After I finish paying off my car in November, I’ll have an extra $5-10k per year to invest. Currently, I am buying silver and gold but I feel like the market is currently at peak and is not likely to go up enough to cover costs (I can sell either at 80-100% spot without too much hassle, the problem is that delivery and storage adds 20-30%.)
What do you guys think can be purchased today at minimal markup or even wholesale prices that will bring a substantial (at least, beating inflation) return in 20 years?
I often watch pawn stars and storage wars, and it seems if you bet on the right horse, you can get 10-100X the original purchase cost in the collector’s market.
My ideas so far:
Silver/gold coins: a dealer told me to buy coins from emerging markets like China. When their economy goes up, they will buy back their own coins at increased value. Interesting idea, but Chinese silver pandas are already selling for 30-50% over spot. The downside is that right now might be a peak for gold/silver prices.
Movie memorabilia: I feel this is almost guaranteed. I used to work at a movie theater, and they got the posters for free. They had thousands in storage. I’m sure if I made a reasonable offer I could get as many as I wanted. What I’m really looking for is actual movie-used props, but I don’t know how to get the contacts to purchase it at cost or wholesale.
Rolex watches: the price from the dealer vs the actual value is astounding. I went to a rolex dealer and the minimum price for a watch was like $25k. Virtually any pawn shop sells them for 3-6k. If I can get them cheap enough, I could buy them for just the silver/gold value and if there is a collector’s premium in the future, that’s just a bonus. The downside is the huge number of fakes.
Toys: Imho, probably the biggest collector’s market is where poor kids couldn’t buy the good toys of their day, grew up, made money, and now want to buy back the toys of their childhood: Aibo’s, tamagotchi’s, dolls, etc. Since the value includes staying in the box, that will help in preserving and storing them. The downside though is that 20 years might be too short.
My rejected ideas so far:
Stocks and bonds: My portfolio is already 3/4 stocks and bonds through my IRA. I don’t see the point in paying transaction fees. Also, I prefer something I can hold and look at.
Comics, sports cards, other paper goods: In the 80’s, I invested heavily and got burned in the big crash of 92. I recently went through my old collection, and they are virtually the same price as when I purchased them in the 80’s. Also, all paper goods require special handling. Nearly all my paper stuff has browning and damage even though they were kept in mylar bags in an unopened box for 30 years.
Antique furniture: no storage space, costs too much to maintain.
Real estate: I’m waiting for prices to go further down.
I would go the Warren Buffet “everyday investor” route and put it in index funds, but it sounds like you’re not up for that. But that is exactly what I would do. And that is what I do and it has served me well.
How does that work? The Chinese economy increases, so China decides it wants to buy gold? And it will pay a premium for its old Gold Pandas rather than any gold someone has laying around?
Or is the value of the yuan supposed to skyrocket with the economy, such that the face value on the coins is worth more than the gold? (Which doesn’t make sense at all, because if you’re looking for yuan rather than gold, a Gold Panda is overpriced by a factor of about 40.)
Don’t knock sports cards so quickly. If you buy some good condition rookies of major players and get them professionally graded, you can get a nice return and it won’t take 20 years.
You need to understand the difference between an asset and an investment. None of the things you listed are investments since they do not produce income. An asset which produces income is an investment. That is why a bond is an investment. Even a stock that doesn’t pay a dividend is an investment since the company behind the stock generates income. As the company becomes more valuable, so does the stock.
Investments rely on their ability to create income to determine their worth. An asset will only rise (or fall) in value if the demand for that particular asset increases in the future. If an asset, like gold or silver for example, can be created from nothing - or pulled out of the ground, which is close to the same thing for our purposes - that further reduces the chance of the asset appreciating in value.
Asset value therefore is determined primarily by the combination of demand, which by its nature is fickle, and scarcity.
In the past, I’ve had good luck with limited run gold and platinum proof coins from the US mint. These tend to be produced in limited runs of 40-50k units, sell for a significant premium over the spot price of their precious metal content and are probably some of the most widely recognize collectibles. Don’t believe that bullshit about Chinese coins - once they sell them to you, they won’t be buying them back except for the spot price of the metal content.
There is no difference between your new ideas and your rejected ideas #2 through 5.
If you don’t like paying transaction fees, put your extra money in a duffel bag, you’ll lose less that way than with any of your other schemes.
The fact that you put a range of $5 - $10k a year on your car payment tells me you’re a little footloose with your grasp of finances. Or have money to burn, in which case, congrats and do whatever makes you happy.
I do have a bunch of stocks already, by doing it through my IRA, I don’t have to pay transaction fees or “churn.”
