Mobe Products Tips: Are you unimpressed with investments that give you a 9.5% annual return? Over the last 15 years, that’s what gold has done, on average.
Precious metals like gold have long been a fairly secure place to invest your money, particularly in times of market crisis, as evidenced by gold’s 65% rise during the four years following the 2008 economic crisis.
But then there are “luxury” investments. They are not correlated to any stock or commodity index, but are providing considerably higher returns. So even if you don’t want to completely divest from gold, it might pay to at least diversify into some of these areas.
Mobe Products Tips: Similar to the various market indices, there are indices for rare and collectible bottles of whiskey. The most widely regarded publisher is the consultancy Rare Whiskey 101, whose analysts track changes in value of the 100, 250, and 1,000 most collectible bottles of single malt scotch.
The market for collectible whiskey has grown steadily, evidenced by £9.6 million ($13.6 million) worth sold at auction in the UK last year, up approximately 21% from 2014.
In 2015, Rare Whiskey 101’s Apex 1000, the leading scotch whiskey index, saw a 14% increase—outperforming not only gold (which fell 10%), but also the S&P (up 0.7%) and the FTSE 100 (down 4.9%).
Judging from the numbers, it may prove very wise to buy and hold on to good quality aged whiskeys (though even lesser quality aged scotches of early vintage are increasing in value).
Hermes Birkin Handbags
Mobe Products Tips: The Birkin was designed by Paris-based Hermes in honor of actress Jane Birkin, who, while sharing a flight with an Hermes exec., complained of a dearth of high quality leather travel bags.
For every year since its introduction in 1984, this women’s fashion leather handbag has gone up in value an average of 14.2%-considerably higher than gold. In its worst year, the bags increased in value 2.1%. Their best year was 2001, when their value increased 25%.
One of the reasons for their rising value is Hermes’ waiting list. It can take as long as six years to have an order filled, thus creating a thriving secondary market for second-hand Birkins. Another reason is discontinuation. The company stopped making ostrich bags, due to a scarcity of high-quality ostrich skin. Ostrich Birkins now demand a high price at auction.
But the main reason is that the bags are in constant demand and so have become collectible. In 2015, a Birkin made of pink crocodile skin sold at auction for $223,000.
Classic and Historic Cars
Mobe Products Tips: Former investment banker Dietrick Hatlapa began collecting cars some time back. He and other fellow collectors noted that the values of the vehicles continuously increased, yet could not account for why.
He discovered there had never been a comprehensive analysis of the classic car market, so Hatlapa took it upon himself to establish the Historical Auto Group International (HAGI) and creating the HAGI Top Index from scratch.
This index tracks the value of 50 car models, of which 1,000 or fewer units were build, which have an established collector base—Mercedes-Benzes, Porsches, Ferrari’s, Bugatti’s and others. He estimates that this market is currently worth more than $37 billion.
In 2011, Hatlapa reported that certain segments of the market had risen in value by 20% over the previous three years. People who’d invested in classic cars would have made twice what they would have made had they invested in gold.
This investment value is echoed by the UK’s Knight Frank Luxury Investment Index (KFLII), which found that their index for classic cars had increased by 17%-the highest performer of all the luxury investments that they track—while gold only rose 9.6%.
Mobe Products Tips: The KFLII tracks nine other classes of luxury assets, including art, which is their second best investment, after classic cars.
According to Knight Frank, in 2014, collectible art brought returns of 15% over the prior year, as well as 61% average increase over the previous five years and a 252% increase for the previous 10 years. These kinds of returns leave gold in the dust.
One place in particular where serious increases in value are occurring is in African art. The UK auction firm Bonhams, which began specializing in contemporary African art in 2007, has seen a fivefold increase in auction prices. This kind of appreciation has also been reported by auction houses in Africa, such as Arthouse Contemporary Limited of Lagos, who found a tenfold increase in the value of pieces sold at their first auction, in 2008.
Mobe Products Tips: Birkins, classic cars, art, whiskey and other luxury items are passions but you don’t necessarily have to be passionate about any of them in order to profit from them. The best approach to take as an investor is to study the various indices for these collectible markets and find out what the opportunities are to diversify into any of these areas.
A good place to start is with Knight Frank’s “Wealth Report,” which provides performance statistics for “100 key global luxury property markets,” according to their website.