So far, 2016 has been a tough year for stock market investors. Often in this type of market, investors will gravitate to gold as a real asset and a store of value.
In August 2011, gold was about $1,905 per ounce. But by early March 2016, gold stood at about $1,265 per ounce. That’s a drop of 34 percent in a period of less than five years. That’s not much of an investment.
“Far from offering stability, gold is extremely volatile,” said retirement expert Walter Updegrave. “As measured by standard deviation, the iShares Gold Trust, an ETF that owns physical gold, has been more volatile than the Standard & Poor’s 500 index.”
However, collectibles can be a fun and lucrative hobby as well as an investment. For investors who are looking for non-traditional alternatives to the stock market, here are eight collectible investments that have fared better than gold.
1. Fine Wine
“According to the Fine Wine 100 index, wines have far outpaced the price appreciation of the DJIA,” said financial advisor Kirk Chisholm. “Appreciating the value of wine is not only about money, but it is also about the personal enjoyment. Drinking your investment will not help it appreciate, but it is certainly a choice you could make.”
If you choose to invest in wine, expect to spend at least $8,000 to get going, and make sure you get adequate professional storage for your bottles, according to wine education site Winefolly.com. The site also said that wine is not a fast investment; prepare to wait six to 10 years before you sell.
2. Comic Books
“[It’s] a true classic that, unlike most other comics, will retain its high value,” said Jeff Somogyi, marketing communications manager with DealNews. “In August 2014, one sold at auction for $3.2 million. Since comics are around 2 ounces, that’s about $1.6 million per ounce — way more than gold.”
It’s a good investment if you can afford it, said Somogyi. He added that the last “Action Comics No. 1” to go up for auction, which was Nicolas Cage’s copy that he reportedly had to sell due to financial difficulties, went for $2.16 million in 2011.
3. Collectible Coins
“Coins are generally worth their weight in gold or silver,” and rareness can add extra value, said personal finance blogger Pauline Paquin. “A little quarter of an ounce gold coin can be worth $25,000. Prices have been going up over the past two years, in spite of gold dropping from $2,000 to $1,000 an ounce.”
For investors who are thinking about buying collectible coins, make sure you know what you’re buying. “Research, research, research,” advised the Federal Trade Commission. The agency also told would-be investors to plan to hold onto this investment for a minimum of 10 years before expecting a potential profit.
4. Political Collectibles
In a presidential election year, collectors might be watching out for political memorabilia that could be a good investment. Steve Ferber, of political memorabilia dealer Lori Ferber Collectibles, said that a copy of the Chicago Tribune from Nov. 3, 1948, is an example of a solid investment of this kind.
“This is the iconic newspaper error where the editors mistakenly declared that Thomas Dewey had defeated Harry Truman for the presidency,” he said. “In 1948, those newspapers cost 4 cents. Today, they sell in very good condition for between $2,000 to $3,000. Not a bad investment for 4 cents.”
However, Ferber said it’s important not to get too caught up in the frenzy. “For example, right after Barack Obama’s inauguration, people were buying and selling copies of The Washington Post and other daily newspapers around the country, from Inauguration Day, for hundreds of dollars — not bad for a $1 investment,” he said. “But just a couple of months later, they were worth $2, if you could even sell them. Rule of thumb: Items that were produced in the hundreds of thousands — or millions — rarely have great value.”
5. Handmade Guitars
Investors who appreciate musical instruments might want to consider collecting master-built, handmade guitars.
“As a builder’s reputation for quality and tone continue to get stronger, so does their client waiting list and demanding price,” said Scott Bresnick of Dream Guitars, a seller of fine and rare guitars. “We have seen builders start out early in their career, building guitars for a few hundred dollars, and now [command] more than $20,000 to $30,000 per build.”
There are a couple of signs that a luthier’s guitars could bring big returns down the road, said Bresnick. A long wait list and professional musician endorsements can give a big boost to an instrument’s value. For example, after luthier Wayne Henderson made a guitar for Eric Clapton, some of his guitars now resell for more than $25,000, even though Henderson doesn’t charge more than a few thousand dollars for the ones he builds, said Bresnick.
Toys are a favorite collectible for some investors. In fact, 21 percent of high-net-worth collectors invest in so-called treasure investments, including toys, as an alternative to conventional investments, according to a 2012 survey by Barclays Wealth and Investment Management and Ledbury Research. It helps to know which toys are popular, of course.
“Everything my son has from LEGO, even unwrapped, is listed on eBay for more than we paid,” said financial blogger and freelance writer Miranda Marquit. “In some cases, much more than we paid. Dementor minifigs: $15 to $20 apiece. LEGO Death Star: Almost twice what we paid — just the box and the manual is listed at $75.”
For investors who love antiques, and are knowledgeable about them, this can be a strategy worth considering, according to Investopedia. Although art and antiques tend not to hold their value well during recessions, the right item can.
Whether it’s worth more than its weight in gold depends on the item you’re investing in, which is why it’s important to know what to look for. The Telegraph featured a British couple who invest in antiques and reported that one of their biggest successes was a terracotta Cortendorf figurine they found on eBay for £19.95 (about $23). Six months later, with some professional restoration, the figurine was estimated to be worth between £600 and £800 (about $680-$900).
8. Hollywood Memorabilia
High-end collectibles have done very well over the past 10 to 15 years, according to Joe Maddalena, president and CEO of Profiles in History, an auctioneer and dealer of original Hollywood memorabilia.
“Supply is very limited and demand is constantly increasing, as we have a worldwide collecting base,” he said. “We never recommend ‘collecting’ as an investment, but the numbers speak for themselves and tend to show very strong performance in the best of the best.”
Some examples of outsized prices for Hollywood memorabilia, according to the company, include:
- Marilyn Monroe’s “subway” dress from “The Seven Year Itch” sold for a record-breaking $5.52 million.
- The Audrey Hepburn ascot dress from “My Fair Lady” sold for $4.44 million.
- The costumes for the historic ensemble of Julie Andrews’ “Maria” and the Von Trapp children from “The Sound of Music” sold for $1.56 million.
- The Marilyn Monroe signature red-sequined showgirl gown from “Gentlemen Prefer Blondes” sold for $1.44 million.
- The hero “Gen 11” road-going car, Chitty Chitty Bang Bang — from the movie “Chitty Chitty Bang Bang” — sold for $805,000.
If you choose to invest in collectibles, it’s important to approach this strategy with caution, knowledge and common sense. Make sure you understand what you’re buying and its value before plunking down your hard-earned money.