Investing in Alternative Assets
When most Australians think of investing, we think of property, shares and managed funds, but there is a whole range of alternative options out there.
One of the benefits of investing in alternative assets is the potential for improved returns. When looking at shares or managed funds it is very difficult to beat the market, and property is a fairly similar story for the average Aussie.
But with alternative assets there is a real opportunity to improve investment performance through knowledge. If you have a particular interest or experience with a certain type of asset, you can use that to your advantage.
The art world can be a very fickle one, but there are fantastic rewards to be had if you can buy and sell artwork at the right time and for the right price.
One of the benefits of investing in artwork is that you can enjoy it in your own home or office, or you can rent it to a gallery to achieve a return whilst holding the piece.
Antiques & Collectibles
As with artwork, investing in antiques and collectibles requires a high level of knowledge on the items you are investing in.
Heritage number plates have proven to be a strong investment over many years. Heritage plates are those which were issued around Australia in the early 1900s and contained numbers only.
Heritage plates were issued in most states starting with the number 1 and continuing into the hundreds or thousands. In terms of value, the lower the number, the more valuable the plate will generally be.
Single digit number plates are worth six figures in most Australian states, and the number 1 plate in each state is said to be worth anywhere between one and two million dollars.
Higher numbers, particularly those containing three digits or more can be obtained for much more reasonable prices. Many experts believe that plates in this range offer the best investment opportunities.
Investing in wine is another area where those with a strong interest and good knowledge can benefit.
One of the most well known wines to collectors and investors is the Penfolds Grange, however there are many other wines out there which are considered to be investment grade.
Motor vehicles, and in particular Australian muscle cars from the 1970s, have proven to be a fantastic investment for many owners.
Various GT Falcons and GTS Monaros have achieved astonishing prices at auctions during the last decade, however they have weakened since the onset of the global financial crisis (GFC).
When investing in cars it is vital to know what you’re doing, as the difference between two seemingly similar models from different years can be tens of thousands of dollars in value.
The Need for Caution
Investing in alternative assets is definitely not for the inexperienced or faint of heart.
Assets such as these are generally seen as luxuries, and whilst they can seriously outperform property and shares during the good times, they can also fall much harder during the bad times.
It is also important to seek professional taxation advice when investing in alternative assets. Just because you class you artwork or collectible car as an investment doesn’t necessarily mean that the Australian Tax Office will agree with you.