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Sunday, May 26, 2019

Investing in collectibles: Realities and risk

by Editor (editor), , March 11, 2019

Collectibles are a form of alternative investment. There are many more of them, anything that is not stocks, bonds, real estate or cash.

Collectibles are a form of alternative investment. There are many more of them, anything that is not stocks, bonds, real estate or cash. These are the traditional ways of investing. Just how reliable is this alternative method? That is a multi-pronged question. With the advent of the Internet, the world is chock-full of schemers, con artists, and frauds. There are only a few people who truly know the market intimately and are aware of these threats well enough to make a profit. If we are thinking about going into this industry, we need to be sure that we can identify these threats, find bargains, and sell them at greater cost. Here are some of the things to keep in mind.

  1. Lack of information

Information is crucial when dealing with collectibles and is difficult to find. Stocks, bonds, cash, real estate etc. all have a paper trail and are quantifiable. That is what sets them apart. Often enough, we would find ourselves digging deep to find out if our vintage object is actually worth as much as we would like. The evidence that we gather has to be satisfactory to any potential buyer as well, which is a completely different situation. They will surely look to lower the price, as the laws of bargaining dictate. That is why we need to be armed with as much verifiable information as possible to get our money’s worth at the end of the day.

  1. Maintenance

At times, we will come across items that require special care, at least if we want to keep them in mint condition. Paintings require dry storage, for instance. They are also susceptible to physical damage and need to be properly wrapped and protected. Maintenance is a big part of this industry, the reason being that we want to preserve as much of the original value as possible. It is not reasonable to think we can professionally preserve every different valuable piece. That is why there is no shame to hire professional help for some tips on the do’s and don’ts.

  1. Selling difficulties

Provided our valuables actually hold value, we should come up with a plan to get the most of it while selling. Listing our collectibles is not a problem. We need the best pictures we can get of it to prove the impeccable condition and a brief description. We wait for a potential buyer to contact us. It is always the customer that ultimately puts a value to a product or service. To some, an old banknote is just a worthless piece of paper. To others, like the Vintage Coins and Banknotes, it is a rare remnant of a bygone era with a fascinating history behind it. We are sure to find people interested in buying. What is much less likely is that they will pay the full asking price. There is always an element of bargaining, it is just a fact of collectibles market life. We need to find a compromise that best suits everyone involved.

  1. Relations to the stock market

Most will say that collectibles are not connected to the stock market and they would not be completely wrong. The truth is, everything is connected with it. When the stock market is favorable, potential investors have more disposable income, which can be used for purchasing collectibles. Consequently, when the stock market is in a recession, investors have less money to dispose of, which will negatively impact the collectibles market.

  1. Associated costs

We have all heard of various popular television shows where people spend small amounts of money blindly on a container and strike a goldmine. Or someone stumbles on a valuable piece in an attic somewhere. Though these situations can happen, they are highly unlikely to. A much more down to earth scenario is that we would have to regularly spend money on valuable items. Sometimes they may not turn out to be profitable and sometimes they will. There are those collectibles that will appreciate over time. But that is also a gamble. It is always a possibility that we will spend large amounts of money and never see a return on our investment.

With the volatility of the more mainstream aspects of the global market has justified most of the alternative forms of investment. Collectibles investment can give us significant returns but this industry does come with its limitations and risks. Even if we account for all of those, we still have to deal with all the taxes, fees, and other costs. But if we can juggle all of these, there is much fun to be had.



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