Can you get rich investing in art, cars or toys?
A typical Australian might have a superannuation plan, a family home they’re paying off, and perhaps some shares.
While those may be solid investments, and the cornerstone of long-term wealth, they can also be a little vanilla and boring.
If you’ve got some extra money on hand and are feeling adventurous there’s a huge market for more speculative investments. From classic cars to toys and art, there’s ample opportunity to roll the dice and hope for a windfall.
But are these realistic investments, and what are your odds of coming out on top?
Investing in art
We’ve all heard the stories, right? A Bansky print originally purchased for $300 fetching $200,000 at auction in Australia.
Or how about the Sidney Nolan stencil of Ned Kelly that sold for $39,000 at auction. Substantially more than the initial $200-$300 estimate it listed for.
According to the 2019 Art Basel UBS report, the global art market saw sales of $67 billion across 40,000 items.
Clearly, there’s money in those hills. But that doesn’t necessarily mean it’s a good investment. As the Australian Financial Review (AFR) points out, the art market “has been patchy over the past decade... the net gain over 10 years is 8.7 per cent - barely keeping up with inflation.” At that rate you may be better off placing your money in a term deposit with a bank.
And there’s the rub. If you’re a wealthy oligarch who can afford to gamble a lazy $50 million on a historically significant painting by a well-known artist, you might see real gains. But for everyone else, perhaps art is better appreciated for its aesthetic value than investment potential.
Investing in classic cars
Facebook Marketplace has placed classic cars front and centre on many people’s phones. One day you click on a listing for a vintage Porsche, next thing you know you’re getting inundated with car ads and falling down an automotive rabbit hole.
But is a classic car a good investment? As usual, the answer is, "it depends."
According to a recent report in the AFR, top end-classic cars have been, “pushing up prices by about 30 per cent for the past decade.” Closer to home, icons like the Holden Torana have sold for over $365,000 at auction, which is enough to make any 1970s Aussie dad weep.
But like any collectable, it’s the limited edition, highly unique models that do serious numbers. Experts suggest that there are 5 key factors when considering a classic car; brand, technology, sporting success, design and quantity.
Find a vehicle that ticks all those boxes and you may stand to see a return on your investment. But don’t forget about the maintenance and upkeep costs.
Investing in toys and video games
Toys and video games are another popular collectible, and you’ll often hear stories about a particularly rare item selling for the price of a house. Most recently, a sealed copy of Super Mario 64 for the Nintendo 64 sold for over $1.5 million USD at auction.
There’s no doubt that nostalgia-fuelled collectables have risen in price over the last decade. But the reality is their overall value is still limited. Coming off a relatively low price point, a 1000% increase on a $30 toy is still $330 - which is a great return, but it’s not going to fund your retirement.
Investing in crypto currency, NFTs, and meme stock
When it comes to abstract digital assets like crypto currency, meme Stocks or NFTs you can’t dismiss the power of FOMO, or the fear of missing out.
Simply put; people see prices going through the roof, want in on the action and buy-in. That sends the price even higher, which then attracts the next round of investors. So it continues, until the music stops, and you’re left to survey the wreckage.
Which is all fun and games if you’re playing with money you can afford to lose. But you wouldn’t want to bet the house on it.
The boring, practical side of alternative investments
If a classic car, a work of art, or an old comic can bring a smile to your face that’s wonderful. But as far as investment potential goes, unfortunately, the odds are stacked against you.
There are also lots of boring, practical things to keep in mind.
- Specialist knowledge: Unless you’re a subject matter expert there’s a good chance you’ll either pay too much or buy something that isn’t particularly rare or collectible.
- Maintenance: Collectibles need to be stored and maintained. There’s also the cost of insurance to consider. This all adds up and can eat into any potential profit.
- Counterfeits and fraud: If there’s enough money floating around you can bet there’s some unscrupulous individuals selling fakes.
- Low Returns: Most collectibles appreciate at a slower rate than other investments including shares and property.
- Lack of liquidity: A collectible is only worth what the market is willing to pay. During economic downturns it can be hard to sell items, and prices can plummet.
Will I get rich?
Let’s bring this back full circle. Can you get rich from alternative investments?
The not-very-satisfying answer is “it depends.”
Yes, it’s possible to see significant returns on alternative investments. But it tends to be the exception.
Want to take a less exciting, but more reliable approach? You can always consider superannuation. Sharemarkets have rebounded strongly over the past 12 months, delivering solid investment returns to members.
Our default Growth Plus (formerly Aggressive) MySuper option returned members almost 20% last financial year (to 30 June 2021), while our Australian Shares option returned just north of 27% during that same period. So there’s something to think about.
Speak with a financial planner
Plan an investment strategy for uncertain times.
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