Investing in Classic Cars

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For many of my clients, owning an automobile is a necessity in this part of the world but depreciation and other rising costs almost ensure that it is also a poor investment. That is not always the case for wealthy individuals who have been jumping on the classic-car bandwagon, buying antiques and otherwise prized automobiles as an alternative to traditional investing over the years.

Wow! Sleek fender lines, chrome grills, plush vintage interiors... Classic cars are items that inspire the imagination like nothing else. The ultimate symbol of luxury, they continue to fascinate collectors with their aesthetic beauty, engineering brilliance and historic importance.

In our world powered by technology, the Internet has opened up the auction process, enabling collectors more easily to bid for and acquire objects anywhere in the world. In recent years, the global financial crisis and on-going stock market volatility has encouraged an increasing number of investors to place their money with classic cars, which in turn has caused values to rocket.

“You cannot be a hero all the time”. According to the UK’s Telegraph newspaper, failing to invest in the classic car market is one of super-investor Warren Buffett’s biggest regret. In 1980, the world’s third richest man was offered the entire Harrah Collection of over 1,400 classic cars for less than $1M. In 1984, the collection sold for over $69M, with Buffett left feeling a sharp pang over the rare missed opportunity.

Stocks? Bonds? Commodities? The possibility that art, wine, antiques and other collectibles could earn a healthy return that is uncorrelated with broader financial markets is certainly appealing.

Collectibles now increasingly share the characteristics of broader financial markets. There are market indices and specialist funds, which enable individuals to invest in any types of assets indirectly. There are even asset-backed financing products that enable collectors to borrow against this type of asset. Amazing.

Classic cars can be a source of great enjoyment and pleasure, as well as a dominant expression of an individual’s status and values. Glad you asked. It is not as easy as you think. When buying then for purely financial reasons, wealthy individuals must be aware of the shortcomings and practical challenges. Yes, investing directly provides a lot more control.

Choosing the right individuals or company to provide the necessary independent expertise will be critical to success. Remember that classic cars require careful maintenance, specialized storage, as well as insurance. However, for most people, the principal role for items in any collection will be the enjoyment that it brings and its ability to enrich life.  

The 10 collector cars the experts say you should watch in 2018 and here is the ARTICLE.

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