Investment portfolios are becoming an increasingly popular way for people to try and boost their bank balance. With so many different types of asset now widely available on the market and the internet making access to and management of investments so much easier than in the past, there really is something for everyone. Emerging as the latest – and perhaps most unexpected – contender as a valid opportunity is none other than the classic car.
Physical Assets vs. Money
For a long time, investing meant placing your money into a savings account in a bank and collecting the interest. With the collapse of the global economy in 2008 and the shambolic state many banks found themselves in as a result, the value and purchasing power of
currencies plummeted. This has caused a shift in interest towards physical, tangible investments such as gold, antiques and artwork. The value of such items is considered far more stable than standard currencies and luckily for collectors of vintage cars, they too fall
into this lucrative category.
Supply and Demand
One of the main reasons why such goods are considered so valuable is due to their relative rarity in comparison to money and the constant supply and demand that this entails. Gold, classic cars and desirable pieces of artwork or not easy to get your hands on and often have to be sourced via specific collectors and enthusiasts. With the time and effort that is required to find a specific model of classic car, their value upon attainment thus remains strong.
Classic vs. Modern cars
On average, a modern car will lose 60% of its value over the first three years following its launch; being one of the products most widely affected by depreciation. This is the beauty of classic cars, as they perform in the opposite manner. The value of the fifty most collectible vintage cars saw an average growth of 12% per year, meaning that they can offer a great long-term investment opportunity.
Are they better than Gold?
Gold is often hailed as one of the best additions to a portfolio due to its ability to grow while the US dollar weakens. However, it has been known for vintage vehicles to actually outperform the precious metal when it comes to getting a return on your money: In 2011,
prices for some classic cars increased by as much as 20%; double the increase of 10% which gold enjoyed in the same year. While cars may involve more expense in terms of upkeep; a well maintained car is undoubtedly a worthy rival to the investment power of gold.
Diversification is the Key
The secret to a successful investment portfolio is diversification. No investor, however new or experienced they are, should ever place all of their eggs in one basket. With their continued increase in value and great long-term potential, classic cars can be a great asset to try and get hold of. Best of all, car loans are now more widely available than ever, meaning that adding a vintage vehicle to your portfolio may not be as difficult to achieve as you once thought.