How to Invest in Classic Cars
The investment thesis behind classic cars is strikingly similar to collectible guns; both are luxury goods which can also be used for personal enjoyment. Classic cars are a viable alternative investment for one simple reason; these hard assets can preserve your capital since they posses intrinsic value given their limited supply. Finding a good deal on a 1966 Shelby Cobra compares to mining for gold in a sense, because at the end of the day you are ultimately looking for something that is scarce in supply.
Like many other hard assets, classic cars have the potential to generate impressive, uncorrelated returns, especially when stock markets turn sour. In fact, the HAGI Top Index, which measures the performance of 50 key collective classic cars, has increased 30 times in the past 30 years. This sort of appreciation translates into an annual growth rate of more than 12%, making classic cars a worthy adversary to even the most stable stocks. In 2011 alone, certain segments of the classic car market saw prices surge upwards of 20%, blowing past gold’s 10% gain on the year. Investors should however consider a number of other factors before dipping into their life savings and heading to the nearest auction. Experts emphasize the importance of accounting for restoration costs and general maintenance expenses, as well as having a keen eye for which models are consistently popular among collectors.