Diversifying your investments can help improve the resilience of your portfolio and could also turbocharge your returns if executed cleverly, so see if it’s time for you to consider broadening your horizons.
Many people are planning to spend more on presents for an extra special Christmas this year, but what if you could source gifts that could deliver investment returns too? Read on for some ideas for gifts with real growth potential.
Despite (or even because) of the world’s current problems, Christmas 2020 is set to be a bumper one for gift-giving. The public finances may be dire, but for many our constrained lifestyles have led to significant savings – and, apparently, a real desire to splash out this festive season to make up for the year’s privations. Research indicates UK families intend to spend around a quarter more than usual on presents this yeari.
The urge to give loved ones something really special to brighten these dark times is strong, but what if your gifts had real growth potential too? There are, in fact, lots of passion or collectible investments providing that all-important fun factor as well as the potential for returns.
There are alternatives for all kinds of tastes and ages, and, while some are very big ticket indeed, there are certainly options for the more modest investor to consider. Here is some inspiration for gifts that can keep on giving long after the festivities are over. You could even send this article to your loved ones as a gentle hint!
A brand-new vehicle might make your recipient’s Christmas, but given that a new one’s value plummets the moment it leaves the forecourt, savvy investors might profitably consider the joy – and potential returns – a collectible could bring.
If your loved one is a “petrolhead”, then you will hopefully have a good idea of what that dream car or motorbike might be. If you do not, then take great care to take advice from a friend or expert to ensure you make the right purchase. Marque, model, year and condition all have to be weighed carefully.
A brand-new vehicle might make your recipient’s Christmas, but given that a new one’s value plummets the moment it leaves the forecourt, savvy investors might profitably consider the joy – and potential returns – a collectible could bring
Storage, maintenance and insurance have to be factored into any financial returns you might hope to make. You may also have to face up to the reality that this new “baby” is never going anywhere!
Wine is a time-honoured passion asset, and one that the investment world has been assiduously tracking the performance of across key varieties for many years now (just as one would a stock market). The vagaries of vintages and changing tastes means outperformance is by no means assured, yet over the past ten years wine indices have posted returns of 50% or more on some metrics.
The grain and other spirit bases are becoming just as popular as the grape, and with just as stunning numbers involved: a bottle of Number 6 Glenfiddich Janet Sheed Roberts sold for $94,000 at auction this year, for example.
The grain and other spirit bases are becoming just as popular as the grape, and with just as stunning numbers involved: a bottle of Number 6 Glenfiddich Janet Sheed Roberts sold for $94,000 at auction this year
As with wine, there are purchases to suit every level of investment, although it would probably be unwise for non-experts to place too much emphasis on investment growth. Also bear in mind the need to insure and store any really serious bottles in appropriate conditions, and that the esoteric world of brokerage in this area can be heavy on fees.
The world of philately may seem dusty and dull to non-enthusiasts, yet the investment performance stamp collecting apparently offers is anything but. Dealers cite 10-20% returns a year on their stamp portfolios, with really rare specimens sometimes touching ten-fold returns when held for several decades.
Enthusiasts may search in vain for once-in-a-lifetime finds like a Treskilling Yellow (thought to be worth £5 million), but stamp investors are said to enjoy far less volatility than other alternatives display – not to mention far easier storage of their tiny paper assets.
The world of philately may seem dusty and dull to non-enthusiasts, yet the investment performance stamp collecting apparently offers is anything but
Seek specialists in this area and ensure providence before making any purchases since it is all too easy to reproduce fakes.
It may surprise readers to learn that coins are currently the most popular of all the alternatives that might be put in the passion investment categoryii.
Many of these investors may well be true coin fans chasing rare specimens like the 1937 Edward VIII Brass Threepence, said to be worth an incredible £45,000 today. However, experts put a lot of today’s coin enthusiasm down to the popularity of gold: coins can be an accessible way to own the precious metal for those who lack the hundreds of thousands (and vault) necessary to invest in standard sized bars.
There are however abundant suppliers of ingots and other items costing below £1,000, and with global uncertainty driving gold to record highs, one might just make the ideal Christmas present for the person who has everything.
There are however abundant suppliers of ingots and other items costing below £1,000, and with global uncertainty driving gold to record highs, one might just make the ideal Christmas present for the person who has everything
Global uncertainty has driven several record-breading diamond auctions in recent times, with high-end jewellery and watches of all types the trickle-down beneficiaries of the trend towards tangible assets.
The world of precious stones and jewellery is incredibly broad. Yet most would agree that diamonds remain “a girl’s best friend”, as well as being time-honoured stores of value. Buyers have to be particularly choosy when selecting stones, however, as our guide to investing in diamonds explains.
The world of precious stones and jewellery is incredibly broad. Yet most would agree that diamonds remain “a girl’s best friend”, as well as being time-honoured stores of value
Meanwhile, the luxury watch market is proving incredibly resilient. The Federation of the Swiss Watch Industry recently said that exports of watches costing more than $3,000 are currently essentially the same as in 2019. The existence of watch investment funds underscores the serious returns at stake, but again work to ensure that your selection really will deliver as an investment and a treasured timepiece by doing your research.
Handbags have very much come into focus as a serious financial asset in recent years, their highpoint being the 2017 sale of a Hermès white Himalaya Birkin bag for $379,261 at Christie’s.
It goes without saying that this diamond-festooned crocodile number represents the apogee of the genre. However, there are people making tidy profits from handbag investing far further down the scale. The best buys hold their value (if well treated) and fashion being fickle it is not uncommon for styles to become cult classics before too long: it is now said to be a seller’s market for the Fendi Baguette popularised in the 1990s by “Sex and the City”.
Handbags have very much come into focus as a serious financial asset in recent years, their highpoint being the 2017 sale of a Hermès white Himalaya Birkin bag for $379,261 at Christie’s
Going for a restored vintage find could bag your recipient a very big-name accessory and there are abundant dealing websites today. Here again however, ensure to ask a friend or someone otherwise in the know, if not the recipient themselves, to make the right purchase.
Fine art seems to be the exception to the rule on passion investments. The global market suffered its most serious shrinkage in five years (5% or $3.3 billion) last year and the pandemic has done nothing to repair its fortunes. Tax receipts suggest that UK art exports fell by 75% year over year in the second quarter of 2020 and imports by 80% (with worse elsewhere).
Of course, all this may augur well for buyers who are clear about what they want and who are able to drive a hard bargain. Buyer beware has to be uppermost in your mind, however, as fraud can result in very costly mistakes rather than stellar returns.
In fact, it is wise to ensure that art, and indeed any passion asset, gives the recipient genuine pleasure in its own right. Fashions change, and the markets for tangibles are notorious fickle. See gifts like these as fabulous treats and any returns as a bonus, and always take into account the costs of holding them – just as you should with all your investments.
Alternative assets which can claim long-term value preservation due to their finitude are gaining popularity as central governments continue to “print money” and the threats of further market volatility and potentially inflation loom. The potential to actually enjoy an investment while it gains (or at least holds) value is naturally very attractive.
Do bear in mind that buying a gift with investment potential is very different to sinking a significant proportion of your wealth into tangible or passion investments, however. Alternatives can offer super-charged returns and help diversify the asset allocation of your wealth. Yet these more esoteric, and generally more illiquid and volatile investments carry risks of their own. Always consult an expert before making any significant changes to your holdings.