5 Unusual Investments That May Work
Small investors are often given the same cookie-cutter advice: stash your savings in fixed deposit, bonds, unit trust, stocks…which are all perfectly reasonable and proven ways to grow your finances, but sometimes it pays to go against convention and let your creativity run free.
People have multiplied their fortunes by putting their money in unorthodox and rather unusual investments. While these strategies may not be risk-averse, they offer a fresh perspective and open up new and exciting avenues to make your money work harder for you.
Here are five alternative investments you might not have considered, but could rake in sizable returns in the long run.
1. Designer bags
That trendy knockoff may look good with your outfit, but designer handbags that appreciate in value are what you should be looking for if you want to grow your money.
Like luxury watches, designer bags are more than just a fashion statement. That classic bag you buy today might become a rare, discontinued item in 10 or 20 years. Many of these timeless and enduring pieces are a worthy investment that can yield consistent and generous long-term returns.
There are certain bags and designs that will stand the test of time. One fine example is the classic Chanel flap bag. On average, the French brand increases its prices from 8% to 12% per annum, which means a Chanel bag you buy today, could potentially increase by over 30% in value in three to four years. This is provided that you maintain and care well for the bag.
In 2010, the classic flap bag cost US$2,650 (RM8,856.74 at the time of writing), and it increased to US$4,900 (RM16,375.37 at the time of writing) in 2012. That’s 84.9% increase! Even if you sell it preloved, you can sell well above your purchase price, pocketing some profit while you are at it.
However, you will require a substantial amount of funds to afford one of these bags. Today, the same classic design will cost you RM20,580, while its larger and smaller variations go for RM22,400 and RM17,710 respectively.
The luxurious but notoriously expensive line of Birkin bags by Hermès is another designer mainstay with a proven history of appreciating price value. Seen as a symbol of wealth due to its high price, exclusivity and highly-publicised usage by celebrities, the Birkin bag ranges from RM24,500 to RM500,000.
Popular favourites such as the Louis Vuitton speedy and tote bag also retain their value and are recession-proof. Prices range from RM3,100 to RM7,000.
Those who are hoping to purchase designer pieces for investment should look out for timeless styles in neutral colours like black, blue and white and material like leather, as they will never go out of fashion. Meanwhile, seasonal multi-coloured and fabric versions may not be the best designer bag investment choices.
Investing in wine is nothing new. The formal and organised transaction of fine wines began in the early 1970s and early 1980s, and peaked in the mid-1990s, where buyers often purchased premium wine to be sold later at a higher price.
Statistics over the past 25 years show that prices of the very best wines go up an average of 12% to 20% a year.
About 90% of the world’s investment grade wine comes from the Bordeaux region of France. A bottle of Château Lafite Rothschild from Bordeaux, considered to be the world’s greatest wine, can cost up to RM1,800. Older bottles command prices higher than RM3,500.
While some of these iconic wines have proven to be sound and low-risk investments, it is important to remember that wine prices are not immune to economic setbacks. For example, the global financial crisis did impact wine prices in 2008 and in 2011, during which prices of fine wine fell from their peaks. However, the wine market has since recovered and has remained relatively stable since 2013.
One drawback to wine investment is that wine is vulnerable to weather conditions, so proper storage is very important, especially in hot and humid Malaysia. Wine cellars can range between RM800 and RM10,000. Because stored wines do not generate return for the investor until it is sold, additional storage costs also mean the investor is losing money while waiting for the wine’s value to appreciate.
In Malaysia, there are a few fine wine investment firms such as Vintage Assets Pte Ltd and Vineyards Direct Malaysia Sdn Bhd. Investment period ranges from three to five years with average return of 12% to 20% per annum, but certain premium wines can generate far higher return than that.
The minimum capital you need to invest through these firms is at least RM20,000. That’s not a small sum at all!
However, wine investors need to be wary about shady investment houses and only invest in reputable and well-known companies. This is because the wine investment market is largely unregulated, making it easy for fraudsters to set up and prey on unsuspecting victims.
Art can be much more than decoration, it can be an investment. According to the Contemporary Art 100 index – a benchmark compiled by the London-based Art Market Research (AMR) – art prices have increased at a compound annual growth rate of 8% over the past 25 years. That’s nearly 2.5 times higher than the average annual fixed deposit rate of about 3.25%.
