Vintage products are often in high-demand by the uber-rich and jet set, who set new records in purchasing these items from auctions or personal collections. But, for the average investor, it is a high-risk investment, fraught by manifold practical difficulties. Not only do you have zero access to any professional financial advice, there are no guaranteed returns. It is always advisable to instead invest in mutual funds, which are reliable financial instruments providing good returns with marginal risks.
Understanding vintage products: Technically, any product more than 20 years old is regarded as vintage, and items which are at least 100-years-old are classified as antiques. So, something vintage is not necessarily antique. Vintage products can include furniture, cars, artefacts, architectural columns, clothes and accessories, home décor items like chandeliers, lamps, ceramics, figurines and statues. They can also include products with like old films and advertising posters, fans, mechanical gramophones and records, cassettes, toys and watches. The popularity of these products are largely driven by nostalgia.
Before you invest your hard-earned money in the vintage product market, here is a list of seven things that you need to know.
1.High maintenance costs
When you buy a vintage product, it requires special care and attention, translating into high maintenance costs. From plastic covers, to special rooms with moisture control, the collectible or vintage product has to be protected from the forces of nature. You might even have to insure the product, if it is more valuable. You also have to pay the professional appraiser, restorer or the dealer before selling the vintage product. Thus, a vintage product does not provide you any income while you hold on to it, but while you wait for the price of the product to increase, it will cost you a fortune for maintenance.
It is difficult to vouch for the authenticity of a vintage product, even if you have purchased from a verified dealer. Counterfeit vintage products often pass as genuine through dealers, and end up in collections.
Vintage products provide low returns of investment as compared to other investment instruments like mutual funds. You also cannot measure the returns based on market variables. According to the most generous, back-of-the-envelope estimates, vintage products can provide returns ranging from 5% to 10% over a period of 10 years or more.
4.Inflated prices at the point of purchase
As there is no mechanism for calculating the real price of a vintage product, you can end up buying a vintage item that is overpriced, several times over. This is because unlike collectors, vintage product dealers have to run their businesses. And no business operates without profits.
Investment in a vintage product is an illiquid investment which produces zero income while you hold on to it. The gains, if any, are also subject to taxation under capital gains tax. Thus, before you buy a vintage product make sure you are happy to own it forever, rather than thinking about profits from sale in future.
6.Lack of information
When you invest in mutual funds or fixed deposits, you have access to a wealth of information about the nature of investment, and returns. But, in the case of investment in vintage products, you often rely on unreliable information, which can never be corroborated.
7.Difficult to find a buyer
Investment in vintage products can be risky as it is difficult to find a buyer who is interested in the product, and is willing to shell out large amount of money for making the purchase.
If you thought that you could invest in vintage products at throwaway prices, and make a fortune out of them later, then you are mistaken. It is difficult to classify vintage products as a separate asset class. Even more difficult is to categorise them among viable financial instruments for investment.
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