Alternative Investments – Options For Collectors

Low interest rates and poor returns on traditional investments are spurring some investors with a taste for risk to put their cash into alternative investments.

Alternative investments is a term covering a multitude of assets – but the most popular are classic cars, stamps, wine and coins.

However, alternative investments come with risk because they are easily moveable and many investors shun them because they are not allowed as pension investments.

Popular alternative investments

Here’s some information about the most popular alternative investments:

  • Classic cars – Some models fetch millions of pounds at auction and not all are those most people would expect to draw big bucks. The Historic Automobile Group, which monitors classic car prices, tags the first Japanese supercar, the 1960s Toyota 2000 GT as a vehicle attracting a lot of attention in the market.

Investors do not have to buy a car – some investment houses offer funds specialising in classic cars that spreads the risk across a stable of models. Some funds offer driving privileges for minimum investments of £200,000.

  • Coins – Experts Knight Frank explain coins are popular but one of the least collected alternative investments. However, as wealthy collectors push prices up in other sectors, prices are beginning to rise for collectible coins – and more people are chasing the best specimens
  • Stamps – Leading experts Stanley Gibbons say stamp prices have risen by 10% compounded every year for the past decade – effectively doubling the prices of sought-after items. 

Besides selling direst to collectors, Stanley Gibbons also offers collectors the chance to buy in to a managed portfolio, starting with a £1,000 investment and then a payment of at least £300 at three monthly intervals.

  • Fine wines – Wealthy investors can buy rare labels for their own cellars, but those with slightly less funds to spare can still wet their whistle by putting money into a managed wine fund.

One fund, the Wine Investment Fund, has seen net asset values rise 117% since 2003, even though prices have tended to drop rather than rise over the past three years or so.

Tax breaks for cars and wines

For British investors classic cars and coins are big draws because collecting does not attract capital gains tax.

HM Revenue & Customs (HMRC) defines a classic car as at least15 years old and valued at more than £15,000.

Fines wines are more difficult to classify – HMRC argues that a wasting asset has a life of less than 50 years and that to qualify for the capital gains tax exemption, wines must still be drinkable within this timeframe.

Wines that last longer than 50 years may lose their tax exemption on the grounds HMRC may argue they are not wasting assets.

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