An Introduction to Alternative Investments
Books aren’t just for reading; wine isn’t always for drinking, and not only kids collect toys.
They’re all investment alternatives for financially aware people who want to combine an interest with their investing, or simply find the world of stocks and shares too dry or complex.
Alternative assets are becoming increasingly popular in the UK, and research suggests that more than six million Britons own alternative investments worth a total of £486 billion.
With alternative investments, there is fun is choosing your items, such as works of art and items of antique furniture, which can brighten your home as well as make a profit.
However, these are high-risk sectors and the value of your investments can go down as well as up, as fashions and demand change.
Research into your chosen field and careful selection of pieces are a must. Buying what you like best means you can enjoy your purchases even at times when they are not worth a great deal.
Here, UK Net Guide covers some of the most popular methods of alternative investment.
Investing in wine has rightly lost its stuffy image of dusty cellars owned by aristocrats and millionaires. It’s now a pursuit that’s affordable for people from every walk of life. For as little as £100 a month, you could enjoy a healthy return in just a few years.
There are many wine merchants in the UK that are willing to advise customers on the best bottles in which to invest. Though most will demand a commission – usually about 10% - when you sell.
Drinks investment scams are common, and thousands of investors fall for them each year, so care should be taken when seeking assistance and products. Credible companies include Dunbar Fine Wine http://www.dunbarfinewine.co.uk, Magnum Fine Wines http://www.magnum.co.uk and Premier Cru Fine Wine Investments http://www.premiercru.com.
Beware of companies touting whisky investment. There is no resale market in whisky.
No one can predict what books may or may not be valuable in the future. It’s unlikely, for instance, that anyone in 1997 guessed that a hardback copy of the debut novel by unknown children’s author JK Rowling would fetch £25,000 only six years later.
First editions by well-known writers are the most likely to have some value. Book retailers now sell ‘deluxe’ versions of new publications, which are numbered and signed by the author and can triple in value within months of going on sale.
But ‘special’ editions are not a new phenomenon. In 1906, publishers released 500 copies of a limited edition of JM Barrie’s Peter Pan, each of which is now worth £6,000. Scouring second hand bookshops is unlikely to uncover too many such gems, though you should be able to find one or two tomes already on their way to being a good investment.
For more information, why not start with the Antiquarian Booksellers Association http://www.aba.org.uk?
Antique teddy bears are the most reliable toy investments, and the best are Steiff bears, which were first produced in the early 1900s and have been known to be worth more than £100,000.
However, more contemporary items, such as early Star Wars figures and the fashionable moveable models by illustrator James Jarvis, sometimes change hands for exorbitant amounts of cash.
Vintage toy robots – like the Masudaya Machine Man that sold for nearly £30,000 - and dolls such as early versions of Action Man and Barbie are very desirable.
Dinky toys from 1985 might be worth several times their original value, while ones from 40 years ago can sell for up to £500 each.
Vectis Auctions http://www.vectis.co.uk is a good place to start.
You don’t need to spend £24.75m – the amount Japanese insurance magnate Yasuo Goto famously paid in 1987 for Van Gogh's Still Life: Vase with Fifteen Sunflowers – to obtain something that is a sound investment.
Art works tend to hold their value, as well as providing nourishment for the soul. Surprisingly, even prints by leading artists such as Picasso are often within many people’s price range, and can be found at events such as The Affordable Art Fair http://www.affordableartfair.co.uk and the Fresh Art Fair http://www.freshartfair.co.uk.
Unknown artists can also be worth a punt (after all, it’s how Charles Saatchi keeps adding to his fortune).
Collecting art is best treated as a hobby first and an investment second, and you should rely on your own eye for picking works that may increase in value.
Antiques are among the most tangible alternative assets, and like works of art they are collected for their aesthetic appeal as much as their value. And like investing in art, investing in antiques is a medium-to-long term venture.
The trick is to choose a style and period you like best and stick to it, because collections of similar pieces are more likely to increase in price than a mishmash of items.
Pieces that you hope will become worthwhile assets should be examples of fine craftsmanship and be in good condition.
To maximise your profit, you should be buying items that will become popular in the future, rather than buy items that are already fashionable and expensive.