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Collectables - Passion or investment?

article3 nov20

Is yours just a passing phase, a lifelong passion, or a smart investment? Whatever the impetus or motive, a recent survey by the Royal Mint revealed that 83% of people in the UK had started a collection of something or other at least once in their lives. And 57% still have an active collection.

Why you collect

Although you can probably think of a whole host of reasons, there seems to be a strong innate impulse in all of us to simply collect things – and impulse that starts right back in our infancy.

UK company TokensFor offers a telling reminder about those pebbles, shells or conkers that young children often start to collect before moving on to more sophisticated collections – often inspired by the latest playground craze (such as Tsum Tsums, fidget spinners, novelty pencil erasers, or the ever-faithful bag of marbles).

As we get older, suggests a psychological study published by the Princeton University Press, collecting may become the “unruly passion” that borders on the obsessive.

A contributor to one of America’s auction house websites also insists that the urge to collect persists well beyond childhood – but the reasons might have changed, and include:

  • personal pleasure through the appreciation, for example, of beauty or craftsmanship. Or, a simple pride in ownership;
  • recognition from fellow collectors – or even non-collectors – and the competitive challenge between you all;
  • reducing stress and improving relaxation;
  • learning and gaining knowledge about the objects you are collecting;
  • forging your connection with history or some part of the past; and
  • the opportunity to earn money from your investments.

Collecting to invest

While many of those reasons are likely to be highly subjective and a matter of personality or personal preference – depending on your passions – the last one we have listed offers an objective measure.

It is likely to prove an attractive investment if the items you are collecting now are more valuable in the future. The amount and the rate by which they appreciate might provide a clue to what you choose to collect.

What to collect

Collecting continues to be founded on passions which might not be easily explained in purely rational or objective terms. But there are certainly collector’s items which prove to have been a money-spinning investment.

With the very firm caveat that we are in no way endorsing or advising upon the collection of particular items, the following are just some of the subjects that have proven been in collectors’ sights – often to their considerable financial advantage:

Stamps

  • philately, explains the National Philatelic Society, is a fancy term for stamp collecting – a hobby that has been popular in the UK for at least the past 100 years’;
  • many collectors started as children – attracted to the hobby because they could spend as little or as much as they had at their disposal to expand their collection;
  • surprisingly perhaps – for a hobby that is often seen as an older person’s pursuit – stamp collecting has seen an upsurge in interest among millennials, according to a story in the Guardian newspaper earlier this year;
  • an article in Forbes magazine last year argued that the internet has made investment in stamps and stamp collections far more competitive. The majority of returns on purchases currently achieve between 2% and 10%. But as much as 17% of the investments analysed returned an annual average of more than 20%;

Wine

  • where stamp collecting might be considered a tad “boring” or “fuddy-duddy” (despite the potential for attractive returns on investment), collecting fine wines has a quite different, much more fashionable social cachet;
  • the existence of ancient wine cellars provides evidence of just how long collections have been prized – a wine cellar in caves in Armenia is reputed to be 6,100 years old;
  • you don’t need to keep your collection of fine wines for quite that long, of course, to turn a profit on such an investment – in a report of the 26th of September 2019, the Investor’s Chronicle found that some investments in cases of fine Bordeaux wine have outperformed fixed incomes, equities, property investment and gold in the 18 years to 2016;

Books

  • like many other collectors’ items, of course, your investment in a rare first edition is unlikely to bring you overnight riches – you are almost certain to be looking at a long-term investment;
  • nevertheless, rare books may offer a steady and reliable return on your investment in a tangible alternative asset class, explained What Investment on the 27th of May 2020, pointing out that if you bought a first edition of the Origin of Species by Charles Darwin, say, ten years ago for about £70,000, it could today be worth some £225,000;

Handbags

  • when it comes to collecting, though, people’s passions run in all manner of directions – and a more recent example might be given by collectors of iconic or haute couture handbags, according to Grazia fashion magazine on the 8th of April 2020;
  • the magazine claims that a well-chosen up-market handbag (particularly a limited edition) might retain its value better than a property in London – though you will probably need a good deal of luck and good fortune in your side to secure the highest of returns in this niche of the collectors’ market.

It’s unlikely to be a question of either-or but a combination of both passion and the quest for a good investment that drives your instinct for collectables – whether your collection takes the shape of stamps, wine, rare books, swords, handbags, or indeed any other item that sparks your interest.

Disclaimer: We offer no advice or recommendation about collecting in general or the particular collectables we have mentioned. Remember, too, as with any type of investment, the value of your collection – or individual items – may go down in value as well as up.

This data is correct as at the time of writing. 

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