Collectibles: Investment or Consumption?

You might know someone who collects something: music, furniture, comic books, memorabilia, table settings, gundams. Likely they know that these items rarely, if ever, appreciate in value.

But sometimes emotions can override logic, and we find ourselves justifying The Collecting Of The Stuff as ‘We Will Make Money From It’.

I’m not going to break out financial data showing how collectibles are a losing investment that rarely, if ever, produces a positive return.

Instead I have come up with some questions to ask yourself prior to buying The Stuff:

  1. Why am I buying it?
  2. Who am I buying it from?
  3. Why are they selling it?
  4. How much money are they making off of me right now?
  5. If I think I will make money from this, have I tried selling one?
  6. How would I sell it?
  7. If I think I will make money from this, who will be buying it/who and where is the market for this?
  8. While I own it, where will I put it?
  9. Will I have to store it?
  10. How much will it cost me to own it?
  11. Am I depending on making money on it?
  12. What happens if I do not make money on it?
  13. Have I already taken care of, and am on track for, my retirement?
  14. Do I have 6 months of savings already?
  15. Do I have any credit card debt?
  16. How much interest did I pay in last month’s credit card ?
  17. Should I be putting this money in my retirement account?
  18. Why am I not putting this money in my retirement account?
  19. If I am lucky enough to make a profit from this, what will be the tax rate? (Hint: way more than you think ….28%).