Quite often, we are posed with the question; can an automobile be an investment? This simple yet complex question will set the stage for the primary topic of this “Alternative Investments” blog. What constitutes a car as an “investment?” What attributes does any given genre of cars have to qualify it as investment grade? Does […]
Quite often, we are posed with the question; can an automobile be an investment? This simple yet complex question will set the stage for the primary topic of this “Alternative Investments” blog. What constitutes a car as an “investment?” What attributes does any given genre of cars have to qualify it as investment grade? Does originality matter? Does quality of restoration matter? If U.S government officials were to put these questions to paper, this post would be 1000 pages long (and counting), have conflicting views about every “answer”, and they would extend the submission deadline to next year for fear that they would actually have to come up with a conclusion. Rather, I will try to explain this in a much more concise fashion because like the rest of us ordinary folk, we actually need to carry on with our lives.
In approximately the last 30 years, classic cars generally from the 20’s through the late 60’s have progressively increased in value enough that if one had the money to shell out for a Series I Jaguar XKE Roadster in the early 2000’s, they would be seeing a healthy return on original purchase price in today’s market. Increases and decreases usually follow the same curve as the stock market. The criterion for an auto investment is not set in stone but for a car to appreciate in value, it typically has the following traits:
-Low production numbers
-Pedigree of the specific marque or model of the car
-“Coolness factor” of when the specific model was originally produced and available to the public
-What the cars original intent was
-Overall appealing look/design in the public eye
-Positive mile stone model for a specific marque or the advancement of automobile history in general
Of course, others factors may be included. In order to make a sensible auto investment, one must be very knowledgeable of the specific car in question, vigilant of comparable cars available, and a little insightful (with a little luck involved) as to where the market may go. Condition, price, colors, and production number are all factors that must be considered in investing. Many experts say, “do not buy a car for investment purpose only” which is a bit contradictory because the Wall Street, car-ignorant business man buying a Mercedes 280SL solely as an investment is slim to none. There is always some element of driving enjoyment for the person investing that causes the purchase in the first place.
Like any other proper portfolio, diversification is always paramount in successful investing. Investing yourself only in gold or a single stock is never a safe way to go; classic cars are no different. It is only a way to diversify a portfolio with a tangible investment. Perhaps with a car that you had in the 60’s when you were carting around your high school sweetheart or drag racing your friends on a Friday night. It is the nostalgic factor mixed with the driving experience, and proud ownership of the car in your garage that are traits of any car investor. Obviously, it takes a certain kind of person for this type of investment.
This blog will be address to that type of person providing information on hot new trends in the market, tips on investing in classics, and auction analysis.
Stay tuned for all this and more to come!