If You Don't Love Your Collectibles, You'll Hate the Results of Collecting

By Rick Kahler

NEW YORK (AdviceIQ) -- Collectibles -- from furniture to coins to stamps -- carry the promise of great riches. That's a false promise. Buy these items because you like to own them, not as investments.

Almost everyone has a story about a cousin or an aunt who bought a box of junk at an auction and found in it a diamond ring worth several hundred dollars. Every once in a while a valuable painting by a famous artist turns up in someone's attic. The TV program Antiques Roadshow sometimes features odd items that were sitting around in someone's house for years and now are appraised for thousands of dollars.

Those stories, if true, are exceptions. They don't mean buying and selling art or other collectibles is a good way to make money.

Buying art, antiques or collectibles is extremely speculative, in part because values are so subjective. What a given item is worth depends entirely on what a collector is willing to pay at any given time. A piece of pottery or jewelry fluctuates considerably in value as trends come and go. Yesterday's hot collectible (think Beanie Babies or Jim Beam bottles) is tomorrow's overpriced embarrassment.

Does this mean you should never buy art or antiques in hopes that they increase in value? Not necessarily. I suggest, though, that investment shouldn't be the primary reason for your purchase.

If you're going to collect Art Deco jewelry or decorate your home with original artwork, do so because you like those things. Choose a painting because you want it hanging on your wall. Buy a carving or a pot because you want it. Collect iron toys or old books because you have fun searching for them at antique stores and garage sales. If your art or collectibles increase in value, consider it a nice bonus.

If you hang onto a piece of art or an antique you don't like because you think it's valuable and consider it as an investment, why keep it? You could sell it and put the proceeds into your retirement portfolio. Then your investment wouldn't take up space in your house, and you wouldn't need to worry about maintaining or insuring it. Another option is to use the money to buy something you enjoy owning.

If you decide to sell an item, do serious research and find out what it's really worth. Don't just stick a price on it for a garage sale or walk into an antiques store and take whatever they offer you. Get at least two or three estimates from dealers or other qualified experts. For something that's potentially quite valuable, paying for an appraisal is money well spent.

Finding valuable collectibles at rummage-sale prices is almost always sheer luck. Anyone who consistently makes money buying and selling art or collectibles has invested the time and effort to become an expert. Unless you're willing to do the same -- and you like it -- don't try to fund your retirement this way.

In the interests of full disclosure, I confess that not all my own collectible purchases turn out perfectly. On one trip to Europe, I bought two hand-woven carpets at bargain prices. What made the purchase memorable was stuffing the bulky, rolled-up rugs into a taxi and hauling them to the airport, only to find that the baggage handlers had gone on strike.

Those carpets still decorate the floors in our house. Are they worth more than I paid for them? After all the effort it took to get them home, I certainly hope so. But I bought them because I liked them and wanted them in my house. If my primary goal were investing, I would have put the purchase price into several well-diversified mutual funds instead.

-- By Rick Kahler, CFP, president of Kahler Financial Group in Rapid City, S.D.

AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.

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AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.

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