How to Invest in Collectibles

The term "collectible" is used in investing to mean any object that does not have a cash flow determining its market value, instead moving up or down in price based wholly on what buyers are willing to pay for it. Traditional collectibles include art, fine wines and rare books, but today, people also invest in a broad range of pop culture items such as toys, games, collectible cards and sports memorabilia.

Instructions

Difficulty: Challenging

Things You’ll Need:

• Knowledge of the collectibles marketplace
• Start-up capital

1. Get involved in an area of collectibles trading that you're personally interested in. If you're a connoisseur of fine wines, the wine trade might be right for you. If you're an avid baseball fan, getting involved in the trade and sale of baseball cards and memorabilia makes a better choice.
2. Head to your local hobby shop as well as your bookstore to arm yourself with some reading to do for homework. You'll have to learn all you can about how to invest in the particular collectibles you're interested in, as well as what's currently hot (and cold) in the marketplace.
3. Make absolutely certain you have a thorough understanding of how to assess a particular collectible's value before you start to buy and sell. Be able to distinguish release dates, condition (poor, fine, good, near-mint, mint), any characteristic markings and indicators of a collectible's rarity.
4. Know what buyers are looking for. Have an idea of the condition the collectible must be in to fetch a good sale price. Remember that collectibles in poorer condition are valued significantly lower than comparable items in near-mint or mint condition.
5. Join online discussion forums to link to other enthusiasts in your line of collectibles trading. It's not a bad idea just to lurk and listen to what folks are talking about and what they're looking for. Remember: it's not what collectors have, but what they wish they had.
6. Keep your eyes open at garage sales and swap meets. Both can be excellent sources of valuable collectibles, frequently at bargain prices.
7. Learn how to restore collectibles in poorer condition to near-mint or mint condition. You'll find a wealth of information online, depending on the particular collectibles you're interested in. Do a cost analysis to see if it's worth your time (and money) to invest in increasing a collectible's value.
8. Observe good online auction etiquette at all times if you're planning to sell your collectibles using a popular website such as eBay. Make sure that you disclose every known flaw your item has, and include a photograph. If you get flagged by other users for failing to tell all you know about your item (even if it was an honest mistake), you'll have a much harder time selling your merchandise.

Tips & Warnings

• Anticipate the collectibles marketplace of the future by acquiring current products (books, toys, games) that you suspect will appreciate in value in the future. Keep them in mint condition in their original packaging.
• Collectibles are subject to a very volatile marketplace. Investing in collectibles by nature involves a relatively high degree of speculation, and therefore a relatively high degree of risk.
• Remember, when purchasing collectibles online: buyer beware.