There are many reasons and benefits for why people collect things. From personal pleasure to social interactions with fellow collectors. From wanting to have a connection to history to nostalgia of a memory from the past. There are even health benefits from stress reduction to just having a sense of joy in the learning collections can bring. The cherry on top, is understanding that there are some collections that can build wealth and even help diversify your long term investment profile.
Most of what we collect will never increase in value. In fact, when you factor in inflation and the time value of money, your collectibles will likely work against you in increasing your total net worth potential. It’s rare you find someone who is able to retire or become rich based on the appreciation from their collections. Because of this, my philosophy has always been to commit to collections that my wife or I are truly passionate about versus collecting with the goal to sell in the future.
But like I mentioned above, the bonus is when you are passionate about something that blends with your passion to build wealth as well. The following are 3 luxury collectibles that my wife and I enjoy and items that have increase potential in value with time when looking at past auction sales.
1. Classic Cars
Collecting classic cars is a good example of why we collect things for many of the reasons I started this post with. Cars in general lose value every time its driven and each second that goes by. But occasionally certain cars do appreciate in value and can build wealth. There is a taste of history built along the curves of a timeless classic car. Restoring them offers learning and builds memories. Seeing a car you drove 20 or 30 years ago or that car your parents drove you on for road trips offer collectors nostalgia. As the decades go by and a select few become more and more difficult to find their value appreciate. As an example, a 1962 Ferrari 250 GTO sold for $38.12 million back in 2014.
Expensive watches tend to hold their value fairly well. Major brands tend not to alter their models too much for their timeless pieces even throughout the decades. They make great hand me downs from a mother or father to their son or daughter. For some they represent a status symbol and to others they even offer confidence while completing their outfit to work in the morning. But to almost anyone who truly appreciates a good watch, it’s an accessory that adds personality to the owner and joy when matching their watch for the right occasion. As an example, a Patek Philippe timepiece from the 1940s era sold at an auction back in 2016 for $11 million.
3. Designer handbags
Designer handbags tend to hold their value fairly well. Similar to watches, a lot of brands tend to not alter their timeless pieces over the decades. They compliments your outfit and expresses symbol of status when walking down the street. As an example, a Hermès white Himalaya crocodile diamond Birkin bagwas sold at an auction for $379,261 in 2017.
There are more than three collections that can be used to build wealth. Art, wine, coins, stamps, jewelry, vintage toys, and even comic books are just a handful of examples where you’ll see high sold prices in auctions relative to what they were purchased for. But I believe in collecting what you are passionate about. If not, like any investment you could end up losing more then the opportunity cost of using that money for something else.
I love wine and even visit vineyards but I am not passionate about it. We hang art all throughout our home but we don’t have the eyes to appreciate good art so we will never spend tens of thousands on it.
The above 3 collections is what my wife and I are passionate about. We love that we use each of the 3 in our daily lives and plan to pass them down to our kids. But the bottom line is the items we do collect symbolizes memories we’ve accumulated and our personal happiness. The increase in value is is just the cherry on top.
Share what you have chosen to collect below!