Top Luxury Alternative Investments Of 2016

Luxe Life

Top Luxury Alternative Investments Of 2016

Thinking of putting your money into something other than stocks and property in the new year? Our WEALTH team will tell you which luxury alternative investments are likely to deliver high returns.

Published on 22 December 2016

Classic Cars

The Knight Frank Luxury Investment Index (KFLII), which tracks the performance of a theoretical basket of selected collectable asset classes using existing third-party indexes, reported that the value of the world’s most collectible vehicles increased 17% on-year.

Indeed, had you purchased a rare, sage-coloured Aston martin DB4 Zagato for £500,000 back in 1996 (only 19 such cars were made), you might be able to sell it for US$14.3 million today, which is what one of these cars fetched at a Sotheby’s New York auction earlier this year.

Enrique Liberman, a partner at Bowles Liberman & Newman, is a transactional attorney who specialises in luxury asset investment funds. “Ten years ago, classic cars were looked at as collectibles, but now people are recognising them as an asset class,” he said in a recent CNBC article.

Wine

The value of wine increased by 5% over the year 2015, according to the KFLII published in 2016. “After a bumpy period when the Chinese bubble for fine French wines burst spectacularly, the market for top-quality wine has now found its feet again and is performing strongly and going head to head with classic cars in terms of performance,” reported Andrew Shirley, editor of The Wealth Report and head of rural research at Knight Frank.

Luxury Daily also indicated that many digital tools are emerging to help wine investors maintain their collections and make smart purchasing decisions. The Vincast by Auction Forecast platform, for example, tracks data points such as auction prices, collectability scores, market indices and return-on-investment forecasts.

Read 6 useful things on wine investing.

Watches

The KFLII highlighted a 5% increase in the value of watches over the last year. If you are ready to build a watch portfolio, classic or iconic models are the way to go. The two brands to keep in mind: Rolex and Patek Philippe.

According to Watch Time, brand recognition, heritage, exclusivity, availability and demand are all factors that have developed the value of these brands over time. Other luxury watch brands with a high demand in the US include Breitling, Cartier, IWC and Jaeger-LeCoultre.

Read more on how to avoid common watch investing mistakes.

Art

Paintings were another high performer, increasing in value by 4% over a 12-month period, a 28% over a five-year period, and a whopping 226% over a 10-year period.

If you’re looking to collect for the long-term, you should adopt the strategies of value investing, according to Bloomberg. This is because the art market is cyclical due to changing tastes, so you should buy art that’s “out of style”. If an artist was talented and popular enough, for instance, there’s a good chance that his work will be back in vogue again.

Consider also buying art that is obscure but important, for example, a piece of ancient art. Such works are also affordable because not many people know they exist, like a 1,500-year-old Mochica shell necklace embedded with turquoise that sold for US$5,400 at Christie’s in 2006 (about US$2,000 less than a new gold-and-silver T necklace from Tiffany). There is potential for the price to increase because it is a valuable collectable.

Finally, if you are buying art for investment, remember that it’s not the meaning of the piece that gives it its value but its art-historical significance.

Read 7 helpful things on art investing to get you started.

Jewellery

Jewellery posted a 4% increase over a 12-month period. While this is not exactly an impressive figure compared to classic cars, it’s worth pointing out that, in 2015, an auction record was set when a Hong Kong billionaire purchased the rare Blue Moon diamond for US$48.4 million.

If jewellery is an asset class you wish to invest in, consider Art Deco pieces from 1920 to 1935, particularly those from designers like Cartier and Van Cleef & Arpels, which were of exceptional quality, according to Moneywise. Natural pearls are also growing in popularity; and it is hard to go wrong with vintage pieces featuring a significant stone.

Read more to understand jewellery investing.

Coins

If you’re keen to invest in coins, it’s important to know that “there are two distinctively different markets. Investors seek gold bullion coins that reflect gold’s market value, called the ‘spot’ gold price. Numismatic coins are collectables, and they can also have a price premium (or discount) attached to them depending on their rarity and conditions according to U.S. News & World Report.

In May 2016, a penny coin dating back to 1933 – one of only four ever made – was sold for £72,000, the world record amount for a copper or bronze coin ever sold at auction, according to CNBC.

Stamps

Surprisingly, stamps turned out to be a wise investment choice. The Telegraph recently reported stamps have become an unlikely safe-haven investment against choppy markets, outperforming shares, property and gold. Business reporter Kate Palmer indicated “an index of the 250 most valuable British stamps, compiled by collectibles dealer Stanley Gibbons, returned 1.2 per cent in the 12 months to June, beating the FTSE 100, which lost 11 per cent during the same period.”

But rare stamps carry a higher value. Over the last decade, the 4d 1935 King George V stamp in deep grey-green rose in value by 1,025%, from £800 to £9,000.

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