Many things lose their value the moment you own them. A new car famously plummets in price as soon you drive it out the garage, typically losing half its value in just three years. Few people will pay top price for an old jumper, a well-thumbed book or a second-hand half-pint of beer.
But if you’re careful – and know what you’re doing – there are a number of alternative investments for those who prefer tangible assets to digitised share certificates. If goods have worth that doesn’t fade over time, they are sometimes known as “treasure assets”. This rarefied clique includes art, antiques, wine, classic cars, jewellery, precious metals, coins and stamps. It may also be embellished with modern collectables such as comics and nerdier pursuits. Think Jedi costumes (actually, forget we said that).
The proclivity to invest in certain items is often driven by location. In India for instance, Ledbury Research found that precious jewellery was owned by 98 per cent of respondents, compared to 65 per cent in the UK and 36 per cent in Japan.
People also seem to own these assets for a much broader set of reasons than they might own property, shares, bonds or cash. As our infographic shows, many do so out of sheer enjoyment. A canny 21 per cent are motivated by diversifying their portfolio beyond more conventional investments. A startling 12 per cent are dog in the mangers, who don’t want anyone else to own them. And a commendably honest 10 per cent admit to enjoying the respect of others. After all, you can’t beat a Rubens in the downstairs lavatory for keeping up with the Goldstein-Couttses.
The maths of grapes
If you like wine, the prospect of investing in it might sate both your palate and your thirst for steady returns. According to a 2012 Barclays Wealth report (compiled by Ledbury Research) on treasure assets, the percentage of those who invest in wine has risen from 21 per cent to 28 per cent in the past five years. The FT cited a compounded annual growth rate of over 10 per cent for the decade to end-2011 (compared to the FTSE’s stuttering 1 per cent over the same period) as being a robust incentive into which to dip your nose.
But as with all investments, do your homework and make sober judgements. In April 2012 the BBC reported that as many as 50 UK-based vintage wine firms have collapsed in the past four years.
Fine art returns
The art market is perhaps one of the most developed for investors veering away from the mainstream. Art Market Research states that from 1998 to 2008, art as an investment category returned 11.5 per cent a year, while modern art grew 17 per cent per annum. But again, there are so many variables at stake – so many artists whizzing in and out of fashion – that you really have to study (and get lucky with) your investments.
Va va voom
Collectors of classic cars are often obsessive and only a small number of premium marques come on the market at any time. This perhaps illustrates why those who collect high-end motors spend more of their overall wealth on their precious wheels – up to 7 per cent of their net worth (an average of almost £400,000) according to Ledbury Research.
As with all investments, be prudent
The emotive element of investing in objects that you love should also prompt you to tread cautiously. You may find for example, that you are willing to pay too much for an unmade bunk bed by a future Tracey Emin because you are led by your heart and not your registered financial adviser.
As with all investments think about how easy they might be to sell if you need to buy your mother a new hip. Research your market – it’s better if it stems from a hobby – and try and anticipate where trends may head. Be the calm breeze in the hurricane’s eye. If there is a worldwide clamour for Emperor Clothing’s limited-edition bottomless trouser range… well, maybe best to sit that one out.
Sources
www.barclayswealth.com/US_Wealth_Insights_15_FINAL.pdf
www.bbc.co.uk/news/business-17703269
www.ft.com/cms/s/0/dc2ed598-9dc4-11e1-9a9e-00144feabdc0.html#axzz2E5xSmW1e
www.ft.com/cms/s/2/e9ee19c6-7801-11e0-b90e-00144feabdc0.html
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Jono Hey
Jono has been responsible for designing and building Nutmeg since it was a PowerPoint deck, and is one of the few Head of UXs to have a PhD. Formerly from the world of physical product design and engineering he spent most of his career switching from making something well to making sure he's making the right thing in the first place. His professional and academic career before Nutmeg includes 7 seven years in the San Francisco Bay Area with Berkeley and Stanford Universities researching and teaching product design, and working at a leading design and strategy consulting firm.Other posts by Jono Hey