The common misconception for new collectors is that they can’t enter the art market without breaking the bank. After all, the record-setting sale of Edvard Munch’s The Scream, which went for a mind-blowing blowing US$119.9 mil (approximately RM400 mil) in a 2012 auction, is enough to shatter your art-owning aspirations.
The good news is, average Joes can still stake their claim to art without losing an arm and a leg. Through art funds, novice investors can purchase art with limited resource and without having to worry about issues that accompany owning fine and expensive pieces, such as insurance and upkeep.
Art funds work like private investment funds. Investors, usually with the help of an advisor, pump in money, and a professional team acquires investment-grade art. Some art funds try to get their pieces displayed in museums to boost their provenance and enhance their value. They then try to sell them for a profit, generally between five to eight years.
Some funds focus on a single medium while others, like the well-known Fine Art Funds in London, diversify their investments.
However, investors should take note that not all funds are well managed and cases of art fund scams are rife due to the lack of proper regulation across the board.
Art funds are also scarce in this part of the world, so local art investors will have to do some extensive research and scout for options abroad.
New investors should also consider buying works from emerging artists, which are considerably more affordable and has the potential to grow in value when the artist becomes more established.
You can purchase art through local merchants like Art Square or Wei-Ling Gallery, both located in Bangsar, Kuala Lumpur.
4. Musical instruments
Musical instruments have to be one of the most underrated alternative investment choices, with fine violins being the top of the money-making list.
Though they come with a hefty price tag – with many from the top-end varieties breaching the seven-figure margin – statistics show that violins have performed better than many other investments, including stocks. They realise an average annual appreciation of 10% to 12% over the last 30 years.
In 2006, Forbes listed the most expensive instruments in the world and Stradivarius violins held four of the top five spots. These magnificent gems were created from 1700 to 1720 by Antonio Stradivari, who was considered the most significant and greatest artisan of his time.
With only 650 in existence today, these immaculate art pieces are prized as much for their supreme craftsmanship as they are for their rarity and uniqueness. They are estimated to bid at the starting auction price of millions of dollars.
Other instruments you can consider putting your money on include musical instruments that were owned or have been played by celebrities.
Actor Richard Gere’s collection of guitar went up for auction in 2011 and fetched around US$936,000 (RM3.1 mil).The best guitar among the lot was 960 Gibson Les Paul that exceeded the estimated cost US$90,000 (approx. RM300,000) and was sold at US$98,500 (RM328,144).
Elsewhere, a guitar that John Lennon played on the recording of Paperback Writer is expected to fetch as much as $1 mil (RM3.3 mil) at an auction later this month.
Factors to consider when purchasing instruments for investment include who made it, who played it and its condition, and you could be on your way to singing a sweet financial tune.
Few would imagine that a childhood hobby could actually help you score some pretty big bucks. Though in most cases, making a profit from the world of doll-collecting requires exponential amounts of research and patience, and is highly-dependent on luck.
Given the perseverance and good financial fortune, the payoff can be magnificent. In 2004, the first-ever Barbie doll, which debuted at the American International Toy Fair in 1959, fetched a cool US$27,000 (RM90,000) at an auction. The original doll had cost only US$3 (RM10)!
Elsewhere in 2006, Barbie in Midnight Red, dating from 1965, sold for a record £9,000 (RM48,103) at a London auction.
A more recent example comes in the form of the 2011 Tokidoki Barbie, which sports a pink bob hairdo, tattoos and a cactus friend, Bastardino. It retailed at US$50 (RM167) at the time of release. Today it is listed on Amazon.com from US$400 (RM1,334) and is going for as much as US$1,590 (RM5,302).
Typically, the money to be made collecting dolls revolve around those that are vintage, antique and typically still in the box with all their accessories, including the stand. The kind of appreciation in value as evidenced by the Tokidoki Barbie is somewhat rare.
As a whole, doll investment can be tricky business with varying and unstable returns. For instance, Barbie dolls typically drop in value shortly after they are released, so it is definitely not an ideal platform for short-term investments.
Don’t buy Barbie dolls for investment unless you are willing to store them up for at least 20 years, where dolls typically start to go up in value. Perhaps, it can be a good investment to start for your kids.
We also recommend staying away from creepy-looking Raggedy Ann dolls (especially ones named Annabelle)…just in case.