What is the most lucrative alternative investment
Alternative investments: Generate high returns with Lego, whiskey and comics
What are alternative investments?
There is no set definition for the term alternative investments. It usually involves the purchase of tangible assets that are later sold at a profit. These can be objects such as valuable musical instruments or living beings such as Japanese Koi carp. The principle is simple: you buy as cheaply as possible, keep the property and sell it at a higher price. This works particularly well with things that are valuable, beautiful and rare. Thanks to the global network of collectors and dealers, unusual and exotic ideas can also bring a profit.
Alternative financial investments are forms of investment that go beyond the usual routes, such as securities or a fixed-term deposit account, in which money is parked in a securities account or in an account. You are independent of fluctuations in the stock market.
Good to know! Sustainable investments are something different from alternative investments. This means investments that are based on ethical values or ecological goals and thus have a sustainable and environmentally friendly effect. These are, for example, investments in companies that do without child labor, have no connection to the armaments industry or meet ecological standards.
What alternative investments are there?
Works of art, clocks, musical instruments and postage stamps have long been considered popular collector's items and thus as investments. In addition, there are many other options for alternative forms of investment. We introduce you to particularly profitable and widespread.
Exclusive cars as an investment
Rare classic cars or limited special models from brands such as Porsche, Ferrari and Mercedes have been increasing in value for years. In the last 20 years they have even outpaced stocks, real estate or German government bonds. Because the initial investment is very high - after all, such cars cost sums in the six- to seven-digit range - collecting luxury cars has so far been something for wealthy investors.
But there is also the possibility to invest proportionally in these collector's items. The Hamburg company Momentum automotive *, for example, pursues the approach of "democratizing" car collecting. Momentum starts projects such as the purchase of a Ferrari Monza SP1 or an Aston Martin Valkyrie, which comes about when the necessary funding is reached. You can get into this special form of equity crowdfunding for as little as € 100. If the vehicle is sold after a predetermined period of time, you will receive back the capital invested plus the return.
Sneaker as an investment
Sneakers, also known as sneakers, have long ceased to be used exclusively for gymnastics or sports. They have long been part of the everyday street scene. Some copies are even suitable as a financial investment, with which, in the best case, several hundred thousand euros can be earned. There are two different reasons for an increase in value.
- On the one hand, the major sporting goods manufacturers produce special models in limited editions, often in collaboration with well-known artists or athletes. These models are sought after by collectors. If you don't get one at the start of sales, you are often willing to pay high sums for it. With a purchase price of € 200 or € 300 you can quickly make a few thousand euros in profit. These models are most valuable in their original packaging and have never been worn.
- On the other hand, used sneakers can also become valuable. For example when famous athletes have worn the shoes. The shoes of basketball legend Michael Jordan were auctioned for a six-figure amount. The most expensive pair of sneakers ever auctioned at Sotheby's went to a collector for just over € 400,000.
There are now online exchanges for the uncomplicated purchase and sale of sneakers. One of the largest and most famous platforms is StockX, where you can trade in collectibles. What sounds tempting also has a catch. Only with expertise and luck can you predict which sneakers will increase in value. The risk of a bad investment is very high.
Wines and whiskey as investments
Whiskey (in the Scottish spelling whiskey) is considered liquid gold by collectors. Certain varieties experience fantastic increases in value in the four-digit range. Experienced collectors invest primarily in Scottish single malt whiskey. The most expensive bottle to date, a “Macallan M”, was auctioned in 2014 for $ 628,205.
Some experts believe that the limited inventory of older, rare whiskeys means that the market continues to see steep growth ahead. Investors don't necessarily have to buy their own bottle to benefit, they can also buy into a whiskey mutual fund. It was launched in 2014 and is administered from Hong Kong. The fund's portfolio includes around 3,000 bottles, mostly from Scotland and Japan.
The price development of whiskey is shown, for example, by the RW (Rare Whiskey) Apex 1000, which contains the 1,000 most popular bottles of single malt scotch. There is also the RW Apex 250 and 100. A look at the development of the index values makes it clear: Within the last 18 years, the indexed whiskeys have increased in value by more than 500%.
Good profits are also possible if you choose to invest in wines. For the Premier Cru from Bordeaux, the estimated value development is 6 to 7% per year. With decades of storage, there is a considerable return.
However, speculation on profits from wine is only promising for proven connoisseurs. Not only the origin of the wine plays a role, but also the storage, whereby it depends on a very special microclimate in the vicinity of the barrels and bottles. In addition, only a few varieties and growing areas are suitable for the very complicated market. Without in-depth specialist knowledge, there is little chance of success.
