You may have seen the news that US home values are finally finding their feet, posting the strongest annual gains since 2005.
The average price of a house in the States rose by 11.3% last year, according to the S&P/Case-Shiller Home Price Index - giving homeowners some relief after years of bad news.
Prices are back to where they were in 2004, but it’s not all good news.
“Gains are slowing from month to month and the strongest part of the recovery in home values may be over,” said David Blitzer, who chairs the S&P Dow Jones index committee.
It might not be the time to jump back into property investment just yet, but that hasn’t stopped the media at large producing lists of where to buy, and which markets are “hot”.
In response, here are five collectible investment options you might wish to consider as an alternative way to store and grow your wealth.
US coins – blue-chip
Collecting rare coins is one of the safest bets when it comes to investing in collectibles. The pursuit has long been known as the “King of Hobbies”, a title earned as one of the oldest and most popular pastimes worldwide.
It is especially suited to the investor, whose working life often revolves around money and figures. It’s the perfect extension of a money-minded career.
The PCGS 3000 index, which tracks values of the leading US coins, has shown a 10.1% per annum increase since its inception in 1970, wavering only slightly at the height of the global economic crisis.
I bet that has you thinking…
Rare stamps – low volatility
Perhaps it’s low volatility you are looking for? Well, can I interest you in a rare stamp? According to the Knight Frank Wealth Report 2013, collectible stamps enjoy a standard deviation of just 4%.
Compared with the relative rollercoaster ride that is the Dow Jones Industrial Average, that figure looks pretty good to me. The CBOE Dow Jones Volatility Index is currently above 13%.
Yet it’s not just low volatility that makes stamp collecting worth a look: the GB30 Rarities Index, which tracks the performance of the top 30 investment grade stamps of Great Britain, has realised an average annual return of 10.3% since its inception in 1998.
Meanwhile, the top 200 investment grade stamps of China have shot up by 11.6% per annum since 1989, as Chinese collectors latch on to the hobby with fervour.
Autographs – top returns
As far as impressive returns go, it’s hard to beat a museum-quality autograph from a famous name, whether it’s a Hollywood star like Marilyn Monroe and James Dean, musical royalty such as the Beatles, or royalty itself.
The PFC40 Autograph Index tracks the price performance of the 40 most sought after autographs, and has seen an average compound increase of 13.6% since 2000.
Leading the way is Prince William, the future king of Great Britain, whose autograph has increased in value by 33.3% in the past year to £2,000 ($3,310). If princes aren’t your thing, try a signed photo of Muhammad Ali, which saw a 25% increase in value last year to £1,500 ($2,480).
Modern comics – long-term
You can’t beat a good trip down memory lane, and nothing beats the nostalgia of owning the comics we coveted at kids. But investors love to look into the future, predicting what might be subject to a sharp rise in the coming years, and there is a way you can do both.
Of all the comic book categories, it is actually the modern issues that are rising in value the fastest. Issues from the 1960s may be the top sellers when it comes to auction prices, but those from the mid-1980s onwards saw a 5.3% increase according to ComicTrend.com’s Marvel Composite Index in the first half of 2013, and the gains look set to continue.
This is very much a speculative market, so buyers beware. However, pick the right issue and you could be on to a winner. The comic book on which the Walking Dead TV series was based was originally issued in 2003 for a few dollars. Now, it is selling for around $5,000 in mint condition.
Comic books that are made into movies are particularly likely to increase in value thanks to the extra exposure the big screen brings them. There is also the bonus that the initial outlay is just a few bucks, so you won’t lose out even if you back the wrong book.
Movie memorabilia - prestige
There is no index that tracks the performance of movie memorabilia. These are unique pieces of iconic cinematic history, so you can’t always pin them down to facts and figures.
What you can do is rest assured that the most iconic pieces will continue to rise in value judging by past performance:
- Audrey Hepburn’s Ascot dress from My Fair Lady – up 41.5% per annum between 2002 and 2011, from $100,000 to $3.7m
- Marilyn Monroe’s bathrobe – 34.9% per annum increase, selling for $6,000 in 1999 and $120,000 in 2009
- The Maltese Falcon statuette – $380,000 in 1994, $4m in 2013 – a 13.1 per annum increase
Demand for these iconic costumes is huge, with collectors often willing to pay substantial sums for the best items. Get your hands on an instantly recognisable piece and you can almost guarantee that, after a few years, another collector will be willing to take it off your hands for more than you paid.
The facts above demonstrate that collectibles can be a worthwhile diversification tool, but one thing I can’t fully convey to you is the pleasure of ownership they bring.
There’s a certain pride in owning a top-quality collectible that’s the envy of your friends and fellow collectors, not to mention the luxuries that ownership will afford you, such as invitations to prestigious events, access to some of the best minds in the industry and, should you reach that level, acclaim as one of the great collectors of all time.