Article by Mike Hall

Alternative Investments

The volatility of traditional investment classes at the same time as low interest rates is encouraging a rising number of investors to look at the collectibles market to secure and grow their wealth for the difficult years ahead. Rather than telling you why I think collectibles are a shrewd investment at this time, I think it is easier to simply repeat what clients tell us. after all, I am biased as a major investor in the market through both my investment In Stanley Gibbons and my growing collection that I have been building over the past seven years.

Top 10 reasons clients give for investing in collectibles

  1. To diversify investments, thus reducing exposure to volatile asset classes
  2. To hedge against risk of high inflation (historically, collectibles have performed best in times of high inflation)
  3. To get a better return on savings (low returns on bank deposits and bonds mean investors must seek other stable and secure investments offering better annual returns to beat inflation)
  4. The historic returns, exceeding 10% per annum on a compound basis over the past 50 years, are very attractive
  5. The pleasure and enjoyment from owning historical items at the same time as watching a collection grow in value
  6. The specific desire to own tangible assets at this time; collectibles offer an alternative to precious metals, which have enjoyed a long bull run
  7. The attraction of the supply/demand dynamics in the collectibles market, with a reducing supply of an already scarce asset at the same time as rising demand
  8. Growing wealth in the Far East and interest in collectibles bodes well for rising demand and price appreciation in the future
  9. The attraction of looking for a non-correlating asset to achieve 'true diversification'
  10. The fact that collectibles are portable yet internationally traded commodities and thus protect against exchange rate risks and reduce dependence on any one geographical market

The attraction of Jersey

Since opening our offices in Jersey last year, the number of clients we have attracted has greatly surpassed our initial expectations.

This can be attributed to a number of factors including:

  • The tax advantages from investing in collectibles insofar that returns from the buying and selling of these tangible assets represents a capital gain and therefore exempt from tax
  • Access to high quality staff and service providers
  • Appropriate premises including secure storage facilities, which, when combined with third party insurance for the underlying assets, provide peace of mind to the astute investor
  • A supportive business environment, which has welcomed a brand with a 155 year trading history

Stamps, historical documents, rare signatures and other collectibles are becoming an increasingly popular means of diversifying, protecting and growing wealth. With current economic instability, together with inflationary concerns and low interest rates globally, this demand is expected to continue. On a personal note, the reasons why I continue to build my own investment in collectibles are that I am fascinated by history, I love holding rare and interesting things and my collection is my best performing asset over the past three years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.