lisehowe.com!