The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: Secretly Saving on February 18, 2015, 09:10:04 PM
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I'm curious about the unique investments that investors on the forums are involved with. Things like:
- paintings
- antiques
- old cars
- peer to peer lending
Anyone involved in these or other less common investments?
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They're great if you have play money, and when a 100% write-off of your investment won't ruin your week. (Unless you're actively involved, for example, professionally restoring old cars for profit, or breaking kneecaps when you don't get your money back in a timely manner.)
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They're great if you have play money, and when a 100% write-off of your investment won't ruin your week. (Unless you're actively involved, for example, professionally restoring old cars for profit, or breaking kneecaps when you don't get your money back in a timely manner.)
Right now the going rate is 3% a week. Not a bad return. More common is to pool your funds with other investors and pay 1/3 of the interest to the lending agency that is facilitating your investment. Your risk is diversified and you don't have to deal with collections. The minimum investment is typically $10,000 which will earn you $200 weekly.
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They're great if you have play money, and when a 100% write-off of your investment won't ruin your week. (Unless you're actively involved, for example, professionally restoring old cars for profit, or breaking kneecaps when you don't get your money back in a timely manner.)
I like this take on peer-to-peer lending. Lending Clubs have been around forever!
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I know someone who dabbled in the lego sets.
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I'm curious about the unique investments that investors on the forums are involved with. Things like:
- paintings
- antiques
- old cars
- peer to peer lending
Anyone involved in these or other less common investments?
Just to clarify peer to peer lending is investing, its loaning money for interest payments similar to bonds or REITs, but everything else listed are 'collectibles'. Collectibles are not investments. If you want to speculate in collectibles that is fine and all, but it doesn't actually meet the definition of the word investment as used in finance.
If you want to try it out it could be fun, but I would treat it as a hobby(likely an expensive one) that you do on the side. Your long term investments should be invested in actual investments. ; )
From Investopedia: I underlined the part I thought was most important.
The building of a factory used to produce goods and the investment one makes by going to college or university are both examples of investments in the economic sense.
In the financial sense investments include the purchase of bonds, stocks or real estate property.
Be sure not to get 'making an investment' and 'speculating' confused. Investing usually involves the creation of wealth whereas speculating is often a zero-sum game; wealth is not created. Although speculators are often making informed decisions, speculation cannot usually be categorized as traditional investing.
http://www.investopedia.com/terms/i/investment.asp
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The investopedia site that you referenced actually had a section called "20 Investments: Collectibles" so somebody thinks collectibles are investments there.... :)
http://www.investopedia.com/university/20_investments/4.asp
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Artwork, jewelry, and other collectibles can sometimes be viewed as an alternative way to store value outside of the normal financial system. After a certain level of wealth, you want to diversify how your money is actually stored to guard against certain kinds of risks. Storing money inside alternative objects that hold value decently well is one way to do that. I believe Joshua Kennon has referred to that in some articles.
Collectibles are probably not a good choice for a standard early retirement plan, unless you have exceptional knowledge of the field. For instance, I have an acquaintance who makes lots of money trading yu-gi-oh cards because he is an expert on the subject matter and that allows him to exploit inefficiencies in the market.
You might be surprised how analytic the yu-gi-oh trading field is. The valuation of a given card depends on the tournament scene, including how strong the card is in play, but also how likely the card is to be banned, how easy the card is to obtain, and a variety of other factors. By correctly calculating the intrinsic value of a card, my acquaintance is sometimes able to buy a huge volume of them at a deep discount and then control a significant ratio of the supply, so that once the true value is recognised by the market, supply is artificially low and he is in a position to charge a premium.
If you wanted to get into collectibles, I would suggest picking a fairly obscure field where you could be an expert.
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Guitars. Now, I don't view them as investments, they're just a huge hobby for me, but I've never lost money on a guitar. Some I've made money on; most I've broken even including fees. My dad got *really* lucky on one and when he sells it will be looking at a 300% return on his investment (to the tune of about $6500 more than what he paid).
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Paintings? Nope - don't buy them for investment. Bad idea - the art market is a complicated, corrupt place (price manipulation like chandelier bidding is common at auctions). Buy them for love, if you can afford it, and to enhance your life. But don't buy art as an investment. Ditto for carpets.
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The investopedia site that you referenced actually had a section called "20 Investments: Collectibles" so somebody thinks collectibles are investments there.... :)
http://www.investopedia.com/university/20_investments/4.asp
Anybody selling fine wine, art, jewelry, etc will tell you they're investments.
But they're speculating. They have no underlying value. It's entirely what some other buyer is willing to pay for it. Where as a piece of stock has a cash generating (usually) business with it.