Alternative Investments: the fun and games
Alternative investments can be classified as pretty much anything purchased with the intention of holding it for capital appreciation.
This could be as varied as cars, wine, figurines, playing cards, computers, currency, stamps, etc.
Should I Invest in Alternative Investments?
I’ll assume we’re talking about the more mainstream alternative investments (if that isn’t an oxymoron), so things like wine, whisky, cars, stamps, coins, etc. Whether or not you invest in these should really be decided on whether or not you enjoy them.
Let’s take cars as an example. I am a fan of cars and have had some good ones in my day. But my problem is I have the attention span of a toddler looking out of a window at a field full of squirrels. And one of the most important things about alternative investments is the time you are willing to commit to them.
They tend to appreciate in value over time, and that timeframe can often be measured in years and decades.
So buying the latest Ford Escort as an investment… probably not ideal. It will probably drop in value initially, and then, perhaps, in 50 years time when all the other Ford Escorts of that type have disappeared into the junkyard in the sky, MAYBE then you will find the price has appreciated.
So you’ve got to enjoy the process of seeking out the hidden gems of that kind of asset class. You need to be a bit of a nerd when it comes to the topic so you can tell the difference between the limited edition Batman figure versus the standard Batman figure. Which Spiderman actor is the most sought-after figure? Which Pearl Jam album sleeve is the rarest?
These weird little quirks are what make the difference between a 30 year old collectors piece, and a 30 year old piece of crap.
Most people should focus more on investing in traditional asset classes and building their wealth and net worth to a certain level before exploring alternative investments.
The alternative investments may not work out in the end, so only bother trying with hobbies that you get some enjoyment out of. And try to remember that there’s more to life than just investing. So drink the bottle of wine, play with the toy barbie, drive the classic car.
Probably bad for the value of the investment, but it might just be good fun!