Hobbies that grow on you
AS THE returns on cash collapse, a rising number of investors are testing out the alternatives.
Many are turning pastimes into profit, with one in six holding hobby investments, according to research from Lloyds Private Banking.
Classic cars, stamps, racehorses and whisky rank among the most popular. Alternative investments and collectables are more fun than traditional options such as cash and shares and may be more rewarding.
Classic cars have been one of the raciest investments of all, growing nearly 500 per cent in a decade.
Investors in rare whisky can drink to a price increase of 350 per cent, while stamp collectors have it licked, with 295 per cent growth. Coins have also shone, rising 270 per cent.
Yet most experts will tell you to invest for love rather than money, with two thirds of classic car owners prioritising having fun over making financial gains, which is wise as they are currently the most expensive area to invest in, with an average total outlay of £34,500.
However, you can get started at much lower levels, investing just a few thousand pounds in a car you expect to become a future classic. For instance, the 1968 Jensen, left, that comedian Eric Morecambe bought for £4,500 is expected to fetch £150,000 when it goes to auction later in the year.
Lloyds’ research shows one in four hobby investors spends less than £1,000. Chief investment officer at the bank Markus Stadlmann says “tangible assets” such as paintings or classic watches retain their value and are not eroded by inflation. They are a good way of balancing traditional investments held in your pension. He says: “Over the longterm, they do not correlate closely with more traditional stock and bond markets and therefore offer diversification.”
Stadlmann explains that you must consider all the costs of investing, including purchase, restoration, storage, upkeep and insurance. “Make sure that all items have valid documentation, to give yourself the best chance to make pastimes pay.”
MAKING A MINT
One in three coin investors is looking for financial gain rather than personal interest but coins can also be things of great beauty.
The Royal Mint sells the Sovereign 2016 Gold Bullion Coin for £268.13 with the price falling if you buy more, so 50 coins will cost £257.26 each.
London bullion dealer ATS Bullion currently charges £367.73 for a 1915 Gold Sovereign Full George V or £1,038 for a Krugerrand 1oz coin.
Lawrence Chard, founder of Blackpool-based bullion dealer Chard, says 1oz gold Krugerrands and Britannias are very popular and are free of capital gains tax. Sovereigns are also sought after, he adds: “These were used until 1932 and are still one of the most popular and collectible gold coins today.”
ART OF GENERATING MONEY
Investing in art and antiques is not as daunting as it used to be, says Colin Sheaf, chairman of Bonhams UK and Asia. “Auction houses have worked hard to make it accessible for almost everybody.”
View upcoming sales online and visit an auction house to talk to experts. Sheaf says: “You could invest in Georgian furniture from around £500, or early 18th-century English porcelain from £1,000.”
Investing is quite an art so master your technique before buying. He adds: “Buy what you love as there is no guarantee you will make money.”
A LITTLE WINE
Fine wines are also expected to make heady returns, Lloyds says.
Simon Staples, sales director at wine merchants Berry Bros & Rudd, recommends dealing with reputable firms to get the expertise you need: “Condition and provenance are key so buy unmixed sealed cases in original wood. Expect to invest over a minimum five-year period but be ready to sell if advised.”
Although you are not guaranteed to make a profit from investing in fine wine unlike other investments at least you can drink your losses.