Investing in collectibles: How it came into existence?

Collectibles such as comic books, stamps, art, classic cars and vintage wine don’t have a quantifiable fundamental value. Sure, they offer a lot of enjoyment to collectors but only a fraction of them are considered valuable investments. When buying collectibles with the sole purpose of selling them for money, you must find someone who will want to pay more just to own it. What drives people to collect things, and where did it all start?

Tulip mania and people’s obsession with collecting tulips

Believe it or not, 4 centuries ago you couldn’t find tulips everywhere like today. In the 17th century, during the Dutch Golden Age, the price for tulips grew incredibly and some people would pay exorbitant amounts of cash just to own a certain variety or type of flower. Tulip mania was an absurd type of collectible that attracted Dutch traders obsessed with flowers in general. The trend faded pretty quickly due to malfunctioning markets, behavioral biases and basic economic concepts such as supply/demand irregularities.

The history of collecting things

They say “collecting things” is an ever-present human activity scattered through centuries-old civilizations. Historians have always been intrigued by antiques mainly because they bear a fascinating past. Collecting is a very old cultural practice that emerged during the Egyptian Ptolemaic Dynasty when the Library of Alexandria started gathering books from all over the world.

In Renaissance Florence, the Medici family started collecting art via private patronage, thus freeing artists from the debts they had. Nowadays, many international museums (such as the Metropolitan Museum in NYC, Franz Mayer in Mexico, Thyssen in Madrid) hold priceless art pieces donated by generous collectors who wanted for the whole world to admire their collectibles. We’re talking here about emotional collectibles with great value, but that are not for sale.

Collecting prints and engravings by people who couldn’t buy original art is another centuries-old hobby. In the 18th century, in Paris, the habit of collecting curiosity items related art expanded quickly in England as well. Ever since, the modern art markets of London and Paris have gained a reputation for being well documented.

New categories of antiques and vintages emerged in the 20th century when people started collecting jewelry, china, stamps, clocks, political memorabilia, wine and cars. Right now, a lot of items that are old (20, 50, 100 years old) are considered antiques. However, this doesn’t mean it’s easy to find someone interested in buying them from you.

Are all collectibles considered valuable assets?

No. The collectible market is faddish, illiquid and opaque. Selling art pieces is now tougher than ever from various reasons. First of all, replicating art is extremely easy “thanks” to advanced technology; second, finding an avid collector to buy what you’re selling is another difficult job. You have to participate in numerous auctions, as well as have your item checked over and over again for authenticity.

Fine wine as a collectible

Is fine wine a valuable collectible? First of all, we must emphasize that wine is a consumable asset. It’s a bit complex to buy fine wine as it demands a lot of patience. Proper storage conditions and good quality wine from reputable vineyards are essential steps to consider before starting spending money. There’s a golden rule to wine investments – invest if you genuinely like the product and your chances of success are greatly enhanced. Let’s not forget that most collectibles are emotional assets, things that people like and appreciate.

However, if you can afford to buy fine wine from auctions to sell afterwards, then by all means, do it. Many wine collectors are not drinkers, and they trade wine for pure financial purposes. This category of investors are extremely rational; they know the market and they’re experts at assessing which wine may increase in value and which will decrease.

The history of investing in collectibles is long and complex, even peculiar. Nonetheless, it’s certainly worth exploring. Starting with Tulip mania in the early 17th century and ending with art, stamps, wine and classic cars in the 20th century, we must admit that vintages have tremendous value, whether it’s emotional or financial. Before investing in wine, or in any other form of collectible, you are advised to deal with a reputable merchant in order to be sure what you’re buying is 100% legit.

Should you rely on collectible investments – yeah or nah…?

A lot of people have collections – anything from baseball cards, to Hummel figurines, or hand carved cuckoo clocks. While most people assemble these collections because they enjoy what they are collecting, they may have in the back of their mind that this set could be worth money some day. Is this realistic? Should you expect your collection to appreciate in value as an investment? Here’s what you need to know.

What makes something valuable?

The value of most collectibles is highly subjective, and depends on the demand. A baseball card has no intrinsic value – its only value lies in the fact that other collectors want that specific card for their own collection. Here are some of the factors that determine the value of a collectible.

  • Rarity. If something is rare, then people are often willing to pay more for it. A stamp where there are only 10 of them in the world is a lot more valuable than another stamp with a million of them in existence. A so-called “collectible” that is mass produced by the truck load probably won’t be able to command much of a price.
  • Authenticity. If something is old and rare, then you may also need to be able to prove that it is authentic in order to justify its value. There have been many cases of forged paintings or other artworks. The higher the price tag, the more likely people will want to verify the item is authentic.
  • Condition. Whether it’s an antique end table or a Spanish doubloon, the better the condition the item is in, the higher its value to collectors.

Will your collection increase in value?

