7 Unique Investment Assets to Beat Inflation: what are they?

What’s on this page:

1. What is passion investing?
2. Investment-grade collectibles: what are they and are they worth investing in?
3. Alternative investment assets: 7 collectibles with high returns

What is passion investing?

We’ve heard of so many investment approaches, but what about investing according to passion?

Passion investing typically involves individuals purchasing and owning objects of desire without the intention of only making profits. While traditional investment strategies involve making decisions based purely on financial considerations, passion investing also factors in passions and interests.

In fact, did you know that the word ‘invest’ was derived from the Latin verb investire, which means ‘to clothe’? It perhaps comes as no coincidence then that so many of the world’s most valuable non-traditional investment assets (which we will talk more about below) are fashion-related.

Investment-grade collectibles: what are they and are they worth investing in?

Sneakers, luxury bags, and high-end watches are among some of the most popular investor collectibles that have generated significant financial returns since individuals began to collect them.

Some of these non-traditional (or alternative) assets have outperformed even the traditional stock market in the last ten years. The Knight Frank Luxury Investment Index (KFLI), which tracks prices of the top ten luxury collectibles), grew 137% between 2013 and 2022, versus the S&P 500 index’s 11.6% growth during the same period¹.

In 2022, the KFLI rose a further 16%², beating not only inflation but also the performance of equities and even safe-haven assets like gold.

By 2025, total alternative assets under management are expected to increase another 21% to reach US$17.2 trillion³, which means unique investments will only become more valuable as time goes by.

Alternative investment assets: 7 collectibles with high returns

The continuously unpredictable nature of financial markets has opened the doors wider for investors to explore non-traditional asset classes as viable alternative investment and inflation-hedging vehicles in 2023.

In general, there are 7 categories of non-traditional investment assets. They include private equity, private debt, hedge funds, real estate, commodities, collectibles, and structured products.

But forget flipping properties, purchasing private equity stakes, and trading structured forex products, there is a whole other world of investment assets out there that not only let you enjoy your passions, but have also proven to be relentlessly lucrative over time.

A September 2022 survey from Social Standards and Boston Consulting Group (BCG) found that jewellery, watches, sneakers, nonfungible tokens (NFTs), furniture, and handbags were among the most mentioned assets on Instagram and TikTok for alternative investments.

From fine wine to vintage cars, we look at six unique collectibles that investors have long loved collecting in this article, for both their high returns on investment and ‘collectability’. If you have a penchant for the finer things in life, hope to make some potential gains along the way, and have extra disposable income to spare, you could consider diversifying your investment portfolio with these products.

Bags

Consumers have been buying and selling luxury handbags for some time now, thanks to their status as fashion staples, as well as relatively affordable entry points and high resale margins among luxury products.

Classic brands and styles, such as the Louis Vuitton (LV) Speedy, Hermes Kelly and Birkin, as well as Chanel Classic Mini Flap, frequently resale at much higher prices, due to their everlasting appeal.

One of the most valuable handbags of all time is the Hermes Birkin 25, which retails around US$10,000, and can be resold for more than twice its value almost immediately.

While prices of most traditional assets have fallen drastically in the last two years, these classic leather pochettes, clutch bags, and holdalls have managed to stave off more of the downtrend.

Now there’s a new wave of investment-grade bags on the rise, and surprise, they only cost $200 on average for one. Telfar shopping bags, popularly known as the ‘Bushwick Birkin’⁴, have a resale turnover of at least 200%⁵, outpacing even some Hermes and LV models.

Fine wine

There is no official definition of what fine wines are, but these high-end libations are generally associated with superior and quality winemaking and growing processes.

The London International Vintners Exchange (also known as the Liv-ex benchmark), frequently cited for the performance of the broader fine wine market, outperformed the S&P 500 index by 8 percentage points on a nominal basis between July 2001 and July 2021⁶.

According to fine wine investment company Cult Wines Singapore’s investment calculator⁷, if you invested S$100,000 a year ago, your wine portfolio would be worth S$112,030 today. This equates to a 12.1% profit in just a year!

When investing in wines, investors should pay special attention to vintage wines, their aging potential, the region where they were grown and produced, their scarcity, as well as price history, according to experts.

‘For wines limited in supply by the size of the vineyards and appellations, such as the great wines of Burgundy or Bordeaux, it’s logical that the price will continue to increase over time,’ said Jamie Ritchie, Global Head of Wine at Sotheby’s.

Sneakers

In 2021, auction house Sotheby sold a pair of Nike Air Yeezy 1 Prototypes worn by Kanye West at the 2008 Grammys for US$1.8 million⁸, setting a new world record sale price for a pair of trainers.

Compared to other assets on this list, sneakers are relatively newer when it comes to its status as a profit-making investment asset.

But the dawn of Hypebeast and similar street fashion-culture orders have created whole communities of liquidity-rich sneakerheads with a major passion for collecting Nike Jordans and Adidas Yeezys.

The Air Yeezy 2 Red October sneakers originally retailed for US$250 in 2014. In February 2021, this pair of trainers were valued at US$5,655, a 2162% ROI. The Jordan 5 Retro Tokyo T23 initially retailed at US$206 in 2011, but fetched US$3,715 ten years later, a whopping 1703% increase!

Some factors that could affect a sneaker’s resale value include a model’s long-term popularity, limited edition releases, and of course, the condition of the shoes⁹.

