Collectibles can be an intriguing investment option, but they come with significant risks and considerations.
Let’s explore the potential of collectibles as investments, top items worth collecting, and major risks to be aware of.
This article was written by a Financial Horse Contributor.
Collectibles as Investments: Potential Rewards and Hidden Risks
Collectibles have long fascinated investors looking to diversify their portfolios beyond traditional assets.
While some collectibles can appreciate significantly in value over time, they are generally considered high-risk investments that require careful consideration.
Top 5 Collectibles That Hold Their Value
- Fine Art
Works by renowned artists have historically shown strong appreciation. - Rare Coins
Numismatic collectibles, especially those with historical significance or minting errors, can be highly valuable. - Vintage Watches
Luxury timepieces from brands like Rolex and Patek Philippe often retain or increase in value. - Classic Cars
Iconic models in excellent condition can appreciate substantially over time. - Investment-Grade Wine
Certain vintages from prestigious vineyards can yield impressive returns. See our article on investing in wine.
Major Risks to Consider
Lack of Liquidity
Collectibles can be difficult to sell quickly. Collectibles often appeal to a niche audience, making it challenging to find the right buyer.
The value of collectibles is often subjective and can fluctuate based on trends, making it hard to price items accurately and find buyers willing to pay the asking price.
Unlike stocks or bonds, collectibles can’t be quickly or easily converted to cash. Finding the right buyer at the right price can be a lengthy process.
Fraud and Counterfeits
Forgeries and counterfeits are prevalent in the collectibles market. Buyers are often wary, and sellers may need to invest in authentication services to prove an item’s legitimacy.
Maintenance Costs
Proper storage, insurance, and preservation can be expensive, eating into potential profits.
Many collectibles are delicate and susceptible to deterioration. Even minor damage can significantly reduce an item’s value, making preservation a critical concern.
Market Volatility
Collectible values can fluctuate dramatically based on trends and economic conditions.
The collectibles market is subject to shifting trends and cultural changes. What’s popular today may fall out of favor tomorrow, affecting demand and value.
Lack of Income
Unlike stocks or bonds, collectibles don’t generate regular income while you hold them. They only make money through appreciation, which can be unpredictable.
Are collectibles a good investment?
While collectibles can be exciting and potentially lucrative, they should generally make up only a small portion of a well-diversified investment portfolio.
Successful investing in collectibles requires deep knowledge of the specific market, patience, and a willingness to bear significant risk.
For most investors, traditional assets like stocks, bonds, and real estate may offer more reliable returns with lower risk.
However, for those with a genuine passion and expertise in a particular collectible category, careful investment in high-quality items can sometimes yield both financial and personal rewards.
Have you heard about the Labubu craze?
Labubu is a popular collectible character created by Hong Kong-born artist Kasing Lung in 2015 as part of “The Monsters” series.
The Labubu craze exploded in 2023 when K-pop star Lisa from Blackpink was seen with a Labubu plush, causing a surge in demand across Southeast Asia. The character’s popularity has led to long queues, sold-out products, and even an uptick in scams.
Pop Mart releases limited-edition Labubu figures, which has become highly sought after. In Singapore, prices for limited-edition Labubus have reached thousands of dollars on resale platforms.
Some people suggest the Labubu craze might be a fad. Content creator Leah Shannon Neubronner predicts, “It will probably die off in a couple of months when a new series that is cute or is endorsed by another celebrity comes out”.
There are reports of collectors selling off older figurines at a loss, indicating that not all Labubu figures maintain their value over time.
Additionally, the proliferation of fake Labubus has made the market more challenging for collectors.
Ultimately, while some Labubu figures may retain or increase in value, especially rare or limited editions, there’s no guarantee they will consistently hold value over time. Collect them if you enjoy them, but be prepared for the possibility that their monetary value may fluctuate or decrease in the future.
Lesser-known collectibles that have shown significant appreciation in value in recent years
There are surprisingly a lot of things that you can collect that can appreciate in value.
- Vintage video games and consoles
Rare or sealed games from the 1980s and 1990s have sold for hundreds of thousands of dollars.
For example, a sealed copy of Super Mario Bros. from 1985 sold for $2 million in 2021. - Sneakers
Limited edition and collaboration sneakers have become highly collectible.
Some rare Air Jordans and other sneakers have sold for over $100,000. - Pokémon cards
Certain rare Pokémon cards from the 1990s have skyrocketed in value.
A Pokémon Charizard card from 1999 sold for $336,000 in 2021. - Comic book original art
Original artwork pages from popular comic books have become very valuable.
A single page of original Spider-Man art sold for $3.36 million in 2021. - Vintage toys
Mint condition toys from the 1970s-1990s, especially Star Wars figures, can be worth thousands.
A prototype Boba Fett figure sold for $236,000 in 2022. - Movie props and memorabilia
Iconic props from popular films have sold for huge sums.
For example, Harry Potter’s glasses from the first film sold for $20,000. - Vintage computers
Early Apple computers and other pioneering tech products have become very collectible.
An original Apple-1 computer sold for $905,000 in 2014. - Vintage watches
Certain rare watches from brands like Rolex and Patek Philippe have appreciated significantly.
Some vintage Rolex models now sell for over $100,000. - Sports tickets
Tickets from historic sporting events can be surprisingly valuable.
A ticket stub from Michael Jordan’s NBA debut sold for nearly $25,000 in 2018. - First edition books
First printings of popular books, especially in pristine condition, can be worth a lot.
A first edition of Harry Potter and the Philosopher’s Stone sold for $471,000 in 2021.
The key with many of these is rarity, condition, and cultural significance driving demand from collectors.
Do you collect anything? Share in the comments below!