Why You Shouldn't Invest In Collectibles

Many people enjoy spending money on collectibles they love. In addition to the pleasure of owning a particular item, the act of finding a rare collectible at a garage sale or thrift store can also be thrilling for both novice and expert collectors alike. When it comes to investing, though, you should definitely look elsewhere if you're serious about growing your money as much as possible.

First of all, what exactly do we mean when we use the term collectibles? Well, this really includes a large number of items such as baseball cards, antique coins, comic books, rare books and photographs, antique clocks, historic sports memorabilia, antique guns and military items, plus a whole host of many other items that we won't go into for the moment.

What do these items have in common? Even though the collectibles we mentioned above come from different fields of interest, they all share some important characteristics. They all focus around some form of hobby and, thus, cater to a certain group of devoted followers. In other words, they are not the type of items with an intrinsic value (as opposed to diamonds, precious metals, and similar items).

The average person on the street would be excited to own a gold coin or diamond ring, but very few people would be interested in purchasing your antique writing utensil or a signed copy from your favorite (and obscure) author. The markup on these items is typically high, since the dealer has to make money in order to stay in business. There may be other costs as well, including appraisals and insurance depending on how much money you're willing to put into your so-called investment.

Collectibles unfortunately have a very poor track record as investments. These typically are not going to give good returns over time, and many times they fail to keep up with even modest inflation. Again, there is nothing wrong with purchasing these items as collectibles -- that's what they are, after all. To purchase them as investments, though, is really fooling yourself into believing that they will one day be worth a lot of money.

People who have made a lot of money in this field were often just lucky because they held onto a new Sandy Koufax rookie card without knowing what it would be worth one day, or they happened to purchase a lot of beanie babies or cabbage patch kids at the right moment before the market exploded in their favor.

If you do happen to experience some respectable returns by purchasing collectibles, you also have to factor in the amount of time it took for your items to appreciate. The likelihood is that your money would have been better spent by investing in ownership investments such as the stock market or real estate properties.

Have fun purchasing collectibles if you enjoy a specific hobby, but you should assume that the items are not going to go up in value very much over time.

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