It is impossible to predict the future value of a collection, because it depends so much on the demand, which will fluctuate. Beanie babies were hot for awhile, then that trend quickly faded away. Baseball cards soared in value during the 1980s, then interest waned again. Public tastes are fickle.

If you collect something where there is a large supply, then you really cannot expect it to increase in value. The price of something like Beanie babies is driven entirely by a passing fad, and you cannot count on that continuing into the future. On the other hand, if you collect something that is rare, you have a better chance of it maintaining some value, because other collectors have limited options for obtaining it.

What about really valuable items?

If you collect original oil paintings, a work by an undiscovered artist has questionable value, and its future price depends in large part on what reputation that artist achieves during the rest of her life.  But what if you own a work that is universally deemed to be valuable, like an original Van Gogh?

The expensive item is definitely worth a lot of money, and you pay for that knowledge when you buy it. The question is how much it will appreciate over time. If you pay a million dollars for a painting, what will you be able to sell it for? There is no way of knowing what future value you can expect.

Can fine wine be considered a collectible?

Absolutely! Why not? Collectibles are tangible assets that people can move and touch. Art, antiques, jewelry, vintage cars are all collectible investments that can bring sensible returns. As for wine, over the past 10 years many rich people have turned their attention to this market. It’s because the demand is increasing while the supply decreases. However, before investing in wine you are advised to get to know the industry. Find out as much information about wine as possible, visit wine blogs and official websites and start “feeling” the market.

If you’re a rooking investor with a passion for wine, a wine investment guide can help you avoid a lot of pitfalls. Seek assistance from a reputable merchant, and start slow. Purchase renowned Bordeaux wines just to be on the safe side, and feel free to invest “en primeur” as soon as you’re 100% sure that this type of collectible investment is stable enough to bring returns. Last but not least, wine appreciates in times. Be ready to wait from 5 to 10 years for the wine to reach maturation before you can cash in.

Wine investment – fun and profitable way to diversify your portfolio

Fine wine investments are a fun and profitable way of diversifying your portfolio. If you’re a wine aficionado, collection good wine can bring you both joy and profit. However, just like any other form of investment, there are certain risks you must be aware of as nobody can guarantee that you’ll see significant returns. Focus your attention on wines from top areas such as Burdungy and Bordeaux in France; also, red wine is better than white wine from an investment point of view, although nowadays experts agree that investing in either type is a wise decision. Here are some tips to help you invest in wine while having fun and making good profit.

Choose a trustworthy merchant

You can’t buy fine wine from just anyone claiming to offer the best vintages. Scammers and unscrupulous dealers are everywhere. Nowadays, “thanks” to advanced technology, it’s simpler than ever to fake fine wine bottles. Here are some tips to help you choose a reputable merchant:

  • Stay away from cold calls – be wary of people calling you out of the blue, or sending you emails wit unsolicited offers. They can’t be trusted and their intention is probably to rip you off
  • Perform a background check – merchants with years of experience in the wine business are the best. Look at their track record and check to see if their other clients were satisfied with the services provided. A good wine merchant has nothing to hide.
  • Wine merchants should own a physical business – it’s important for a merchant to have a physical address too, and not just a PO Box. Prior to sending any money, make sure the information you have is legit. Check the office and meet with the merchant in person.

Research

A wine merchant, a friend or a colleague can advise you to buy a certain type of wine, but that’s doesn’t mean you must listen to them. It’s always a good idea to research on your own. There’s a wealth of reputable sources to check out; start with official wine blogs and websites like Liv-ex for example, and read forums to stay updated with prospective market changes. If you want to buy investment grade wines, which are pretty expensive, make sure to verify their provenance. Official documents to attest the origin of the wine are mandatory.

Packaging and condition

When buying fine wine, pay close attention to the smallest details. The smartest way of investing is to purchase wines that are in unmixed, sealed cases. If by any chance, the wine was repackaged or the cases have been damaged, this means the product’s value decreases. Perform a comparison on the wines you’re thinking to purchase and don’t hesitate to bargain. Get an estimate by checking the web or you can always ask for assistance from wine experts.

Fine wine investment is a worthwhile investment provided that you have what it takes to make sound choices. As soon as you made the decision to invest, the next step is to take precaution measures and secure your wine. For instance, if you want to avoid VAT, make sure that your product is being stored in a bonded warehouse. Perform period checks to certify that your investment is preserved in the best conditions.

Get your priorities straight

Much like investing in real estate, stocks or anything else, it’s impossible to know for sure that your investment will pay off. The first step to succeeding in this business is to get informed. Know as much as possible about the wine market, do your research and take all the time you need to sample various types of wines. Learn about vintages and seek the services of a reputable merchant to help you get through the process.

Before spending money on wine cases, ask yourself this: do I want to invest in wine because I like the product or because I want to make money? Many investors who have succeeding in the wine business are not avid drinkers. Of course, it’s always a good idea to invest in things you actually enjoy; because you’ll be waiting 5 to 10 years to see returns, at least your investment will be well worth the wait.