Besides toy collecting, my background and education are in finance. I keep up with current financial news and I am always interested in what financial gurus like Dave Ramsey and Suze Orman have to say. Interestingly, I was emailed this article from DaveRamsey and thought it fit just right with our readers here.
Folks familiar with Dave's investing philosophy know he's not a fan of "alternative investments." The key to building wealth for retirement is long-term investing in good growth stock mutual funds.
But once you're on track with that plan, is there a place for art and collectibles in your portfolio?
Unless you are an art dealer or make your living in the collectibles market, it's not a good idea to consider any of your purchases as investments. In fact, the only reason you should buy art or collectibles is for the pleasure they bring you—not their investment potential.
If you're still convinced that your binder of baseball cards is going to contribute significantly to your retirement fund, here are a few facts that might change your mind.
- It takes about 20 years for an item to become collectible. But a 20-year-old item won't become a collectible without rarity and appeal: two attributes that are nearly impossible to predict.
- Collectibles tend to have much lower returns than stock market investments like mutual funds. Stamps are considered one of the best performing collectibles, and a generous estimate of their returns is 5–10%. Compare that to the long-term history of the stock market at about 12%.
- Over the last 25 years, stocks have outperformed fine art as well. You'd have to hold on to your artwork for 50 years to have a shot at the same returns as a stock investment.
- Even art experts have a hard time predicting value. Christie's Auction House expected a recent sale of Impressionist and modern art to sell for up to $304 million, but it only brought $140 million. And one painting that was expected to sell for $6 million actually sold for $16 million.
What do you think? Agree or disagree?
About the author: John Sholtz is an avid toy collector and the interim editor of the Batcave Toy Room due to the abrupt death of Bruce Wayne. Learn more about him here and connect with him on Twitter at, Facebook, Google+ and Linkedin.