Yep, pretty much. I don’t expect China to be a big collector’s market though, but I understood his meaning.
My main goal is just to buy it cheaply now and sit on it for 20 years. I don’t like paper, as mentioned above, but also the “good” cards now are at a premium before they are even found. I almost bought a 1/1 RG3 last year for ~300. I don’t want to to front that $300 on 1/1 cards, I want to put in say $1 300 times, wait 20 years, and collect $2 300 times.
Usually it’s in 10 year cycles where I live. This past cycle it hardly dropped to 10 years ago levels because real estate was so high. 10 years ago, I could have purchased a 2 bedroom condo for $100k in my area. During the boom, it went up to $600k. In the crash, it went down to 300k. So, even though land dropped by 50%, it was still a crazy amount. So, I’m waiting for the next cycle.
I went back and looked at proof coins from the US mint. The numbers seem to work, but in the price guide i’m looking at, for some strange reason proof sets from 2000-2007 are now worth less than what they sold for, but individual proof coins outvalue the set price by close to 200%.
To put it another way: I want to buy something that doesn’t have a collector’s or market premium now that will have it in 20 years, such as silver in 2003, star wars toys in the 1970’s, etc.
This thing or things should:
Not have a transaction fee, like stocks.
Not be overly fragile, like baseball cards or comics.
Not be difficult to store, like furniture.
Not take specialized skills to maintain, like pinball machines.
Be physical items, unlike certificates of deposit.
You don’t have to pay huge or any transaction fees if you do it right. I use Vanguard. I opened the account with a set amount, and then feed it every two weeks with an investment. I also reinvest the dividends. I do not have any transaction charges associated with that. When I put in $500, $500 goes in. As the funds I have are not managed, their expense ratios are practically non-existant as well, with one of my funds being as low as 0.05%, so $50 out of every $100,000 goes to expenses. And you’re paying that with your IRA anyway, if you have mutual funds.
So basically you want us to magic you up a collectible that is unknown now but will be worth a ton of money in the future. If I had that kind of information, why would I share it with you?
Oh, and how can you see past current fads to what will still be worth money in 2033? If I could do that, I’d already be rich.
The question with something like collectibles is “do you really have an eye for it.” MOST of the things people buy as collectibles will - 20 years from now - be junk. That said:
I have one friend who I think has done pretty well on art (and I think there is a Doper that has as well) - a good eye for emerging artists, a habit of going to shows, a desire to collect and display pieces - and some of the art she picked up for $200 twenty years ago is now by known artists and worth ten times what she got it for. But she’d have to sell it and is emotionally attached to it - I think her kids will do ok when she dies.
My father in laws retirement plan is an ancient coin collection - it takes a lot of knowledge and I’m not sure its really profitable or just a hobby. Again, he has to sell it - and he’s been selling it off now that he is retired. But as he gets older, with he still have the mental acumen for a deal.
I’m figuring the JC line of hand made duct tape origami. Guaranteed to appreciate.
Seriously, stick with the mutual funds. Or maybe muni bonds. All this bullshit about collectibles is way too high-risk low-reward for a reasonable expectation of ROI.
Another vote for Vanguard index funds or their 2035 retirement fund. Buy 'em and forget. My mix of funds have matched the S&P500 over the last 20 years, but sadly with higher fees.
IMHO, all the options considered and rejected are speculation, not investing. Might as well buy Guns, Gold and MRE’s for the coming demise of civilization
Metal likely is at a high; I lost a nickel bet with a friend when prices didn’t drop to what I thought would be more reasonable after I sold off my gold a couple of years ago. (Gold bugs are as nutty as most TFH’ers; I merely had a few dozen ounces in hard coin and unloaded them without hesitation.)
As for the overhead costs, buy your coins directly from dealers and store them yourself. Paying a fortune for someone to deliver and/or hold them is idiotic.
And in answer to your question, while you can gamble on art, antiques, collectibles, cars and whatever and perhaps become one of the lottery winners in those categories, keep in mind that $999 out of every $1k in investment earning came from those boring stocks and bonds… and RE. That’s not going to change. Play with 10% of your holdings in silly exotics… but the market is what will make you wealthy in the long run.
Somebody above suggested index funds based on Warren Buffet’s advice. That sounds good.
Collectibles are good if you like an item and don’t care if it becomes worthless. They are a shitty investment.
Personally, I’m a believer in something with real value, like real estate. Over time it will probably increase in value, but in the meantime you either live in it or get a stream of income out of it and you learn how to take care of it.
