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There is much more to the investment world than just stocks and bonds. Alternative investments can include collectibles, real estate, commodities, wine, and much more. These unique investment vehicles can offer high returns and superior diversification.
Alternative investments generally have little to no correlation with stocks and bonds. So, if the market is underperforming, your other assets aren’t directly affected. The tradeoff is that they’re typically harder to sell and more challenging to value.
Despite the lower liquidity, most investors should consider owning unique and desirable assets. It’s a more sophisticated and well-rounded strategy that prevents you from having all your eggs in one basket.
Get ready to diversify your portfolio with class with these 10 classy alternative investments.
1. Fine Art
Investing in art can produce unmatched returns, but it comes with a lot of risks. The art market is gaining in popularity, and collectors are willing to pay high prices.
When it comes to investing in fine art, you will need to know your stuff. Knowledge of what artists are famous or soon to be popular will help create an edge.
If you buy a painting of an unknown artist, the value will be relatively low. If the artist’s career takes off, their artwork will substantially increase in value.
Regardless of economic or financial market conditions, art will hold its value. Most collectors are very wealthy and always looking to buy.
2. Wine
The quality of wine appreciates over time, and for some selections, so does the value. This alcoholic alternative investment oozes class.
Having a wine cellar full of scarce investment-grade bottles of wine is “next level” and not feasible for most people. However, investing in wine is becoming more widespread through alternative investment apps.
The returns on wine are similar to art. Collectors are willing to pay extravagant prices. If you invest by buying bottles yourself, you’ll need to fight off the temptation of having a taste.
Most of all, you will need to consider all the risks and finding suitable storage. When it comes time to sell, auctions and private collectors are ideal.
3. Rare Coins
Numismatists are customarily intelligent and classy people. Although you may think of coin collecting as something a nerd may do, it can be a lucrative hobby.
Just like investing in stocks, it takes the right knowledge to make successful investments with coins. There are tons of coins marketed as great investments that are mostly a huge waste of money.
Reputable coin dealers and coin shows are an excellent place to start accumulating a collection. Gold and silver coins are not the only sought-after investment in the coin world. Many non-precious metal coins can hold a high value as well.
4. Antique Books
While it’s a bit unorthodox, collecting rare and antique books is a sophisticated way to preserve your wealth. Regardless of market cycles, the value of a collectible book charges on.
Reading is one of the best ways to learn, and there are many sought after books to invest in. Look for 1st edition books that are in good condition and use AbeBooks to get an idea of the value.
Not all books have to be an antique to produce a good return. A rare edition of Harry Potter and the Philosopher’s Stone is valued around $50,000!
5. Music Memorabilia
From vintage records to guitars, there are several different ways to invest in music memorabilia. Just stay away from mass-produced merchandise as it isn’t worth much.
Possessions previously owned by famous musicians fetch the highest prices and rarely lose value. Contemporary artists may not be prominent in the long-term, so be careful with their memorabilia.
Investing in musical instruments and collectibles is not without its risks. There are lots of fakes in the market that you’ll need to look out for. It’s best to purchase from reputable dealers or places that only carry authentic pieces.
6. Mid-Century Modern Furniture
Who would have thought a sofa would be such a classy and valuable investment? If you’re buying the right mid-century furniture, it is.
Buying furniture is usually a terrible investment. RC Willey dressers typically don’t hold their value after you stuff your underwear and t-shirts in them. However, mid-century furniture will continue to maintain its worth, and it’s a unique way to furnish your place.
“Midcentury modern” is approximately around 1933 to 1965. Look for pieces made during these times, and you’ll be sure to find a well-made gem. Pieces from particular designers will be more valuable than others. It pays to do your research.
7. Classic Cars
Like furniture, cars are usually a terrible investment. But classic cars appreciate over time simply because they “don’t make ’em like they used to.”
Brands such as Ferrari, Alfa Romeo, Porsche, and even vintage American muscle cars are profitable investments (if done right). Highly customized vehicles can be risky as it will take a unique buyer. Collectors want vehicles to have as many original parts as possible, and condition is everything.
The Historic Automobile Group International or HAGI uses indices to track the collector’s car market. The HAGI Top Index returned over 500% in the past ten years alone!
8. Watches
The market for watches is booming with no signs of slowing down. Some even speculate a bubble in watches due to the rapid increase in demand. It’s easy to see why there is a growing desire for rare timepieces. Owning stylish accessories that are also valuable assets is a win-win for many.
It’s hard to determine which watches will gain in value over time and which won’t. But there are brands such as Rolex and Omega that are reliable bets. The more unique and obscure the watch, the riskier it will be as an investment.
Look for specific models that are known for retaining their value. Be sure you like the look of the watches you collect so you can wear them if the market goes south.
9. Vintage Clothes
Well-made vintage clothes are not only trendy but are also a classy alternative investment. Luxury brands like Chanel are typically the most valuable, but there many desirable pieces out there.
Investing in vintage clothes is perfect for people that have a good eye for fashion and know what’s in and what’s not. Women’s vintage accessories and clothing is a larger market than men’s, but there are profits to be made in both.
A wardrobe of designer clothes from the past is a fashionable way to grow your wealth. However, just like wine investors shouldn’t drink their investment, it’s better not to wear the clothes. A mustard stain can really ruin the value!
10. Stamps
The stamp market hasn’t been too hot lately, but rare stamps are still quite valuable. In recent years stamp collecting has taken a slide, and so has the value. The drop could be a fantastic buying opportunity.
Younger generations living in the technological world of today just don’t have the urge to own stamps. The rarest of stamps are still increasing in value, and other less rare stamps could turn around if the market changes.
Either way, owning a valuable stamp collection is still very popular amongst the ultra-wealthy, including Janet Yellen.
Final Thoughts
All the mentioned classy alternative investments are hard assets that aren’t highly liquid. This makes them best as long-term investments for those that are patient (and wealthy). You can think of them as a savings account for excess cash.
Paying off debt, building an emergency fund, and saving for retirement should be a priority. So, you probably shouldn’t be investing in classic cars if you haven’t maxed out your Roth IRA.
If you have the privilege, then investing in these hard assets is a great way to diversify your wealth outside of the stock market.
Should You Always Max Out Retirement Accounts?
