Profit From Collectibles

Investing in collectibles can be fun and lucrative, if you follow a few basic rules.
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A Business Lunch(box)

Collecting is in a bull market these days.

Due to the popularity of shows such as PBS' "Antiques Roadshow" (with 16 million viewers), and the advent of Web auction sites like eBay (EBAY) - Get Report, more people than ever are getting into collecting.

So are collectibles a good investment?

Can you expect a better rate of return than from other investments, such as stocks or bonds?

Keep reading -- the answer is yes and no.

Investment Potential

Buying collectibles can be a good investment, but it can also be risky, just like the stock market.

If buying at the peak of an items' popularity, you could find yourself holding a collectible worth less than you paid for it (remember Beanie Babies?).

Speculation can create an artificial bubble in a market that inevitably bursts, like in the case of baseball cards in the 1980s, when collectors were buying everything offered for sale with the hopes that prices would double or even triple within a couple of weeks.

But if you follow your passion, along with the right steps, you can have an investment that appreciates.

Can you expect a better return on your investment than the stock market? Financial publication

Kiplinger's

figured this out: "In 1929, a beautiful Chippendale highboy sold at auction for $44,000. If that same chest of drawers came on the market today, it would probably sell for well over $3 million.

"But think about this: even at such a fabulous price, the highboy would have earned just 7% a year, a return that was easily exceeded by the 10% average return on quality stocks over the last 60 years."

So it's up to you to determine whether you would rather buy and enjoy a Chippendale highboy for the long term or hold

Google

shares.

Collect What You Love

Before you start collecting vintage posters, Tiffany silver or Nippon porcelain, you need to ask a few questions.

Do you have an interest in what you're collecting?

Would you be happy if none of it sold and you had to look at your collection all the time?

For example, I collect WWII Japanese military artifacts and I sell these items through eBay.

When an item fails to sell, I'm not depressed; I love what I collect and don't mind holding onto a sword or helmet.

The holy grail of baseball cards, a near-mint condition 1909 Honus Wagner tobacco card, just sold for a record-setting $2.35 million.

The seller, Brian Siegel, commented that "the Wagner card gave me a tremendous amount of pride, excitement and pleasure" while he had it.

Siegel purchased it in 2000 for a then-record $1.265 million.

So determine what it is you're interested in, whether comic books, Mickey Mouse memorabilia, fountain pens or corkscrews, and then do your homework.

Like any investment, collecting needs to be backed with prudent research.

  • Find out what people are buying and what you need to look for. Join a collector's club and get its newsletter. Go to collectibles shows and talk to dealers and collectors.
  • Buy some reference books and price guides about your collectibles. While the prices are usually dated by the time they're published, comparing the prices in annual guides help you deduct trends -- whether they're moving up, down or sideways. Read up on condition so you'll know what to look for.
  • Go online and search out auction ads and the chat rooms of like-minded collectors, and see what people are buying and bidding on. Use this information to learn about the current prices of items.
  • Always buy items in the best condition you can afford; don't be afraid to spend the money. The pieces that will appreciate the most are those in the best condition. An item in poor condition that costs $10 will probably be worth $15 in ten years, while one in mint condition that costs $100 could be worth $1,000.

Finally, be aware of collecting's downside: disposing of items.

Selling a stock is easy; to sell a collectible collection, you need a venue -- whether an auction house, like Sotheby's or Christie's, or online at eBay or

Yahoo!

(YHOO)

-- and this sale process takes time. And while some pieces could bring you big money, others may never appreciate in value.

What's Hot

Trends in collectibles right now stem from baby boomers with disposable income who are looking back at their lives -- they like to collect items from their past with sentimental value.

Here are some collectibles that are not only fun to own, but also have investment potential.

Lunchboxes

. Old steel lunchboxes with eye-catching graphics are becoming increasingly valuable. Lunchboxes were in their infancy as a collectible five years ago, but a four-year tour showcasing them in a dozen museums added a big endorsement.

Every conceivable genre of pop culture can be found on lunchboxes.

The most collected are superhero-themed, such as Superman, Batman, the Green Hornet and Wonder Woman; and cowboys, such as Hopalong Cassidy and Roy Rogers. Other popular categories are children's characters, primarily from Walt Disney films, and TV shows, such as Howdy Doody and The Lone Ranger.

Manufactures include Universal (it made the most valuable boxes since it didn't mass-produce them), Aladdin and Thermos.

Look for lunchboxes in mint condition, especially ones that have an intact Thermos bottle. The character portrayed on a box is also a key factor in determining value.

Prices can be astronomical: A 1954 Superman box in mint condition by Universal brought $13,300 at a recent auction. A 1955 box of Davy Crockett at the Alamo in mint condition by Thermos sold for $2,500 (without the Thermos bottle). The same design Thermos bottle alone, in top condition, can go for $3,500.

Vinyl and plastic boxes from the 1970s and 1980s don't bring nearly the same prices as the steel boxes from the 1950s and 1960s, and don't have much appreciation potential.

Teddy bears

. Vintage teddy bears can be a bullish collectible.

Teddy-bear production started in Germany in 1903; the stuffed bears were named after President Teddy Roosevelt. Within a few years, teddy bears had become a craze in the U.S. Value of vintage bears depends on condition, maker, age, size, material and even facial expression.

Good values can be found in bears made in the 1950s. For example, a 19" German golden mohair teddy, made around 1950 by Richard Dien, in excellent condition, recently sold for $148 at auction. A French 20" champagne-colored mohair bear in excellent condition, also from about 1950, by Fradap (an acronym for Fabrique Artistique d'Animaux Pelache) sold at auction for $644.

Hand puppets

. Character hand puppets, depicting comic or celebrity characters from baby-boomer childhood years, are hot and should only get hotter. Many of the characters appeared on children's TV shows that aired in the 1950s.

Prices are climbing but are still reasonable. A Howdy Doody puppet set of six -- Howdy Doody, Dilly Dally, Phineas T. Bluster, Princess Summerfallwinterspring, Flub-a-Dub and Clarabell, each 8" high with vinyl heads and cloth bodies in very fine condition from the early 1950s -- sold for $228 at auction.

The Lone Ranger and Tonto puppets in excellent condition in the original box, 11½" in height with vinyl heads and vinyl bodies by the Ideal Toy Co. from the 1960s, sold at auction for $479.

Enjoy the Good Life? Email us with what you'd like to see in future articles.

Malcolm Katt is the owner of Millwood Gallery in Millwood, N.Y., which specializes in militaria collectibles. He also co-authored the second edition of

The Complete Idiot's Guide to Starting an eBay Business

.