Collecting as an Investment – Some Thoughts

Lots of us have collections.  Something catches our fancy, and we get the “bug.”  Collecting is a fun and rewarding hobby, but it can get out of hand in a flash.  Here are a few thoughts on managing a collection, from the perspective of responsible household management.

  1. How much can you handle?  Do you have the type of personality that is inclined to go way, way overboard?  Don’t be ashamed, you’re in good company.  But, how far can you responsibly go with your collection?  What is the amount of money you can spend to your collection while still respecting your family and your financial responsibilities?  If you’re a real enthusiast, then putting limits on what you collect really pinches, because there’s always another “thing” to acquire.  Putting on these limits matters, though, because it makes you focus on the acquisitions that matter, and it encourages you to trip you collection of the items that don’t matter.
  2. Do you have the personality to manage a large collection?  Starting a collection and buying more collectibles is pretty easy, compared to the work of managing and displaying your collection.  Do you have the wherewithal and inclination to do the management that a substantial collection requires?  Also, can you display and store your collection appropriately?  The reason I ask is that, if you’re going to put your precious time, attention and money into a collection, it’s heartbreaking to have your collectibles ruined by rain, vermin, or bad storage.  If you don’t have the desire to keep up with the management, then it’s probably better to have a more modest collection.
  3. Are you kidding yourself with the value of your collection?  Just because you bought you collectible for a certain price, doesn’t mean that you can sell the same item for the same price.  An excellent example of this is jewelry.  Jewelry is generally sold at a significant markup compared to the price you would get for selling the same piece.  Take an honest appraisal:  is your collection as valuable as you feel it is?  No, no, be honest.  Do you see similar collectibles being sold?  What price to they get?
  4. Is your collection really an investment, or is that just a fantasy?  One of the number one excuses people make for collecting irresponsibly is that “it’s an investment!”  Do you know what we call people who manage collections for value?  Curators.  If your collection is an investment, then you need to be its curator.  What do curators do?  They manage, document, and properly store the collection.  They buy and sell the works based on a theme they want to express, or to illustrate an idea, or create a timeline, or otherwise use their collection as a vehicle for enlightenment.  Well curated collections are far more likely to retain value and to be sold for a good price.  Speaking of selling…
  5. If you collection is an investment, do you ever plan to sell?  If you don’t ever sell it, is it really an investment?  Sure, sure, you hear about people who by shares in investments “for the long term,” but generally they sell them for their maintenance in their old age.  Do you intend to do that with your collection?  If you don’t that’s fine.  It just may be more accurate to think of your collection as a valuable personal asset instead of an investment.
  6. How do you intend to dispose of your collection? I hate to say it, but at some point you are either going to sell your collection, or you will die.  So, do you have plans for what will happen to your collection after you’re gone?  Do you have an institution or person who will receive your collection?  If you’re planning on leaving your collection to a loved one, do they have the knowledge or wherewithal to care for your collection, or do they plan to sell?  Whatever you do, please don’t leave your collection in an undocumented mountain of boxes for your loved one to sort through.  It isn’t respectful to your collection or to your loved one.

If you’re managing a collection, be wise when you acquire and sell your items, and remember that your collection will probably survive you.  Do you have any ideas about managing a collection?  Pipe up in the comments!

This entry was posted in Financial Planning, Spending and tagged , , , . Bookmark the permalink.