Classic cars

If you are an automobile fan, classic cars should be right up your alley as an investible.

Classic cars can be categorised into the following:

• Vintage – cars manufactured between 1919 and 1930
• Antique – cars manufactured before 1975
• Classic – cars manufactured before 1990

Classic muscle cars (think GTOs) and roadsters from Mercedes-Benz, Porsche, Ferrari, Bugatti, and Alfa Romeo are known to fetch seven figures on the retro car market.

The most expensive car ever sold was the 1955 Mercedes-Benz 300 SLR Uhlenhaut Coupe. The antique was auctioned off for an extraordinary US$142 million in May 2022. A 1962 Ferrari 250 GTO follows at a distant second place, when it fetched US$48.4 million in an August 2018 auction¹⁰.

While these convertibles might be easy on the eyes and beneficial to your investment portfolio, upkeeping them is a major point for investors to consider. Between import and annual taxes, regular maintenance fees, garage charges, petrol consumption, and other miscellaneous fees, the cost of maintaining and owning historic vehicles add up very quickly.

In Singapore, a Mercedes-Benz 230SL Pagoda registered in 1965 with an original price tag of US$3,400 (S$4,610) was recently listed for S$300,000 on SGCarMart¹¹.

Watches

Like bags, investible watches range widely in entry prices.

At the high end of the resale timepiece market are those from Audemars Piguet, Jaeger-LeCoultre, Patek Philippe, and Rolex, with prices starting from at least US$16,000. While these brands have watches with less hefty price tags, those models generally do not command as big of a resale demand.

On the lower end are brands like Omega, where prices for new investment-grade pieces start from US$5,000.

While the higher entry points (compared to bags, for example) might seem like a lot, watches have the highest ROI of the collectibles mentioned in this list, based on data from various market researchers.

Consider this: Rolex Daytona steel watches retail for roughly US$16,000, with second hand prices having the potential to rise above US$35,000¹².

According to Boston Consulting Group, Luxury watch collectors can generally be segmented into four categories:

• Classic timeless (low purchase frequency, purchases luxury watches across different price ranges)
• Fashionable professional (moderate purchase frequency, purchases entry-level luxury watches)
• Luxury watch hobbyist (moderate purchase frequency, purchase super-luxury watches)
• Collector/investor (high purchase frequency, purchases ultra-luxury watches)

Toys

If you think toys are child’s play, think again. Adults love them too. For different reasons. Monetary mostly.

From Barbies to Pokémon cards, some of today’s most sought-after collector toys were yesterday’s biggest childhood icons.

Unlike the main character in the new Barbie movie who discovered that her true worth was beyond any price, an original ‘stereotypical’ Barbie doll released in 1959 still in its original box fetched US$27,450 at a 2006 auction¹³.

Long before Pokémon Go (like in 1996), there were Pokémon trading cards. These cards were first printed in 1998 and sold as the Pokémon Trading Card Game, and only 39 Japanese sets (and 13,589 English sets) were ever produced. They are as rare as the Armored Mewtwo and Clone Pokémons on Pokémon Go.

So, what is the most expensive Pokemon trading card (or any trading card for the matter) of all time? That honour belongs to a Pikachu Illustrator CoroCoro Comics Promo card (of PSA Gem Mint 10 grade – the highest rating for game cards). It was sold for US$6 million to YouTuber Logan Paul in April 2022¹⁴.

Furniture

Purchasing a piece of furniture should not just be about its aesthetic and how budget-friendly it is, if secondary market prices are any indication. The world’s most expensive furniture – the Badminton Chest (which dates to 1726) – was sold at a hefty price tag of US$36.7 million at a 2004 Christie’s auction¹⁵.

Contemporary pieces by iconic furniture designers like Yves Klein and Herman Miller also command lofty prices on the resale market. One of Klein’s iconic cocktail tables, which retail for between US$20,000 and US$30,000 on average, fetched US$125,000 at a 2014 auction¹⁶.

When considering which household pieces to buy, one should also pay attention to how unique and rare they are, the materials used, the technology and methods used in the manufacturing process, who the designer-carpenters are, and the resale prices of past pieces from a particular designer or company.

That’s because the furniture resale market is experiencing a facelift. Today, buyers view furniture not only as everyday household products, but as rightful pieces of art (just like paintings and sculptures) worth collecting, maintaining, and passing down to future generations.

Having a good eye and feel of what furniture will work with subsequent generations could potentially yield great financial benefits for you in the long run. As Loïc Le Gaillard, co-founder of Carpenters Workshop Gallery, told Forbes: ‘Try not to be guided by fashions or fads; think about it as a future heirloom. How will the next generation feel about it? Will it look good in a future home?’¹⁷

Footnotes

¹ The Motley Fool, 2023
² Knight Frank, 2023
³ Pregin, 2020
⁴ The Cut, 2020
⁵ PurseBlog, 2021
⁶ Forbes, 2022
⁷ Cult Wine Investment
⁸ Chubb blog
⁹ Finance Buzz, 2023
¹⁰ BBC Top Gear
¹¹ SGCarMart
¹² Zealande
¹³ Invaluable, 2019
¹⁴ Dexerto, 2022
¹⁵ LuxHabitat
¹⁶ Architectural Digest
¹⁷ Forbes