Beyond stocks: Discover lucrative collectible investments for a diverse portfolio

Most popular collectible investments

Curious about alternatives to the ups and downs of the stock market? Explore the world of collectible investments — from art and rare cards to fine wines — and learn how these unique assets could boost your financial strategy.

Investing in collectibles isn't for the novice trader or those focused on building up their retirement fund. However, investing in collectibles can be a great way to turn your passion into profit. If you want to shake up your portfolio consider the following eight type of collectible investments.

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1. Artwork investment as an alternative

People have been creating and collecting artwork before there was a way to buy and sell stock. So, it shouldn't be a surprise that art investments are one of the most popular alternative assets in the current investor marketplace.

For high-net-worth (HNW) investors, purchasing and displaying fine art may be the goal. The thrill of gazing upon a multi-million dollar sculpture would be exhilerating.

However, for most investors the purchase and display of high-value art is out of reach. That doesn't mean Main Street investors can't add fine art to their investment portfolio. Artwork investing platforms, like Masterworks, reduces the financial barrier to investing in fine art. Like crowdfunding platforms, artwork investing platforms allow investors to buy and sell shares in the value of fine art. When the value in the piece increases, so do the value of the shares. Investors can then opt to hold their stake in the art or sell using the secondary marketplace created by these artwork investment platforms.

So what's the upside? Art investments have the potential to outperform the stock market, while providing some downside protection when equity markets stumble. To illustrate, Masterworks compared data on the performance of contemporary artwork compared to the performance of the S&P 500 (SPX:INDEX), US real estate and gold:

This doesn't mean there aren't risks, even with artwork investing platforms. Art as an investment is a lot like real estate. In general, these are illiquid, meaning it can take longer to sell, and there are typically higher costs to completing a transaction. Also, investors can't earn income from art. Instead they must rely on appreciation and an eventual sale to get your return. Still, artwork investing platforms, like Masterworks can help reduce some of these risks — creating a shorter secondary marketplace for art investments, using an equity-based strategy for investors and reducing the target holding period required before crystallizing profit.

2. Trading cards as an alternative investment

In 2022, a 1 PSA 10 Illustrator Pikachu was bought by YouTube influencer Logan Paul for approximately USD$5.275 million. In that same hear, a PSA 10 Gem Mint grading Shadowless 1st Edition Holo Charizard Pokemon card sold for an astonishing $420,000. And if you don't know what all that jargon means, don't worry. In simpler terms, someone just paid the equivalent of a nice house (or big mansion) for a child's collectible playing card.

Investing in trading cards isn't anything new, and people have been buying and selling trading and sports cards for decades at this point. But in recent years, there's been a surge in certain trading card niches like Pokemon. This rise in interest has been largely fueled by people picking up new hobbies during the pandemic and card collecting becoming more mainstream with celebrities getting involved.

This sort of sudden interest presents a lot of opportunity for flippers and collectible investors to turn a profit. It's almost similar to crypto in some regards since when a lot of new money piles into an industry, the early adopters can usually cash out on the wave of popularity. Personally, I wouldn't dabble in trading card investing unless you're very familiar with a particular trading card game or sport and know how to spot a deal. But if you just want to dabble in this collectible investment, you can use platforms like Collectable to buy fractional shares of rare sports cards and other sought-after merchandise.

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3. Wine as an alternative investment

Like artwork, wine is another collectible investment that can help diversify your portfolio. Wine also helps provide downside protection since wine prices don't usually correlate too strongly to the equity market. And the great news is that you don't need a million-dollar wine cellar to add wine to your portfolio. Platforms like Vint and Vinovest let you invest in fine wine from around the world starting with $25 and $1,000 respectively. With Vint, you buy shares of wine collections, and you don't need to be an accredited investor or even know much about wine to get started. Unfortunately, it's only available to American investors. As for Vinovest, it's similar to a robo-advisor and provides automated wine investing for a variety of portfolios.

Both Vint and Vinovest handle storage and wine insurance as well, so it's a passive investment.

So why bother invest in wine? Because of the potential for higher-than-average returns. For instance, data that tracks Liv-ex Fine Wine 1000 — the indice used to track the value of the 1,000 wines from across the world — wine, as an investment, has outperformed the S&P 500 since 2006.

Keep in mind, the Liv-Ex Fine Wine 1000 indice was developed by the London International Vintners Exchange, Liv-ex for short, as a business-to-business fine wine trading platform. Once the demand from retail investors was realized, the indice and wine investing platforms began to pop up.

Like many other collectible investments, a lack of income generation is a downside of wine investing, as is liquidity since you can't usually sell off your wine portfolio in a single day like you can with stocks. However, as platforms like Vint and Vinovest pop up, the barriers to entry for wine investing are only getting smaller.

4. Comic books as an alternative investment

Like trading cards, certain comic book series and characters have incredibly loyal fans. This can make old, rare comic books immensely valuable in the eyes of collectors. By investing in comic books and holding them for the long-run, you're banking on this interest to continue and for your books to appreciate. That's the theory behind comic book investing anyways, although for some investors, owning a 1977 Star Wars #1 comic book that's in pristine condition might just be for pure nostalgia.

In any case, if you want to invest in comic books, platforms like Rally Rd. let you buy shares of rare comic books starting at just $1 per share. This means you can be a part-owner of comics like a 1940 Batman #1, or a 1963 X-Men #1, without having to spend upwards of hundreds of thousands of dollars for the entire book.

