Tip:
Highlight text to annotate it
X
Almost everyone has a story about a cousin or an aunt who bought a box of junk at an
auction and found in it a diamond ring worth several hundred dollars. Every once in a while
a valuable painting by a famous artist turns up in someone's attic. "Antiques Roadshow"
sometimes features odd items that have been sitting around in someone's house for years
and that are appraised for thousands of dollars. This doesn't mean buying and selling art or
collectibles is a good way to make money. Buying art, antiques, or collectibles is extremely
speculative, in part because values are so subjective. What a given item is worth depends
entirely on what a collector might be willing to pay at any given time. A piece of pottery
or jewelry might fluctuate considerably in value as trends come and go. Yesterday's hot
collectible (think Beanie Babies or Jim Beam bottles) might be tomorrow's overpriced embarrassment.
Does this mean you should never buy art or antiques in hopes that they'll increase in
value? Not necessarily. I am suggesting, though, that investment shouldn't be the primary reason
for your purchase. If you're going to collect Art Deco jewelry
or decorate your home with original artwork, do so because you like those things. Choose
a painting because you want it hanging on your wall. Buy a carving or a pot because
you want it. Collect iron toys or old books because you have fun searching for them at
antique stores and garage sales. If your art or collectibles increase in value, consider
it a nice bonus. If you're hanging onto a piece of art or an
antique that you don't like because you think it's valuable and you think of it as an investment,
why keep it? You could sell it and put the proceeds into your retirement portfolio. Then
your investment wouldn't be taking up space in your house, and you wouldn't need to worry
about maintaining it or insuring it. Another option would be to use the money to buy something
you would enjoy owning. If you do decide to sell an item, do some
serious research and try to find out what it's really worth. Don't just stick a price
on it for a garage sale or walk into an antiques store and take whatever they offer you. Get
at least two or three estimates from dealers or other qualified experts. For something
that's potentially quite valuable, paying for an appraisal might be money well spent.
Finding valuable collectibles at rummage-sale prices is almost always sheer luck. Anyone
who consistently makes money buying and selling art or collectibles has invested the time
and effort to become an expert. Unless you're willing to do the same-and you would enjoy
it-don't try to fund your retirement this way.
In the interests of full disclosure, I should confess that not all of my own purchases turn
out perfectly. One of my travel memories is of the time I bought two hand-woven carpets
at bargain prices. What made the purchase memorable was the experience of stuffing the
bulky rolled-up rugs into a taxi and hauling them to the airport, only to find that the
baggage handlers had gone on strike. Those carpets still decorate the floors in
our house. Are they worth more than I paid for them? After all the effort it took to
get them home, I certainly hope so. But I bought them because I liked them and wanted
them in my home. If my primary goal had been investing, I would have put the purchase price
into several well-diversified mutual funds instead.