For community.
For altruism.
For nostalgia.
And for probably a dozen more reasons — humans are collectors.
Aside from the joy and purpose it seems to bring us, there’s another feature of collections that make them beneficial. If chosen well and treated right, collectibles can be a great outlet for growing and protecting your financial portfolio throughout stock market turmoil.
If you’re interested in the “why” behind becoming a collector or just want to learn how to parlay your passion for collecting into an actual asset, you should definitely read along as we dive into the intriguing world of collectible investments.
What Are Collectibles?
The world of collectibles is massive. Most items that are worth more currently than they were when first produced and sold can be considered collectibles. Some of the more common categories that collectibles fall into include:
- Artwork
- Antiques
- Coins
- Classic cars
- Stamps
- Toys and figurines
- Sports memorabilia
- Books, including comic books
- Baseball cards and other trading cards
The value of collectibles tends to increase the older they get, as long as they remain in decent physical condition. Naturally, the more rare a collectible, the more value it holds. However, there are some items that are mass-produced with the intent to become valuable collectibles one day.
Baseball cards might not have originally fallen into this camp, but you could place them there today. And of course there are the infamous Beanie Babies. And yes, some of them are still worth something today despite the craze not lasting the way many hoped it would. A quick ebay search shows that the toys are still selling for hundreds and even thousands of bucks right now in 2022!
Collectibles Are an Alternative Asset Class
Before we get any further we should confirm that, yes, collectibles are in fact a type of alternative asset.
Kind of like collectibles, there isn’t a hard-and-fast rule defining alternative assets. Alternative assets are basically assets that fall outside of the realm of traditional assets. Stocks, bonds, cash, and mutual funds are some of the most common types of traditional assets. There are innumerable types of alternative assets, but some of the most popular include:
- Digital assets: cryptocurrency, NFTs, DeFi properties, domains, etc.
- Alternative financial vehicles: private equity, venture capital, hedge funds, etc.
- Commodities
- Real estate
- Wine
- Collectibles (of course!)
Top-Performing Collectible Investments
Interested in adding collectibles to your portfolio — we’ll talk about the big benefits here later! — or upgrading to assets that are most likely to secure a financial gain?
Then come along as we uncover a few categories of collectibles that have a history of generating trustworthy returns.
Stamps
No surprise that stamps rank among some of the best-performing collectible assets.
First of all, stamp value is reliable. The value of stamps has grown by more than 13% annually since 1991 according to the GB250 Index, which tracks Great Britain’s top 250 stamps.
And there are a few reasons why stamps are desirable as far as collectibles go. They’re accessible because their small size makes them easy to store. And typically, the initial investment is affordable. In addition, stamps are often released in limited batches.
Coins
The value of collectible coins has nothing to do with the amount stamped on them.
Coins make for valuable collectibles because, much like stamps, they’re often released in unique batches that become rare once they’re no longer released into circulation.
The most collectible coins are those from extremely limited runs or with unique errors. It may take a while for a coin to amass real value, but it’s certainly been known to happen.
One of the most valuable collectible coins currently is what’s called the Flowing Hair Silver Dollar, sold for around $10 million in 2013. Its value comes from its rarity as well as its age. Minted in 1794, some believe it could even by the first-ever silver dollar created by the U.S. Mint.
Fine Art
Of course art is one of the most well-known types of collectibles, appreciated well beyond the world of collectors and investors.
The value of a piece in the art market is driven by factors both tangible and intangible. Rarity is of course a key element, as most fine art is one of a kind. There are also considerations like the piece’s age, artist reputation, previous owners, and sale price history. To check the value of a piece of art before collecting it as an investment, there are plenty of resources for identifying and checking the value of fine art.
The best financial advice we've seen for first-time collectors is to invest in an emerging category or artist. Art in this group has more time and space to appreciate, and is much more likely to fall within your budget than something offered up at Sotheby’s or Christie’s auction houses.
Benefits of Investing in Collectibles
Here are some of the great things well-chosen and well-preserved collectibles can do for your portfolio.
Portfolio Protection via Diversification
Portfolio diversification is the single best risk management strategy for keeping your portfolio intact no matter the level of stock market volatility.
Investing in asset classes that aren’t closely correlated with stocks — meaning they don’t jump or dive in value at the same time stocks do — enables a portfolio to remain stable even when the news, the economy, and other factors tank the stock market. It’s just like the age-old saying goes: “Don’t put all your eggs in one basket.”
With time, diverse portfolios have been found to generate higher returns and remain more protected from losses than undiversified portfolios.
Potential for Outsized ROI
It’s not just about portfolio protection, collectibles can also help your portfolio be more productive.
When you shop carefully and take good care of them, even affordable collectibles can generate a huge return in a matter of years.
Take for example the Star Wars merch that went for just a few dollars when the first movie was released in the 1970s. Today, some of those collectibles are selling for thousands and pulling in ROIs around 155,000%.
Physicality Promises Portability — And Control
We mentioned this when talking about stamps earlier, but the cool thing about many collectibles is that they’re physical, and typically portable. You can hang a piece of art on any wall, you can carry a collectible coin in your hand. Their portability makes it simple to buy, sell, and transport collectibles around the world.
