Wouldn’t it be wonderful to have your own Antiques Roadshow moment? It’s lovely to imagine buying a painting for a song at a garage sale that turns out to be worth a fortune.
The idea of spotting a future treasure – a coin, a jewel or a classic car – is compelling, but are passion investments really a good way to make money?
REDnews asked some experts, and it turns out that you should always buy what you love and consider any profit a bonus, rather than banking on predictable returns.
Art: something for every budget
One way to invest in art is to buy a quality artwork that is already established in the secondary market, perhaps from the 19th or 20th century. These pieces will hold their values, but they’re not cheap.
New Zealand art is increasingly popular around the world; a few months ago a Goldie sold for $1.75 million, so beautiful “it could hang in the Louvre or anywhere in the world,” says Richard Thomson, director at the International Art Centre.
The more speculative and less expensive approach is to try to pick an artist of the future and buy while the artist’s work is still affordable.
Most galleries promote their favoured contemporary artists; “some will go on to become successful in the secondary market, others won’t,” says Thomson. “Buy something you like; you can’t guarantee it will make money but you can enjoy it while you own it and that way there’s minimum risk.”
Art enthusiasts should begin by going to art fairs and art galleries, as well as learning about the history of New Zealand art, he advises. Educate yourself – find retail prices for your favourite artists’ work and compare that with what they sell for at auction.
One of the major advantages? There’s art for every budget, with Thomson’s recent contemporary art auction knocking down lots at prices from $500 to $125,000.
Wine: very few worth investing in
A fabulous wine cellar will definitely impress some of your friends, but are you laying down a future source of wealth? Probably not, says Reece Warren, head of fine and rare wines at Mossgreen-Webb’s Australia and NZ.
Wine investment has become more difficult in recent years as buyers from fast-growing economies like China, Russia, and India have flooded the market.
“There are very few wines worth investing in, you’ve got to spend a lot of money, and your investment takes a long time to realise,” says Warren.
At local level, Warren says savvy buyers get great deals at secondary auctions, where prices are often lower than from the vineyard: “Te Mata Coleraine is probably the most collectible wine in New Zealand, and I’m selling them for less than release – some go for more but most don’t.”
Invest in a good time and enjoy drinking your wine with friends, he advises. If you’re a wine nerd, go to fine wine auctions, get a sense of prices and you may be able to get some great deals.
Classic cars: a labour of love
Investing in classic cars has seen a huge surge in popularity over the past six years, with some staggering returns for lucky owners. But it’s more about the joy of cars than about cash returns, says Catherine Davison, collectors’ cars specialist for Mosgreen-Webbs.
There are six important factors in the value of a car: provenance, condition, mileage (you can’t drive it every day!), rarity, originality, and driveability.
Then there are market trends; while ‘classic cars for the future’ is always a hot topic of conversation, Davison says you can’t predict the market trends.
“Don’t try to pick it, just buy something you love – and I’m speaking from experience, because I’ve been best served by buying things I love,” Davison says, adding that you should examine selling prices, not asking prices, as the two can vary enormously.
Restoring classic cars is a labour of love and a modern way to reconnect with craftsmanship and engineering, but it’s rarely a great money-making enterprise.
“Vendors aren’t always happy to hear that their car is only worth $90,000 when they’ve spent $150,000 on it.”
Jewellery and watches: portable, wearable beauty
Portable, wearable and beautiful: jewellery is an extremely practical way to enjoy your money.
You can pick up some excellent bargains at jewellery auctions, from collectible costume jewellery to beautiful engagement rings, says Bettina Frith, jewellery auctioneer and valuer at Dunbar Sloane.
Going to a dealer or auction gives you the benefit of being able to inspect the items before you buy, whereas buying online can be risky; “you can get ripped off or get the bargain of the century.”
“There’s a whole gamut of what you can afford in one auction,” says Frith. “If you buy a nice piece of jewellery hopefully you’re not going to lose any money and over the years you might make some money.
“Buy something that you really like and you’ll also have the enjoyment of wearing it. If you make money, look at it as a bonus.”
Stamps and coins: start off with just a few dollars
It’s unfair to lump the two together – they’re very different markets, says John Mowbray of Mowbray Collectables.
From an investment perspective, gold coins are particularly interesting because their values are pegged to the price of gold. A gold sovereign, for instance, will set you back about $600 and the price of gold has risen around 30% this year – and the sovereign is much more interesting and beautiful than any ordinary lump of gold.
“In both the stamp and coin markets, the collector ultimately decides the value, not the investor,” says Mowbray. “If you’re looking for an investment, you want to talk to a dealer about that and get their opinion on a good investment – but at the end of the day the onus falls on you.”
Dealers and auctions are a great place to start your research, rather than jumping in and buying off TradeMe or eBay.
“You’ve very much got to make your own decisions, but try and get as much advice as you can.
“The beautiful thing about the coin and stamp markets is you can start off with just a few dollars – and historically coins have been a good investment, but there are no guarantees.”