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Why do people spend a huge amount on collectibles? And are they a good investment?

May 30, 2022 by Matthew Du

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A couple of days ago, Mercedes-Benz made the news. No, not because they let out some brand spanking new car that absolutely destroys all existing vehicles on the market. It’s actually because of the exact opposite.

 

If you’ve already forgotten, Mercedes isn’t just known for its modern, sleek vehicles - it’s history goes way back well into the 1900’s and earlier this month, a piece of that history has resurfaced as a 1955 Mercedes-Benz, only one of two of its kind, was auctioned off for a whopping 135 million euros or $143 million USD, making it perhaps the most expensive car ever sold.

 

The Mercedes-Benz 300 SLR Uhlenhaut was sold to a private collector and fetched a price well over that of the previous record selling price of $48 million for a 1962 Ferrari 250 GTO.

 

This is just a sneak peek into the world of collectibles - an industry worth billions of dollars amassing all different kinds of items. From an investment perspective, investing in collectibles is a great way to diversify your portfolio while also owning things you love, albeit at different rates of return.

 

In this article, we cover everything there is to know about collectibles - from something everyday people will love to use to legitimate investments for as financially-inclined individually but remember, the value of a collectible is in the eye of a beholder, and like some other investment, there’s simply not a single guarantee that you’ll make money.

 

What Are Valuable Collectibles?

 

What Are Valuable Collectibles

 

There’s not one single definition for collectibles but generally, they’re known to be items worth more now than what they were when they were initially being sold. This includes items that fall under different categories such as art, antiques, stamps, books, trading cards, and even coins. There are so many rare collectibles that have the capability to continuously fetch higher prices as the value of these collectibles tends to appreciate over time. 

 

So, how do you know if something is worth collecting or not? Well, it’s difficult to say, there’s quite an argument for saying that collectibles are composed of rare limited-edition pilots but that’s not necessarily true. Other times, even mass-produced items can become collectibles, such as Beanie Babies and Care Bears.

 

This tells us that there’s not a singular definition for a collectible, perhaps the closest being that they simply pique the passion of the collector. Nostalgia, after all, plays a huge role in a collectible’s value. Nostalgia cycles have scientifically been proven to come back in 20 and 30 year cycles. Meaning that something that’s popular and trending right now, perhaps a toy or a piece of clothing, has the potential of becoming an authentic collectible over the next 2 or 3 decades as people get the itch to reconnect with their past.

 

If, however, this statement will lead you to believe that all trendy items at the moment will eventually become collectibles in the future, think again. There’s no guarantee that it’ll happen so if you’re entire retirement plan is to hoard today’s top-trending items in the hopes that someday, you’ll get extremely rich by selling today’s items to the elderly Gen Z.

 

If you do manage to find a way to increase the value of your item and turn it into a bonafide collectible, you should know that the value of an item, it’s price is determined by a collectible’s condition. Even the smallest imperfection can just wipe out an item’s value. If you’ve heard about “mint condition” before, you’ll definitely have heard about the importance of keeping something in pristine condition. A baseball card of Michael Jordan in mint condition will definitely garner a higher price than what it was initially sold for. But a few scratches and a crinkled edge just might take away all the value from the item. 

 

Selling Collectibles and Investments, Here are some Collectibles to Begin With

 

Selling Collectibles and Investments Here are some Collectibles to Begin With

 

Much like a condo for sale investment, collectible investments are a good financial move!

 

Many people treat collectibles as alternative investments - and they are! There’s definite money to be made in collectibles and the more item categories you collect, the more opportunities you have in getting high quality items. From stamps to stuffed animals, here are some of the largest collectible markets in existence today.

 

Fine Art

 

Collectible art doesn’t have to be something created by an extremely popular (or dead) painter. Collectible art is any form of art that is rare or popular. Within time, we very much expect the value of this collectible to rise. By this definition, a collectible item doesn’t even need to strictly be solely a painting, it could be a sculpture, a printout, a drawing, or even a sketchbook. 

 

Fine Art

 

To that end, collecting fine art depends on your end goal. If you’re collecting for financial gain, then ensure that you take into account the trends of price. If you are collecting simply because you love a certain artist or an art movement, then you might want to look into investing in key artists and specific styles may be more up your speed.

 

Sports Memorabilia

 

Sports Memorabilia

 

On that note, if you’re a sports fan, you may want to look into finding sports memorabilia and trading cards like baseball cards and other sports cards. Think about it this way: if someone caught a fly ball from the infamous Babe Ruth or someone has the winning ball from Michael Jordan’s Shot, then for certain the price of that item will only continuously go up, right? Especially if you have them signed. If that’s the case, cash in on it.

 

Plus, its a good display for your man cave in your recently bought condo for sale unit!

 

Toys from Movie Franchise releases, fictional characters and even basic things like Coca Cola Collectibles

 

In popular media, toys, action figurines, and all the like, are signs of someone living like a child. It also, however, discusses that many of these figurines are worth a lot of money. Those original Star Wars figurines that your kids probably don’t care about? Well, someone is more than willing to pay top-dollar for that. Disney collectibles also have a strong market these days. Some of those limited-edition Frozen dolls go for multiples of thousands of dollars.