Good to know: Those who shy away from the expense of storing their own wine can also participate in wine funds. These equity funds are created by portfolio managers and invest in wines that are expected to increase in value.
Cryptocurrencies as an investment
The idea of crypto currencies as a virtual and digital means of payment only existed since 2008. They are created and managed in a decentralized network, entirely without institutions such as banks. There are now almost 3,000 different ones. The best known are Bitcoin, Ethereum, Bitcoin Cash, Litecoin and Ripple. These five together make up 80% of the market capitalization of all cryptocurrencies.
With cryptocurrencies, gains of many hundred percent have been achieved in the past 10 years, but huge losses have also been made. But how can money be invested with cryptocurrencies? There are five ways to do this:
- Cryptomining: As a participant in the decentralized global crypto network, you generate new units of a currency and can sell them at a profit.
- Exchange: You can bet on certain fluctuations in a cryptocurrency on the exchange.
- Shares: You can purchase shares in companies that are active in this field.
- Currency trading: You can take advantage of fluctuations in the exchange rate and sell your investments if the exchange rate gains.
- Initial Coin Offerings (ICO): Crowdfunding is used to collect capital for a new cryptocurrency. You can participate and get your capital back at a profit when the new currency hits the market.
However, investing your money in cryptocurrencies is risky. Large fluctuations occur in a still very young market that is not regulated and has no investor protection. Smaller or unknown cryptocurrencies can even disappear from the market entirely.
Lego as an investment
Lego bricks are not only popular toys, they are also an interesting alternative investment. If you have the right sets, you can make several hundred euros and in exceptional cases even more profit. For example, the Star Wars Millennium Falcon from the Ultimate Collector's Edition, which was launched in 2009 for around € 400, experienced an increase in value of over 1,000%. Lovers will pay you up to € 5,000 for it.
It is up to the manufacturer Lego itself that certain models become more expensive over the years. Limited sets and short sales cycles make the goods scarce and therefore particularly interesting for collectors. It is important for an increase in value that the objects are in their original packaging and have not been used. Even the condition of the packaging has an impact on the value of the object. You therefore need a lot of space to store the individual packaging in a dry and cool place. The Brickpicker.com website offers good information on current prices.
However, not every limited set increases in value. In some cases, Lego is offering cheap new editions of old models, which of course makes the value plummet. In addition, a large number of new publications come onto the market every year. It is a gamble to bet on the right Lego bricks.
Bonsai trees as an investment
The art of growing and caring for a bonsai tree originated in China and is over 2,000 years old. Nowadays you can also use bonsai trees as an investment. After all, the most expensive bonsai of all time was sold in Japan at around € 2 million. That was over 30 years ago, but bonsais are still very valuable. In Germany, the prices for particularly expensive copies are between € 20,000 and € 40,000.
You have to reckon with several thousand euros for the purchase of a young bonsai tree of outstanding quality. There are also special tools for caring for and pruning the plant. And you have to be patient. Only with special knowledge can a valuable tree be grown over many years, which can be sold at high prices to enthusiasts.
How high the profit will be and whether you will find a buyer at all is uncertain. That is why investing in bonsai trees as an investment is very risky.
Forest as an investment
Getting a return on trees. Many investors came up with this idea in the past few years of interest rate developments with very low interest rates. This is also possible in principle, but very difficult to implement. Anyone who wants to purchase land with trees in Germany has to dig deep into their pockets. Only very few spaces are on offer and there are high ancillary purchase costs. Management is time-consuming and only brings a profit after 20 years or more.
The alternative to buying directly is investing in wood stock companies from North America and Scandinavia or participating in closed forest funds. Regardless of the form, investing in forests is risky. Natural disasters such as forest fires or droughts can lead to losses. To this end, Stiftung Warentest took a close look at the seven forest investments approved in Germany in 2018: All of them failed. The providers provide poor information and the risks are significantly higher than the opportunities for returns.
Tip: You can invest in real estate as a capital investment without having to purchase your own property. With crowdinvesting in real estate, you have the opportunity to participate in large projects with small amounts. You invest your capital via platforms such as Bergfürst or Exporo and you will receive your money plus interest back after a set period of time. In this way, you can also invest in startups and renewable energies. However, this is associated with a risk, as there is no state depositor protection for this area.
