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Four benefits of investing in collectibles

by , 21 May 2015

The key to successfully diversifying your portfolio is to invest in different assets that respond in different ways to what's going on in the economy.

One way to add diversification to your portfolio is to invest some of your money into collectibles.

Let's take a closer look at the benefits of investing in collectibles…


What are collectibles?


Collectibles, otherwise known as alternative investments, include a wide number of different things. Common examples include stamps, coins, art and antiques.

The thing about collectibles is their performance has a low correlation to the performance of the financial markets. This means the performance of collectibles doesn’t tend to follow the performance of the financial markets.

Even during economic downturns, collectibles tend to hold their value.


Why you should invest in collectibles


Benefit #1: Diversification
As mentioned above, investing in collectibles adds diversification to your portfolio. If you want to invest, aim to hold about 5% of your investment capital in collectibles.

When the financial markets take a turn for the worst, many investors turn to collectibles to hold their wealth. This leads to an increase in demand for this asset class.

Benefit #2: Safety
By investing in collectibles, you have a tangible asset. For example, you can hold a rare gold coin in your hands.

You can easily transport them around too and can trade them anywhere in the world.

Benefit #3: Liquidity
Collectibles tend to be relatively liquid. This means that you should be able to sell them on. But if you opt for a more niche collectible, it can take time to find a buyer.

Benefit #4: Long-term performance
Over the long-term, you can expect your collectibles to appreciate in value. This is especially the case if you’ve invested in items that are in demand.

The key to successfully investing in collectibles is knowing your market. Take your time buying collectibles and try to become an expert in your collectible of choice.

So there you have it. Four benefits of investing in collectibles.

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Four benefits of investing in collectibles
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