Collectibles as an Asset
One of my hobbies is understanding how different things can be seen as investments and how different things can make money. As a millennial, a student of history, an avid consumer of pop culture, and a UFC fight fan. I understand that many people see value in collectibles. One of my favorite shows on TV that speaks to this type of thing is Pawn Stars. Everything from antique swords, vintage baseball cards, and even Rocky Marciano used boxing gloves can be sold to the right collector for a high price. The appeal to collectibles as an investment is that these items at one time or another cost pennies to purchase but now can be sold for thousands of dollars. But before you go off and spending your life savings on beanie babies, 1980s transformers, and the rare holographic Charizard pokemon card there are some things you need to understand about collectibles.
Collectibles are Subjective
Really collectibles are all about interest (not the haram kind). Generally, speaking they are items that a large enough group of people have a desire to own. Collectibles do however have a few commonalities that increase and enhance their value.
1) Nostalgia: Nostalgia plays a big factor in determining if an item is collectible. That sentiment of the “good old days” in people makes some of the items they owned in their childhood worth more. The 1980s transformers, vintage video games from super Nintendo or Nintendo 64, 1960s American Muscle cars, Pokemon Cards (you get the idea). All of these remind people of a time when they were younger, life seemed simpler, and they had fewer responsibilities. This allows for items that were once popular in childhood to be sold for significantly more than they were purchased for.
2) Rarity: The rarity of the item plays a factor in valuing it. Collectors of hockey cards, transformers, or action figures will pay higher prices for items that are not easy to obtain. That’s why a Wayne Gretzky rookie card (greatest hockey player of all time) is worth considerably more than a Tie Domie card (Maple leafs enforcer with lots of penalty minutes, famous for fighting a fan).
3) Condition: When it comes to collectibles almost everyone knows that condition adds tremendous value. That is why you see many collectibles in plastic cases, when they are touched they are touched with white gloves and when it comes to collectible toys and action figures the ones that go for the highest prices are still in their original boxes.
Why You Shouldn’t Invest in Collectibles?
In my opinion, collectibles are in General a bad investment. The subjectivity of their value is one of the reasons that makes them such a bad and unpredictable investment. Many will not agree on the value, the value can be cyclical depending on where the collectors are at in their lives and value could diminish.
Collectibles do not produce income. Pokemon cards, action figures, sports memorabilia do not produce income. They sit and one day we hope to sell them at a higher value then what we bought them for.
Collectibles require space to store them. Bookshelves, Binders, Boxes or rooms are all ways people store their collectible items. These things certainly cost money and take up space where you live. That’s one thing. The condition in which they are stored is another thing people need to keep in mind. Basements flood all the time. Rooms get humid all the time. Children and Pets ruin stuff all the time. Those are all factors that can contribute to the condition in which your collectibles remain and your ability to sell them for a profit in the future.
Why you should invest in Collectibles?
Hobbies & Interests
Really, I do not think looking at collectibles as an asset or an investment is the right thing to do. Instead, I see it as a hobby or an interest that you spend money on. With the added benefit that could make you money one day. If you enjoy collecting sports memorabilia, vintage video games, or Yu-Gi-Oh Cards then do it! Using our hard-earned money on the things we enjoy is one of the things that makes work and life worth living. Just remember, when engaging in these activities if you are planning to sell things in the future keep them in good condition.
You could hit a jackpot
When I was a kid I played with pokemon cards. I had the first edition Holographic Charizard. I don’t know what happened to that pokemon card collection but today this card is selling for nearly $12,000. The Pokemon card pack i found it in at the time cost like $5. I also had a holographic Blastoise that’s selling today for nearly $1000.
Overall collectibles should be seen as an expense or hobby. But could turn into a sizable asset down the road. This is certainly something collectors should keep in mind.
Some Crazy Price Tags for Collectibles
1. Wayne Gretzky Rookie card sold at auction for $1.29 Million Dollars
2. 1963 G.I Joe Action Figure sold for $200,000 dollars in 2003
3. Mint Action Figures from Empire Strikes Back Star Wars are can sell for $30,000
4. Rocky Marciano Signed Boxing Gloves are listed on Amazon for $18,000
5. Pikachu Illustrator Pokemon Card for $200,000
In my opinion, collectibles are certainly a fun way to spend your time and money. But that is how they should be viewed, as an expense. Whether we are talking pokemon cards, sports memorabilia, action figures, toys, or stamps the subjectivity, rarity, and condition are all things that will play a role in their value. It is hard to predict what these things will go for in the future and near impossible to add them into a financial plan. Overall, keeping an eye on trends and potentially capitalizing on these items in the future seems worthwhile it is rare to hit a jackpot like the ones listed above. The best thing to do is hold on to the items you enjoy collecting and one day they might be worth something. But even if they are not you had fund engaging in your hobbies.