People are always asking me questions about investing and they want to know how they can make their money work harder and how can they get better returns than are currently on deposit at the moment. And who could blame them given how shockingly bad interest rates are?
So, after doing some research I found some investments that have yielded returns of between 7 % and 9% over the last year and about 240% over the last 10 years.
I am sure you are wondering what on earth could make such great returns so let me give you a couple of clues before I let you in on the secret:
Are you none the wiser? The Flowing Hair Dollar is the most expensive coin ever sold. It was sold back in May 2005 for $7.85 million. This dollar was first minted back in 1795 and features the image of a woman, with flowing tresses, surrounded by 15 stars with the word “liberty” above her head.
In June 1938, the very first edition of a comic book featuring Superman was published by Action Comics. Fast forward to December 2011 and the lucky owner of one of those first editions sold it for $2.1 million; it was reportedly bought by the actor Nicholas Cage.
The first edition of JK Rowling’s Harry Potter & the Philosopher’s Stone had a print run of just 500 and 300 of them were given to libraries leaving only handful of the quality that investors wanted to purchase. A copy of this book was sold last year for £18,485
A Treskelling Yellow is the most valuable postage stamp in the world. It was originally sold in 1996 for $3 million but was later sold in 2010 for an undisclosed amount, apparently far in excess of the $3 million paid for it in ’96.
Of course all of these items are alternative investments that some people - apparently very wealthy - invest in.
Tthere are, however, millions of people who invest in these areas with very modest amounts of money.
And there are many other areas people invest in as well: like wine, cars, jewellery, art, and so on.
There really is a very big market for them – and not everyone as I said invested the huge amounts I just referred to. For example there are 60 million people worldwide who spend in excess of €73 billion buying stamps alone.
Now for some people it is a hobby but others buy them purely for investment. The reasons for this are driven by two big factors which are (a) very poor interest rates and (b) the financial upheaval that began in 2008 where individuals and institutional investors had to rethink their long-held asset allocation strategies.
Of course investing in alternative products rather than putting your money on deposit is a very, specialised area and knowledge and absolute care is required. You obviously need to know you are buying from a name you can trust along with the “five golden criteria” when buying any item which are:
I haven’t come across that many people who have invested in these types of vehicles but I have met people who invested in wine many many years ago and I remember them asking me whether I would like to invest along with them.
It was back in the late ‘90s and myself and Roseann had just bought our first house together and given that we were using what carpet was left over from our living room, and it wasn’t much, to partially cover our cemented hall, I had to pass.
Alternative investments aren’t for the faint hearted though because purchasing things like coins, art, books etc. is risky. The markets are very volatile and antique furniture, for example, is something that has fallen out of favour in recent times.
Not only do your once held profits take a nose dive so does the amount you used to buy them in the first place. Antique furniture has seen a -19% return from 2003 to June 2013.
If you are buying books, stamps, wine or whatever, then do so with the intention of holding onto it for two seven year cycles to see any decent return on your investment.
The first seven years you wait until you get your money back and the following seven is where it appreciates in value.
I believe using your money to invest in this area is fraught with danger and I don’t like danger when it comes to investing.
In my opinion, this is something people can dabble in once they know the risks involved and are aware they could lose all of their money.
The up-side of course is you could strike it lucky and buy something that appreciates beyond your wildest dreams; but the chances of this happening are slim. The majority of people invest and buy things they like and enjoy for themselves and it is more a hobby for them rather than trying to make money.
Let me leave you with a quick story about a man living in the USA. He had been living in this house since the 1950s but lost his job and fell behind on his mortgage and the bank was about to repossess his home – he owed $200,000.
He was cleaning out his attic putting things in boxes getting ready to move out when he found a very old Superman comic.
Thinking nothing of it he brought it, along with other comics, to a store to sell hoping to get $100. To his amazement and disbelief that particular comic was worth $436,000 so Superman really did save the day after all. Get into your attics and start looking around – you might be surprised at what you will find.