MONEY HACKS: The Investment Potential of Collectibles

Today, we're switching things up and taking a slight detour from our usual financial advice to talk about something a bit more playful and, yes, potentially profitable: collectibles!

Ever found yourself drawn to a pair of rare sneakers or a vintage guitar? Maybe you've got a stash of baseball cards or Pokémon cards that you think might be worth something. Well, you're in luck, because today, we're exploring how these hobbies can sometimes turn into a treasure trove of investment opportunities (disclaimer: sometimes!)

Around the office, we have this ongoing debate about who has the coolest shoes… and let me tell you, the competition is strong! Of course, it’s not just about shoes. To name just a few collectibles, vintage toys, coins, stamps, art, sports memorabilia, and even comic books – all can appreciate over time if you know what to look for. The key is doing your homework. Understand the market, know the value of what you have, and be mindful of how you maintain these items. Also – recognize that sometimes these “collectibles” are only valuable for a short period of time, often called “a bubble.”

Investing in collectibles isn’t just about the money, though. It can be about passion, nostalgia, and the thrill of the hunt. Whether you're flipping sneakers or tracking down a rare movie poster, it’s a fun way to enjoy your hobbies, maybe make some extra cash on the side, and rarely (if ever) diversify your investments. So, let's dive in and have some fun exploring this unique investment avenue.

Any money questions you’d like answered? Our Money Hacks series is created from conversations we have with employees, investors, savers, and all people planning for their financial futures. What topics are on your mind for our next episode?

Video Transcript:

Hey, this is Alex and its episode 115 of Money Hacks. I thought we'd have a little fun today. Switch it up and talk about another type of appreciating or sometimes appreciating asset collectibles.

We have one one-on-one conversations with investors and savers, and from time to time, this comes up about somebody who has maybe some old collectible or a hobby they really like and they collect and save. Or maybe, you know, they actually are making money as a side project or a side hustle flipping certain types of valuable, in-demand, or rare goods or collectibles.

Now I've got in front of me tennis shoes because I like different types of shoes. Around the office. we have a little bit of an internal debate around who has the coolest shoes. These are two pairs that I have. These could be considered collectibles. Now for me, I actually wear these so they get a little bit of wear and tear on some not really worth as much as if, you know, you didn't wear them.

Like, let's take these, for example. If you don't know these, these are Air Jordans, right? Everybody, if you're my generation or my age as a kid, probably had a favorite basketball player and a high percentage of probably Michael Jordan. These are the Jordan threes. Iconic because it was like when he did the dunk contest, he was wearing a pair of these not this specific pair, of course, but these are the black cement from 2018.

I actually got in retail in 2018. If they were brand new in a box, they probably trade right now for like $475, which is about a 27% annualized return. And I get nowhere near that for these because I've worn them, they've got a little bit of wear and tear on them. Here's another fun pair. This is a little bit of a statement piece.

These are island green Air Jordan fives 2019. These you can buy retail for 180, I think the last sale for a pair of these is $320. So maybe about a 13% annualized return. So there's a market for Jordan shoes, there's a more than a cult following. There's definitely a high demand.

And therefore, you know, people who collect, who trade, who invest in these can actually make good money flipping or investing, holding and selling for some time down the road. You know, another example is things like guitars, right? I also love to play music and love guitars and certain musical instruments appreciate in value. Now, the thing to know is if you're somebody who's either, you know, really into certain things like shoes or guitars or baseball cards, is to really understand and do research on that marketplace, you need to really understand the process of maintaining the value of the product, maintaining the authenticity, understanding supply and demand, and also the liquidity, the ability to actually sell them for a higher price when if you wanted to, you know, think of this as an investment. Not every collectible has a liquid marketplace on a day-to-day basis that you could buy or sell. Baseball cards are a great example. Again, I grew up in a generation where baseball cards were, you know, just common for people to collect.

Thad these really extraordinary values that in the, you know, late nineties, early 2000s. And then their value went down dramatically because of this flood of supply with a lack of demand. So just like any type of investment, you know, we think about the work that we do talking about traditional investments like stock mutual funds, bond mutual funds, ETFs, and so on.

We encourage investors to understand what you're investing in and understand the risk you're taking and your time horizon. And if you want to do something similar with collectibles like shoes or baseball cards or Pokémon cards or whatever type of collectible it is, that's you know, there's something that you really like or you think you can make into a side hustle or a business.

You need to do your research, you understand the marketplace and you understand the economics, the supply and demand of it. So anyway, this would be a little fun to share some other things outside of the traditional falling away investment asset classes we generally talk about, we love to hear your feedback, your questions, and your thoughts. If there's something that you think is interesting and cool, maybe rare that you collect or that you're investing in, feel free to send it over to me or put it in the comments and we'll see you again soon.