You might know someone who has an interest in collectibles: music, furniture, comic books, memorabilia, gundams. Likely they know that these items are not investments and instead are for consumption.
But sometimes emotions can override logic, and we find ourselves justifying purchasing collectibles as being an investment.
Collectibles
Collectibles are a losing investment that rarely, if ever, produces a positive return.
Here are some questions to ask yourself prior to buying collectibles:
- Why am I buying it?
- Who am I buying it from?
- Why are they selling it?
- How much money are they making off of me right now?
- If I think I will make money from this, have I tried selling one?
- How would I sell it?
- If I think I will make money from this, who will be buying it/who and where is the market for this?
- While I own it, where will I put it?
- Will I have to store it?
- How much will it cost me to own it?
- Am I depending on making money on it?
- What happens if I do not make money on it?
- Have I already taken care of, and am on track for, my retirement?
- Do I have 6 months of savings already?
- Do I have any credit card debt?
- How much interest did I pay in last month’s credit card ?
- Should I be putting this money in my retirement account?
- Why am I not putting this money in my retirement account?
- If I am lucky enough to make a profit from this, what will be the tax rate? (Hint: way more than you think ….28%).
Next Step
Ready to take the next step and work with a fee-only CFP? Reach out to schedule a Discovery Meeting to learn more.