In addition, the physical nature of collectible investments gives owners a level of control that many other asset types don’t.
Enjoyment!
How passionate do you feel about your stocks? How much job do you get from looking at an accounting of your investments in bonds?
Yeah, most investment assets really don’t create that much joy. But with collectibles, you get to enjoy the assets all while they’re growing in value!
There is also the thrill of the hunt that comes with collecting rare items, something that spurs many people to become collectors well before they’re even aware of the financial benefits.
The Downsides of Collectibles Investing
Before you go head-long into racking up the collectibles, there are some downsides you oughta know about.
Collectibles Have No Intrinsic Value
An item’s intrinsic value refers to what it’s worth, objectively.
And while it can be argued that the value of very few things is actually objective, this is especially true when it comes to collectible investments.
There is a whole system that revolves around setting the market value of stocks — it’s called the stock market.
But when it comes to collectibles, there is no singular collectibles market. Their value is heavily based on perception. The value of something like fine wine or art or a sports card can change based on the opinion of the appraiser, the buyer, or the seller. If the popularity or rarity of a collectible asset suddenly shifts in the wrong direction, you might find yourself the not-so-proud owner of an asset you can’t offload for your desired amount.
This illiquidity can be an especially big drawback for certain investor types.
Value Depends Entirely on Condition
We’ve alluded several times to the fact that condition is everything when it comes to the value of your collection.
Often, collectibles have to be in mint condition to fetch anywhere near what investors hope to get from them. One accidental scratch, bend, or crack can ruin their potential to ever reach their full valuation. Investors need to be quite careful and aware when it comes to collectible condition.
Risk of Fraud
Especially when it comes to very rare and valuable collectibles, fraud is something of which to be aware.
Collectors should be on guard against fraudsters looking to sell them counterfeit goods and scammers looking to trick them out of the full value of their possessions.
Are Collectibles as Investments Right for You?
At the end of the day, as with any type of investment, there is no guarantee that any certain collectible will accumulate value.
And while collectibles specifically have some unique benefits — such as their enjoyability, ability to diversify, and tendency to generate outsized ROI — they can also be volatile, easily faked, and their value is somewhat easily threatened.
Those who plan to invest in collectibles the same way they do traditional assets may not have a pleasant time. But still, some financial pros see the upside in adding a small percentage of collectibles to a well-rounded portfolio.
Collectible investments may be right for you if you’re interested in collecting something you’re already passionate about and you don’t plan to sink more into the hobby than you can afford to lose.
But if you’re not in it for the fun of it and are looking for more liquidity and reliable returns, another type of alternative investment may be a better match.
Track Net Worth, Collectibles, and Traditional Assets Side-By-Side with Kubera
Whatever types of assets you decide to add to your portfolio, they’re all still going to need to be managed eventually.
If you don’t want to spend your days flitting between this crypto wallet, that stock brokerage account, this real estate portal, that banking platform, and the tens of other locations where your assets “live” — we have a solution for you.
Kubera is personal balance sheet software that empowers modern investors to organize and manage every element of their diverse portfolios from the comfort of a desktop, iOS, or Android device.
How do we do it?
Well, first, we made it incredibly easy to spin up a portfolio and fill up the spreadsheet-like interface with your assets.
First, add the credentials for all your account-based assets — bank accounts, credit card accounts, brokerage accounts, crypto accounts, mortgage accounts, etc. — and Kubera will update in real-time every time your accounts refresh. (Check out this list of some of the account types Kubera works with).
Then, plug in those assets that don’t have a live account — collectibles like art, wine, toys, books, etc. often fall into this category. Because Kubera is so user-friendly, it’s easy to go in and update their value every once in a while.
Stock market and cryptocurrency tickers as well as integrations with asset experts Zillow, EstiBot, etc. further enrich Kubera’s capability to track all of your assets.
But it doesn’t stop at just visualizing your diverse portfolio, Kubera also enables you to monitor the performance of each and every one of your assets.
We do this through our custom calculator that automatically finds IRR for investments.
Kubera’s platform adds up the current value of an asset, its purchase price, any cash flow in and out, and holding time to find the internal rate of return (IRR) — which is basically a more detailed take on ROI. And, it displays that IRR in your preferred currency!
This is such a valuable feature for diverse investors because it enables you to understand how each asset is performing and impacting the rest of your portfolio — no matter if you originally purchased it in a foreign currency or digital cryptocurrency.
Read this help center article to see our IRR feature in all its glory!
Kind of a lot of info to take in, right?
Perfect time to introduce our recap feature then!
We built this capability to crunch all the data in your Kubera instance — no matter how vast — to provide a granular overview of performance over time.
Want to know how your entire portfolio has done this year or how a specific collectible has performed just this week? You can slice, dice, and view that data any way you like with Kubera.
Check out all of the above features — and more — in action on our how Kubera works page!
Now for our best feature of all — shockingly simple and accessible pricing!
Sign up to try it for yourself. Or, if you work with a financial advisor or wealth manager, you can access Kubera through them! Just send them the info on our white-label solution. When your investment adviser starts using Kubera as part of their client portal, you’ll enjoy the benefits of the more complete, modern experience they’re able to provide.
