Are Antiques A Good Investment? – Yes. But three factors must be considered when buying antiques: cost, resale value, and rarity.
Antiques will never go down in price; they continue holding their value over time instead of depreciating like most other items we buy. So, investing in antiques can be a great way to grow your wealth!
The good news is that if you can find a rare, valuable antique piece at an affordable price, you should be able to resell it for roughly what you paid for it – if not more. You can do this by either selling it privately or through reputable antique dealers.
What is the difference between antiques and collectibles?
Do you have a prized collection of items in your home? If so, are they considered antiques or collectibles? Antiques and collectibles both seem to be relics from the past that can be valuable. However, what exactly is the distinction between them?
An antique refers to any object over 100 years old. Thus, something manufactured within the last century cannot be an antique. Even though things can become valued for their antiquity over time, something made yesterday could not technically be called an antique. The term “antique” may also refer to older reproductions of items produced during earlier times. But if these reproductions are supposed to fool people into believing them to be originals, they are instead referred to as replicas.
Collectibles are objects that can be collected, such as stamps, coins, dolls, or memorabilia.
Antiques get valued for their history rather than monetary value. Furthermore, collectibles are often produced after 1980. So, if an object is created before this date, it cannot be a collectible.
Antiques and collectibles may also differ in the level of quality they exhibit.
For example, some antique furniture has long since lost its finishing while others retain the original paint coating. The difference between antiques and collectibles does not just rest with dates either; antiques may be older but continue to work while collectible ones do not need to function anymore due to their inherent worth tied to their rarity.
Are all antique items collectible?
A valuable antique may not be considered particularly collectible by most standards.
While many modern-day objects can become valuable over time, they are not necessarily always considered antiques when this happens. For example, while something might have intrinsic historical significance if it was older than 100 years, if it was less than 100 years old, it would not meet the threshold to be considered an antique.
If there is a high enough demand for an item produced recently, it can also become collectible.
Antiques are typically valued for their historical significance, while collectibles are valued for being rare and beautiful.
Antique objects are usually more valuable when they have been in continuous use over time rather than kept merely as display items. However, some may not need to function anymore because their value lies in being extremely rare or having ties to famous people or events. An example of this would be the Hope Diamond which is worth far more than its weight in raw materials alone.
Is investing in collectibles a good idea?
When we look at collectibles as investments, one should note that they do not generally bring in an income stream. So, the monetary benefit you gain will only be realized when selling the item itself, rather than enjoying royalties or dividends yearly. When looking at such collectibles as investments, I would place them in three different categories:
1.) A source of diversification with low correlation to other asset classes – An example of this type of collector would be someone who invests $5 million into rare comic book collections. When placed within a portfolio alongside other more traditional forms of investing. These specific collectibles can help reduce your overall portfolio volatility.
2.) A source of diversification within the art & collectibles asset class itself – An example of this type of collector would be someone who invests $5 million into Chinese paintings, increasing the overall value of all Chinese paintings held by individuals worldwide. Although prices for this sub-asset class, are more closely correlated to one another, you will still experience a lower degree of correlation with traditional asset classes such as stocks and bonds.
3.) Collectible items that hold sentimental value – An example of this type of collector would be someone who spends money on rare first edition books written by their favorite author(s). Let’s also say they spend an additional amount on custom framing these books so that they can be proudly displayed. Although this type of investment will not likely track the S&P 500, it might very well increase in value just based on how much joy it gives its owner(s).
We have written some useful guides that go over the basics of antique collecting. Please click here to take a look.