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Collectible Investments for the High Net Worth Investor

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Collectible Investments for the High Net Worth Investor

Academic Press,

15 min read
10 take-aways
Audio & text

What's inside?

Collecting for fun and, sometimes, profit: Proceed with caution if you expect to earn money from your collectibles.

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Editorial Rating

8

Qualities

  • Innovative
  • Applicable

Recommendation

Financial advisers and money managers are comfortable with traditional investment vehicles, such as stocks and bonds and, perhaps, real estate. However, an increasing number of wealthy individuals are exploring alternative avenues for profitable investing, including collectibles. Consequently, investment houses and wealth managers need to familiarize themselves with art, stamps, wine, books, classic cars, and the like, to be qualified to advise clients who want to know if their acquisitions will bring in a pretty penny or not. Editor Stephen Satchell’s compilation of scholarly essays from a variety of experts on different collectibles – and on the psychology that motivates purchasers – is not a casual read, but it sure is a useful one for money managers whose clients want to cash in Grandma’s stamp collection. Much of the material deals with sophisticated economic and business theory, including mathematical formulas and detailed charts and graphs. Still, getAbstract believes that most financial advisers (and collectors) will emerge with a greater understanding of collectible investments – and maybe a hankering for a cherry red and white 1957 Chevrolet.

Summary

Collecting Knowledge

Wealthy investors who are interested in collectibles pose a challenge for investment firms and wealth managers. Individuals who want to allocate money for potentially valuable collectibles expect their investment managers to be able to offer educated, sensible advice. Managers must try to determine the value of a collectible and whether its acquisition will benefit the client financially in the short term or, much more often, in the long term. Like other collectibles, art can fluctuate between impressive gains and precipitous downturns. However, many investors are not looking only for sizeable profits. They also enjoy the prestige, satisfaction and social benefits of investing in art. Some relish the pursuit of rare pieces or the challenge of building a reputable collection. Others like to broaden their intellectual horizons and achieve expertise of sorts in a particular genre.

Scientific studies show that several areas of the brain influence a collector’s decisions and behavior. For instance, the prospect of acquisition or financial gain excites the “nucleus accumbens,” or “pleasure center.” The “amygdala,” on the other hand, is more careful and...

About the Author

Stephen Satchell is a Fellow of Trinity College, the Reader in Financial Econometrics at the University of Cambridge, and visiting professor at Birbeck College, City University Business School and University of Technology, Sydney.

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