Alternative investments. Vintage wines, stamps and classic cars. Maybe even a few raw materials – gold, oil and the odd tree. It all sounds a bit different from the usual drab way of making money but – let’s face it – also a bit of a hassle. So why bother?
One of the first things that might put you off is that oak-panelled study. You know the one. A dusty old den where collectors leer through a magnifying glass to study unperforated Penny Blacks, extinct dead beetles and sepia-coloured Victorian erotica.
But the truth is that the panelling was stripped out sometime last century. And as well sitting around his Ikea beech veneer, the old fashioned collector has been given a modern makeover too – he is now a forward thinking alternative investor.
The ones still stuck in the past are those clinging to the old ways of making money. Trusting those pinstriped ninnies in the City who have proved over the past few years their most impressive attribute is they cannot be trusted at all.
Although no one remains fooled by that smokes-and-mirrors nonsense it still doesn’t stop us acting stupid with our cash. Paying their wine bills so they can slap our chips down on the stock market casino – often losing or just breaking even.
These days the world of alternative investments is far more alternative than you might think – only limited by the scope of your imagination.
Some of the top returns in recent years – easily outstripping stock market performance – have been from the most unexpected of ideas. Shrunken heads, dinosaur bones, celebrity wigs and punk rock T-shirts. They have all been beating shares.
And unlike a highly geared econometric modelled derivative hedge instrument an alternative investment is something you can actually see, touch and maybe even understand.
On top of all that you might have fun with it in the comfort of your own home – especially if you hang it on the wall. Yes. The dirty word of pleasure is a key appeal. With a genuine interest it is far easier to do the homework.
How does it all work? By that most basic lesson of economics – that demand outstrips supply. Nostalgia is a key driving force behind this desire. It helps explain why classic car, old toys and other vintage items can be popular among investors who hark back to good old days that never were.
Many childhood favourites were thrown out by mum to ensure supplies are scarce – thus enabling the alternative investment market to flourish. As long as they keep timeless appeal and are in good nick you should be quids in after a few years.
Don’t believe me? Nor did the parents of those schoolchildren who read the first comic-strip adventures of Superman way back in 1938. The adults then threw the cartoon capers out as rubbish.
One lucky survivor was picked up by the actor Nicolas Cage in 1997 for £100,000. Most people thought he was a fool for burning cash on a 50 cent (30p) comic that sold for a record-breaking £60,000 five years earlier – especially when it then got stolen.
A couple of years ago it sold for £1.4 million.
Toby Walne is author of 101 Extraordinary Investments: Curious, Unusual & Bizarre Ways to Make Money. His website is at www.tobywalne.co.uk.