For the most investors, you’ve got your basic investment portfolio covered. You have your stocks, from small- to mid- to large-cap; you have your array of unit trusts. You’ve got bonds, property and perhaps commodities. If you have some leftover funds and are looking for something out of the ordinary to invest in, perhaps try looking into collectible investments to further diversify your portfolio.

The general definition of a collectible is an asset that appreciates in value over time due to its rarity, making it a luxury investment as well. Such investments are typically long term ones and are in limited quantity, thus contributing towards its high values. Such items include but are not limited to classic cars, watches, fine wine or whisky, art and jewellery.

As with all investments, a rule of thumb when it comes to collectible investing is to always do your homework (never buy something you’re not familiar with) and have a passion – or at least an interest – in the collectible item at hand.

To indicate how interest in the collectible or luxury investment market is growing, the Knight Frank Luxury Investment Index by global property consultancy Knight Frank grew 10% in 2014 and has risen by 205% over the last ten years. It is an index which charts the performance of luxury investments over a ten year period according to asset class, which includes furniture, watches, Chinese ceramics, coloured diamonds, jewellery, stamps, coins, wine, art and classic cars.

In Knight Frank’s 2015 Wealth Report, classic cars garnered the biggest appreciation rates. It gained 487% in a 10-year performance from 2004 to 2014, and in 2014 alone increased 16% in value. Art and wine follow suit in second and third place, gaining 252% and 234% respectively over the same time period. For female investors, coloured stones and jewellery also made it to Knight Frank’s index at 167% and 168% in appreciation value over the last decade.

For those interested in finding out more about investing in collectible or luxury goods, here are some things to consider and know about each respective asset class:

Classic Cars
When it comes to classic cars, many recommend that investors only go into it if they are true car enthusiasts. Price appreciations aren’t a guarantee, so buy a car you’d enjoy driving and regard any rise in value as a bonus. As these are older cars, there are also maintenance costs to consider.

While the classic and exotic car market saw a collapse in the early 1990s after booming in 1988 (prices collapsed by as much as 40%), experts say the market is different today as there is a rising class of wealth who are looking to park their money elsewhere. So far, classic cars have been a good bet. For example, a Ferrari 250 GTO was sold for a record US$35 million in 2012. It was bought a decade ago for a mere US$8.5 million.

Generally, classic car buyers look for low-mileage vehicles with meticulous service records and minimal restoration work required, as sourcing and fitting rare parts can wipe out larger increases in value. A celebrity endorsement or connection can also boost values. Check out the Wall Street Journal’s Dow Jones Investment-Car Index for specific car models and their price ranges.

Wine
Wine is favoured as it is easily tradable, and in recent years has gained a growing interest from Chinese investors. Its characteristic as a finite commodity coupled with an increasing demand for it makes wine an appealing investment. As the wine market has its boom and bust cycles (like with many other investments), investors are recommended to take a medium to long term outlook.

One of the most expensive wines ever sold was at a Sotheby’s auction in Hong Kong, where 114 bottles of Romanée-Conti Burgundy sold for £1,035,000 – around £9,800 a bottle. To play safe when choosing good wines to invest in, stick to the main chateaux of Bordeaux. Super Tuscan wines such as Sassicaia, Tignanello, Ornellaia have also performed well in recent years, according to news reports. Do note however that the wine market is an unregulated one, where scams have taken place before.

Investors have the option of amassing their collection through a wine merchant, or by buying into a wine fund. If you’re feeling more adventurous, you can look into whiskey as well; the principles of whiskey investing are similar to wines, and there is a whiskey fund you can look into based in Hong Kong.

Art
While one opinion states that art can be fickle, as prices and values are determined largely by demand, another opines that the global art market is booming. According to the Economist, sales in 2014 reached a record US$68 billion, almost double from that in 2009 and slightly above the previous peak of €48 billion in 2007. In March 2015, an anonymous buyer paid US$300 million for a painting by Paul Gauguin titled: “When will you marry?”, the highest price ever paid for a work of art. Days later another record was set: A painting by Gerhard Richter, a living European artist, was sold for £30m. On average, prices for contemporary and post-war art have risen by 19% over the past year.

Art investors should target returns in the mid-teens. Another opinion states that an 8% annualized net return over a minimum holding period of five years is a realistic figure. Investors should also note that liquidity in selling art is also substantially less than in equities and even real estate.

For art categories to consider, Old Masters has shown stable results in the last 10 years while prices for Post-War and Contemporary art have reached record highs. As with classic cars where any value appreciation is a bonus, art investors should be art enthusiasts first and investors second.

Coloured stones
Coloured gemstones are in a class apart from diamonds. When selecting an investment grade stone, consider its colour, clarity and cut. Rarity also increases its value, with popular gemstones today being emeralds, rubies, and sapphires.

Generally speaking, the fewer mining sources a gemstone has indicates the chances of a particular gemstone being in limited supply are greater. As a rule of thumb, the rarer the gemstone, the more sought after it will become. Custom faceted gemstones also tend to have more value than commercially cut ones as this makes them rarer.


As an asset class, gemstones aren’t as liquid as other investments. Its value is determined by factors including the quality of the stone and how much the person you are selling it to is willing to pay.

Investors should be careful when picking up stones, there fakes are rampant in the market. As it is extremely hard to differentiate the real from the fake, it is recommended that investors seek the advice of a professional and it also helps to get a gemstone certified. The Gemological Institute of America offers a buyer’s guide to gemstones for further reference. Alternatively, another precious stone to look into which is now rising in popularity is jade.