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25 Jul 2016Last updated
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The smart investor: mixing business with pleasure

Years after the recession, the global economy is still not delivering the returns it once was. It is time to look beyond the obvious bets like the stock market and at commodities like vintage cars, watches and art

By Chris Anderson
Added 00:00 | 3 March 2016

It’s tough to make your money grow these days, at least following the traditional routes. In the past, you might invest in bonds or stocks and shares, but with interest rates so low in most global markets, there is very little return on these.

This has given rise to ‘luxury investments’ or ‘passion assets’. Once the domain of avid collectors, the buying and selling of rare luxury items – from stamps and coins to art and classic cars – has now become popular as a new means of growing savings. Having these items in your possession will not deliver an interest stream, but there are other benefits, such as protection from the risks of today’s financial markets. “Companies can fail, rendering equities worthless, and bonds can default,” said one recent report. “But rare stamps or coins will remain rare – nobody can go back in time and print more stamps or mint more coins.”

The luxury investment market has grown significantly in the last five years, with property firm Knight Frank launching the Knight Frank Luxury Investment Index (KFLII), the industry standard used to track the performance of these collectibles across 10 categories, including cars, art and coins. Of all the items to consider, these might be the best for improving your home, wardrobe or driveway until it’s time to sell them on.

Art

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Why it’s hot: Whether your preference is for the classics or something modern, paintings or sculpture, an eye-catching piece of art can be the focus of an entire room, inviting and dividing opinion. Art is easily portable too, and with an increasing number of private museums being built to display collections, particularly in emerging markets like Asia, demand is peaking.

What to keep in mind: All art is subjective, with the market tending to follow trends. That said, it has proven to be the second most lucrative luxury investment after classic cars, with values rising 15 per cent overall during 2014. American pop art, featuring such artists as Andy Warhol and Roy Lichtenstein, is the most popular genre currently, with prices increasing 86 per cent in the last year alone. Experts warn that the art market is volatile, however, and prone to huge fluctuations. If you don’t have the money for Warhol and want to take a chance on a regional artist, check out the galleries at Al Serkal Avenue in Dubai’s Al Quoz district.

The big score: In May, a painting by Pablo Picasso set a new world record for the most paid for a piece of art – Women of Algiers (Version O) fetched $179 million at auction in New York.

Classic cars

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Why they’re hot: Luxury cars are the ultimate boy’s toy – who doesn’t want to drive a Ferrari, Lamborghini or Bugatti? But rare or iconic vintage models, both prestige and no longer made, are even more desirable, from an Aston Martin DB5 to an early Porsche 911.

What to keep in mind: The make and model of car. That Renault Megane you bought from the showroom last year has been depreciating in value, and is likely to continue. A rare 1950s or 1960s Ferrari, however, is a very beautiful thing. But experts say that unlike buying a car for everyday use, a classic for investment is not necessarily about the condition or mileage, and more the story behind it. Which races did this model win? What is its significance in popular culture? Of all the luxury investments, vintage cars have increased the most in value – 16 per cent during 2014 alone.

The big score: A race-winning 1962 Ferrari 250 GTO Berlinetta sold for $38.1 million at auction last year – setting a new world record.

Comic books

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Why they’re hot: You can’t move for superhero movies these days, whether it’s Spider-Man, Batman, the Avengers or Guardians of the Galaxy – and all of these characters got their big break in comic books. That has made first appearances, key issues and variant editions all the more desirable.

What to keep in mind: Generally, it’s the Golden Age era (1930s-early 1950s), Silver Age (late 1950s-1960s) and Bronze Age (1970s-mid 1980s) that hold the most value, anything later not so much. The condition of a comic also plays a key part in its value, with some collectors getting theirs graded by a third party, such as the CGC (Certified Guaranty Company, see www.cgccomics.com), who will rate it on a scale from 0.5 up to 10. Having a comic professionally graded will also add value.

The big score: Action Comics No 1 from 1938 – the first appearance of Superman. In 2014, a copy set the world record for the most ever paid for a comic book at over $3.2 million.

Stamps and coins

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Why they’re hot: Stamp collecting is one of those classic hobbies that people can develop at a young age. Some estimates claim as many as 60 million collectors globally, with a third in China alone – an emerging market seemingly driving demand. Coin collecting is popular, but not as big as stamps.

What to keep in mind: According to experts, modern stamps are not really that valuable, with those from the British Edwardian or Victorian eras the ones pulling in the money, and the condition and proof of authenticity also adding value. If investing in coins, rare pieces or those with misprints are among the most sought after.

The big score: In 2014, a British Guiana One Cent Black on Magenta stamp sold for $9.5 million in New York, while a year earlier the 1794 Flowing Hair Silver Dollar – thought to be the first silver dollar coin ever minted – sold for over $10 million.

Watches

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Why they’re hot: A watch is useful and stylish, and for many a symbol of status. There is a strong market for second-hand models just a few years old, and for vintage pieces dating back further.

What to keep in mind: Brand new watches depreciate in value like cars. Buy one at least a couple of years old to make the smartest investment, as from here, generally, they will hold their value and potentially gain. Stick to the popular makes and models always in demand – a Rolex, preferably a Submariner, Deepsea or Daytona, any Patek Philippe or an Omega Speedmaster. For rarer, vintage or iconic models, many auction houses, such as Christie’s or Sotheby’s, now have dedicated watch departments, or try a specialist auctioneer like Antiquorum (www.antiquorum.com). There’s also the Momentum watch store in Dubai’s DIFC, which stocks a range of vintage timepieces by all the major high-end brands.

The big score: The Henry Graves Supercomplication timepiece , made by Patek Philippe in 1933, sold for $24.4 million at a Sotheby’s auction in 2014.

By Chris Anderson

By Chris Anderson