Handbags as an investment
Handbags are not only practical companions for on the go, but also fashionable accessories that can even become cult items. Certain luxury models therefore reach prices of several hundred thousand euros. In 2016, a copy was auctioned for around € 280,000 at Christie's in Hong Kong. This record amount was achieved by the Birkin Bag Himalaya in matt white crocodile skin from Hermès. Bags from Hermès in particular generate high sales revenues. In addition to the valuable material and the elaborate handwork, an artificially limited supply also plays a role. Only a few copies of a model are brought onto the market at a time, resulting in waiting times of several years for those interested in buying.
If you don't want to wait that long, you can often try your luck on special auction sites on the Internet. Older models are also sold here for a few thousand euros. So there are good chances of making money with handbags.
But be careful: As with many other collector's items and collector's items, the condition of the handbag plays an important role. If you want to use bags as an investment, you need protective covers for your investment objects and, ideally, cool and air-conditioned rooms for storage.
Records as an investment
Records are sometimes referred to as "black gold". This is because many copies increase in value. This works best with limited editions, special editions, misprints or copies signed by artists. The most expensive record is the Beatles' White Album; a collector paid over € 700,000 for the copy with the serial number 0000001.
By the way, records from the 90s are particularly popular. At that time, CDs came on the market and seemed to replace vinyl records. Therefore, editions with a small number of copies were published. That makes them valuable today, prices of a few thousand euros are achieved in this segment.
However, the market for records is very confusing and many specialists cavort there. Information is available at the Mega Record & CD Fair, the world's largest fair for sound carriers in Utrecht. You can find a good overview of current prices on the popsike.com website.
In the past few years, collectors have observed a drop in the price of porcelain. The cause: There is a large supply with falling demand. The traditional brand Meissner Porzellan is also affected. Only very unusual old objects with a special appearance and in excellent condition are worth investing in. The highest prices are achieved by individual pieces. Porcelain is therefore only worthwhile as an investment in the rarest of cases.
Comics as an investment
Even cheap comic books can get expensive over the years. The first edition of the Superman comic from 1938 went to a collector as an investment for around € 2.4 million in 2014. A look at the auction page dersammler.eu shows the currently most expensive comics on the European market. A first edition of the mosaic comic from 1955 is offered there for over € 15,000 and an original Tintin drawing from 1938 for € 8,000.
The examples show two aspects if you want to use comics as an investment. For one thing, it should be a popular cult series, and for another, you need patience. Something else is important: the better the condition of the booklet, the more expensive it will be. Even minor signs of use can make comics uninteresting for collectors.
The same applies as with most other tangible assets as an investment: you have to be familiar with the subject matter and know which books will find your fans. You also need a bit of luck so that you can offer the right comic at the right time.
Koi carp as an investment
Koi carp are fish from a special region in Japan that have only been known outside of Japan for about 60 years. Because of the special coloring and the mythological strength that they embody, they are coveted collector's items worldwide. The color, shape and skin quality of the animal are decisive for the value. A young animal for a few hundred euros can become a koi that is worth tens of thousands of euros. The prices for particularly beautiful specimens are € 100,000 and higher. The previous maximum price for a Koi is € 1.5 million.
However, koi are very sensitive animals that require special housing, which means a lot of effort and investment over many years. And keeping koi as an investment is risky. It is difficult to recognize early what value an adult carp will have and a dead animal means a total loss.
What do I have to consider with alternative forms of investment?
Alternative investments should only make up a small proportion of your total investment. Do not bet everything on this one card, but spread your investments. Bear in mind that profits from alternative investments are difficult to calculate and even a total loss is possible.
In addition, as with any form of investment, there are also advantages and disadvantages with alternative investments.
- very high profits are possible
- independent of stock exchange prices and interest rate developments
- Occupation with interesting topics
- it may be possible to combine hobbies with making money
- Expertise and good market knowledge are important
- high expenditure for the storage of the objects
- usually only very long-term increase in value possible
- no investor protection, therefore high risk of bad investments
Who are alternative investment options suitable for?
Do you want to invest part of your money in alternative investments? Then it is an advantage if you are not shy about taking risks. You should also have patience, are very knowledgeable about the topic in question, and want to take the trouble to keep an eye on the market. Because this is the only way to recognize the right time to sell an object.
Anything that is rare, old or popular is an alternative investment - regardless of whether it is Lego bricks or sneakers. In any case, it is important that you have specialist knowledge. But don't just invest in properties that promise the highest return. Instead, find an area that you are familiar with. So you already have an overview of supply and demand.
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