 

So, if you want to start investing in collectibles, make sure that you start thinking about what’s current in toys that you could buy today at face value. If they’re tied in with a movie, all the better as these are usually a big hit. This just might be the best investment option out there, as they usually aren’t that painful on the wallet. Other items aside from toys that are also good collectibles are comic books as well!

 

Toys from Movie Franchise releases fictional characters and even basic things like Coca Cola Collectibles

 

At the same time, you’ll need a safe place to store your investments and collectibles. Why not do it in your own home? Crown Asia has the perfect array of diverse homes and and condos for sale for you to not only build your dream home but also to keep your precious collectibles before you’ll eventually end up selling them at higher prices than they were originally sold.

 

The Risks of Investing and Having to Sell Collectibles

 

The Risks of Investing and Having to Sell Collectibles

 

Investing in collectibles doesn’t come without its own risks, here are three of the biggest risks that you’ll have to take on if you’re looking to continue investing in collectibles:

 

Cost

 

Look, we’ve been reiterating just how difficult it is to invest in collectibles. You’ll always hear stories about someone barging into a garage sale and finding something worth thousands of dollars after buying it for less than 5 with your personal finance. Now, this doesn’t happen all to often but social media and those who did manage to find treasure troves in garage sales would lead us to believe that it’s possible. That’s survivorship bias at it’s finest.

 

More often than not, unfortunately, you’ll find that the value of the product you buy either stays the same or decreases. If you plan to hold onto an item for a long time, they probably will appreciate but as we all know, probably isn’t a guarantee and it probably won’t hold up in the majority of these situations. It’s still possible that you will spend on a large amount of money but never see a sizeable return on your collectible turned financial asset.

 

Lack of Information

 

Another risk that many people will come into is the sheer lack of information that you’ll face with these types of investments. Trading stocks, bonds, commodities, currencies and other traditional investments will provide you with access to information that exists. But unlike collectors item? Well, that part is unclear. 

 

There’s not a single chart in the world that can tell us the constant price of an item. There are instances where you have an idea, but you can never get a definite answer. The best you could come up with, maybe, is a mere snapshot in time of what the cost of an item would be.

 

Illiquidity

 

Finally, perhaps the most difficult point for any collector is that it’s often difficult to find a buyer for any product. Need we explain more? The logic behind this is pretty simple, collectibles are largely illiquid because cashing out depends heavily on your ability to find a buyer willing to pay your asking price.

 

Pros of Investing In Collectibles

 

Pros of Investing In Collectibles

 

To that end, there are some definite pros in investing in collectibles. Here are four of the biggest ones:

 

Diversification

 

We’ve said it time and time again, collectibles are a form of alternative investment. It’s always more helpful to have your eggs in more than one basket, which is exactly why multi billionaires often have their own collectibles at home - items such as expensive cars or fine art.

 

Portability

 

A lot of the time, collectibles are physical assets (maybe except NFTS) and them being physical assets means that you can also transport them easily, either for safe storage or selling. It’s so much easier and warming to the heart when you’re able to always keep tabs on important assets and items. 

 

Following Your Passion

 

Unlike a share of stock or bond investments, collectibles are actually pretty fun to collect. You get to enjoy your rare collectibles while also waiting for them to appreciate in value. You can, for example, display a rare painting on your wall or drive a vintage car on the weekends. All this is extremely fun obviously and are clear advantages collectibles have over the more boring alternative investment options.

 

Easy Access

 

Its not as hard as looking for a condo for sale!

 

While these items may be inherently illiquid, it’s pretty easy to get access to collectibles, there are a lot of available pieces available on online marketplaces such as eBay or Facebook marketplace. This works especially well if you already know what you’re looking for - you may even be able to pick up items of value at yard sales, thrift stores, and pawns shops.

 

Tips on Buying And Selling Collectibles

 

Tips on Buying And Selling Collectibles

 

Knowing the pros and cons for buying and selling collectibles is great, but it would be much better if you have some experience actually buying them. Quality collections of any kind, after all, require massive amounts of interest, attention, research, and a sharp eye among many other attributes.

 

Here are 3 tips to help you get started on the road to being a successful collector:

 

Study The Trends

 

If you’re not well-educated about the item you’re looking to collect, how will you know whether or not what you’re getting is a good deal? Not only will you probably lose out on good items by overpaying for them, but you just might rob yourself or profit if ever you do decide to sell. Make sure you keep an eye out for the condition of an item - it’s immensely important that you get a good idea of what condition is normal or acceptable and what you can get from it.

 

Build Connections with Reputable Dealers

 

At the same time, getting close to the source of a product just might be the best way to get the best prices. Talk to store owners and people within the online marketplaces to find out where they get their prices and get to know those that own a very large and diverse inventory then contact the store owner and manager.

 

Be Patient

 

Finally, make sure that you’re getting a fair price for the items your buying. Too many collectors fall in love with an item, decide that they just have to have it, and end up overpaying. This overrides common sense and can quickly turn an otherwise winning and profitable investment into a losing one.

 

Related Blog: The Most Expensive Filipino Artworks You Can Buy for Your Crown Asia Home

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