In last week’s Tony Byrne’s View blog, I mentioned the main collectibles to invest in. I covered rare coins, vintage toys, fine art, rare stamps, vintage watches, rare books and sports memorabilia. In this week’s blog, I will cover the most popular collectibles as well as the concept of fractional ownership which is an emerging trend via the use of NFTs.

Before discussing these popular areas of collectibles investment I’d just like to explain why I believe collectibles should be considered as a part of most investors’ portfolios.

 

 

Firstly collectibles give you genuine diversification of risk compared to the traditional sectors of equities, bonds, property and cash.

Secondly, they afford you some protection against being de-banked like Nigel Farage. You own tangible physical assets which do not require a bank account.

Finally, they protect you against the government one day potentially creating a CBDC (Central Bank Digital Currency) and abolishing notes and coins. This would enable the government to operate a social credit system like the one in China which could potentially empower the government to freeze your bank account. I consider this a genuine threat to your liberty.  If you don’t believe me, do some research on the social credit system in China.  It will concern you.

The most popular areas for investing in collectibles are coins, stamps and signed memorabilia. According to Just Collecting historic annual returns of 10% a year are not unusual for coins and stamps in recent years but signed memorabilia has been returning double that figure.

It is surprising just how valuable these collectibles have become and how sought after they are.  Interestingly many of us already have signed memorabilia of our own in our homes, especially in our lofts and garages. I was only talking to a client recently and he admitted he had been having a clear out and had thrown away and gifted autographed books. I told him to stop giving away these books because they could be worth a lot of money. Shades of Antiques Roadshow? Or even Only Fools and Horses for those of you who can remember that hilarious episode when Rodney and Del Boy made their fortunes.

So you may be sitting on your own goldmine without even realising it! Strange but true. So when you next have a clear out stop and think twice. Could that item you are throwing away be very valuable after all?

As for new forms of collectibles ownership, why not consider fractional ownership via NFTs or Non Fungible Tokens in a digital wallet on the blockchain?

 

 

Firstly you need to get a digital wallet. Mine happens to be  with Metamask. If you don’t already have a digital wallet you will probably own one, one day, like the rest of the UK population. You don’t need any blockchain knowledge to participate as Just Collecting can hold fractions in a cold wallet and issue a certificate upon customer’s request.

Next, you choose a collectible to invest in using an NFT. I have invested in three such NFTs so far.  

The first one was a 16th share of a set of pairs of Madonna’s knickers commemorating one of her world tours. She never actually wore them of course!

The second one was a 16th share of a lock of Kurt Cobain’s hair!

The third one was a 16th share of original handwritten lyrics by Mick Jagger for a song that was never released but some of the lyrics were used in later hit songs by the Rolling Stones.

Some of you reading this may think I’m crazy but you will be surprised by how much such collectibles can grow in value even when it appears unlikely.

The beauty of fractional ownership is that you don’t have to invest 100% into one asset.  You simply buy a fractional share much like the fractional ownership of a racehorse in the non-NFT physical world. So you spread your risk with your co-investors and you can sell your fractional share whenever you like subject to finding a willing buyer at the time. It also means you invest a lot less of your wealth and by investing in a series of assets fractionally you spread your investment risk. It just makes sense. My wife Cholpon is not convinced! However, she has informed me that there is a collectibles market in branded handbags which sounds interesting.

 

 

I have personally chosen Just Collecting to select, buy and manage my collectibles. Just Collecting/CollectorLab is the pioneer of the Blockchain based fractional ownership model. There is a third business in the group called Paul Fraser Collectibles.

I don’t have the time, inclination or skill to do it myself. If you do decide to go down the same route then do your own research and due diligence first before choosing a collectibles specialist to work with. This is not a personal recommendation.

I have only invested  a very small proportion of my wealth in collectibles. In fact, it’s less than half of one percent. It’s money I can afford to lose. I have invested in gold coins, stamps and signed memorabilia so far. I have invested lump sums as well as monthly amounts. There is no commitment to continue investing monthly so I can turn off my monthly contributions whenever I like, increase or reduce the payments and re-start them whenever I like. I really like the flexibility this gives me. Because I pay monthly I also get a certain amount of interest-free credit which is very welcome.  

You can choose to have the collectibles delivered to you but I took the decision to have them stored in a secure vault in the Channel Islands. They are insured, there is a certificate of authenticity for each item and there is an annual audit which certifies their existence. If I were to invest a much more significant amount of my wealth in collectibles I may opt to take delivery of these collectibles instead. The choice is yours to make.

 

So in summary collectibles is an interesting investment sector. It’s not for everyone but there are a number of compelling reasons to consider investing a small amount of your wealth invested in collectibles including through NFTs especially if it is money you can afford to lose. You know it makes sense.*

 

*RISK WARNING

Collectibles are not regulated by the Financial Conduct Authority and they are not covered by the Financial Services Compensation Scheme. The value of investments can fall as well as rise. You may not get back what you invest. The information contained within this article is for guidance only and does not constitute advice which should be sought before taking any action or inaction. All information is based on our current understanding of taxation, legislation, regulations and case law in the current tax year. Any levels and bases of relief from taxation are subject to change. Tax treatment is based on individual circumstances and may be subject to change in the future. This blog is based on my own observations and opinions.

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