5. Classic cars as an alternative investment

Classic cars are another popular collectible investment, and they're actually an asset with utility unlike many collectibles. But whether you drive your classic car around town on a sunny day or keep it locked up in a showroom is entirely up to you.

Once again, platforms like Rally Rd. let you invest in shares of classic cars like a 1955 Porsche 365 Speedster or an Aston Martin V8 Vantage Oscar India. This is ideal if you're investing a small amount of money or don't want to spend enough to own a classic car outright.

However, according to a report from Hagerty, inflation is now outpacing classic car appreciation. Hagerty tracks data like auction volume for classic cars, and this news isn't ideal if you're a serious motorhead who was hoping to beat inflation by investing in cars.

6. Historical artefacts and antiques as alternative investments

Growing up, I watched a lot of the History Channel show called Pawn Stars. If you haven't seen it before, it follows a famous Las Vegas family-run pawn shop and the antics that ensue each day. As the viewer, you get to watch people attempt to pawn or sell all sorts of collectibles, ranging from ancient coin collections to famous artwork.

The category of historical artefacts (the plural of artifact) is probably the most popular on the entire show; pretty much every episode features some sort of old, collectible antique. This includes artefacts from ancient Egypt to the Second World War, and everything in between.

As an investment, antiques and historical artefacts are too niche to really generalise. For example, the market for investing in ancient coins is probably very different from the market for antique firearms. But for any antique or historical artefact, spotting frauds and authenticating your potential investment is incredibly important.

7. Figurines and toys as alternative investmentments

In a 2022 study published in the Journal of Research in International Business and Finance, researchers argued that Lego actually outperforms large stocks, bonds and gold. The researchers analyzed secondary marketplace prices for Lego with a sample time period of 1987 to 2015 and found that the average return is about 11% annually.

This makes some sense if you think about it. After all, Lego is an old company, so sets produced a decade or two ago might fetch much higher prices for nostalgic investors than the original MSRP. Other toys, including Funko Pops and action figures, can follow similar patterns.

Of course, this doesn't mean you should liquidate your portfolio and go all-in on Lego as a collectible investment. However, if you're very knowledgeable and passionate about a certain franchise or period of time, you might find toy investing brings both a sweet sense of nostalgia and the potential for returns.

8. Sneakers as an alternative investment

One very popular collectible investment are sneakers. Sneakerheads, which is the term for sneaker collectors and investors, generally buy rare, mint condition sneakers and then flip them for a profit or hold onto them with the hopes of appreciation.

What's interesting about sneakers as a collectible investment is that there's overlap between investors and everyday consumers who just want the latest pair of Jordans to walk around in. This is why some sneakerheads try to buy sneakers that are part of an exclusive drop, and then immediately flip them. This could involve buying limited edition Nikes, Jordans and other luxury sneaker brands and then quickly reselling them for a profit.

Overall, sneaker investing is a mix of a flipping side hustle and collectible investing. But if you want to dabble in collectibles that are potentially faster to liquidate, sneakers are a good option.

Why you should consider collectible investments

Before diving into some of the most popular collectible investments, be sure to understand the motive of the investor (or yourself). This is particularly important as some collectible investments can take along time to sell — and that means holding on to these assets for a longer-than-anticipated time.

Passion projects: For many investors, dabbling in collectibles begins as a passion project that's mixed with the desire to invest. For example, someone who invests in rare Pokemon cards or baseball cards probably has an affinity to either one, or at least enjoys researching the space.

Portfolio diversification: Another reason to invest in collectibles is to diversify your portfolio. Collectibles are as far removed from securities like stocks, bonds and ETFs as you can get, and some investors view them as excellent stores of value or appreciating assets.

Inflation hedging: Some investors argue that investments like artwork, wine and gold and silver can serve as excellent inflation hedges. Historically, assets like gold have been, which is why more investors have been turning to alternatives as markets dip and the dollar loses value.

Beat the market: Collectible investments are often high-risk, high-reward. For example, if you invest in a classic car, it doesn't usually generate income, and it's difficult to know if it will appreciate. But if you enter at the right price and things go your way, there's the potential to outperform the market, and by quite a margin.

Enjoyment factor: A piece of artwork can bring someone genuine pleasure. Same goes for an iconic action figurine, or an old comic book. In contrast, the stocks and ETFs in your online broker don't have the same “enjoyment factor” as collectibles.

Pros and cons of investing in collectibles

Pros of collectibles as alternative investments

• Collectible investments can help diversify your portfolio
• Fractional investing has made it easier to get started without much capital
• Some collectibles provide downside protection and can even be inflation hedges
• Potential for outsized returns

Cons of collectibles as alternative investments

• Collectible investments don't usually produce fixed-income
• Most collectible investments are illiquid
• Fraudulent collectibles pose a serious risk to investors
• The barrier to entry can be high for some collectibles
  
  

Generally, successful investing in collectibles requires a lot of knowledge and research, so it's less passive than you might think

Do collectible investments belong in your portfolio?

When it comes to alternative investments like collectibles, there's no cookie-cutter answer for deciding if they belong in your portfolio.

Many investors stick with a cap — limiting how much of their investment portfolio goes into collectible investing or alternative investments, in general. Typically, this cap is between 5% to 10% of your overall portfolio. This means if you have $100,000 to invest, no more than $10,000 should be allocated to collectibles or alternative investments.

— with files from Romana King

Sources

1. CNN: This Pokémon card just sold for $420,000 at auction (March 26, 2022)

2. TCG Player: The 20 Most Expensive Pokémon Cards Ever (July 1, 2024)

3. Hagerty: Inflation is accelerating past classic car appreciation (July 22, 2022)