Views and Ideas

Collecting Equities Can Pay Off

30 April 2019

Collecting Equities Can Pay Off

Combining one’s passion with one’s investment strategy may get some investors excited but it hasn’t turned out to be the most lucrative approach in recent years, even for the very wealthy who make up the predominant investors in collectibles. While sometimes amassing art or vintage cars, for example, can reap valuable gains, investing in equities in the U.S. during the past 10 years has proven substantially more profitable.

Equities Have Eclipsed Other Investments over the Past 10 Years

  • Since the current U.S. bull market began, equities have outperformed several alternative investments by a wide margin. Some may perceive that these opportunities—mostly available to the very wealthy— are worthwhile but even New York real estate has not outperformed the S&P 500 in the last 10 years.
  • A primary issue in buying high end alternative assets is their illiquid nature. Stocks can often be sold in a matter of seconds but unloading a car or a work of art at an attractive price can take an indefinable length of time.
  • Additionally, collectibles have their own cycles with demand fluctuating over longer periods, exacerbating the difficulty of selling collectibles at a profit.
  • Collectibles are not tax advantaged in the U.S. either. They frequently entail larger capital gains taxes than stocks.
  • Although diversifying a portfolio with tangible assets may sound promising, it may only make sense for the extremely wealthy who can afford very long holding periods and the risk of selling at a loss.
    However, investing in stocks is accessible and has yielded impressive long-term results compared to other options.

 

 

 

 

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