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Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Antiques, art & sneakers: Investing in non-traditional assets
Karl
9th Jan 2024
Sneakers, antiques, artwork, wine & whiskey… there are a host of non-traditional assets that have the potential to rise in value over time. Given the high inflation we’ve seen over the past few years, now could be the time to consider alternative ways to store your wealth.
In this article we’re going to explain everything you need to know about investing in non-traditional assets, including the potential drawbacks you should be aware of.
Scroll down for all of the info, or click on the links to head straight to a section.
What is non-traditional investing?
If you buy stocks and shares, exchange-traded funds, or precious metals, you’re engaging in traditional investing.
It may therefore come as no surprise that non-traditional investing refers to buying assets that don’t sit nearly into the conventional investing category.
When it comes to non-traditional investing, the hope is that the items you purchase will increase in value over time, as supply dwindles and demand (hopefully) grows.
Non-traditional investing requires patience as it can take a long time for a particular item, or items, to rise in value. It’s also worth understanding there are no guarantees. Some items may fail to hold their value, even if they’re stored properly and kept in good condition. All in all, non-traditional investing requires a composed and hopeful mindset as opposed to an expectant one.
Examples of non-traditional assets
Non-traditional assets really can be anything outside of the usual ways of investing. In this article we’re going to focus on some of the more popular types of alternative assets, starting with arguably the most hyped about…. sneakers!
1. Sneakers
Releasing limited edition sports shoes is now a relatively common phenomenon for big-name sports manufacturers. The idea is that their exclusive, uniquely designed footwear is only available for a limited time until stocks sell out.
Examples of limited editions sneaker ranges include:
- Adidas originals
- Puma ‘Clyde X’
- Vans ‘Old Skool’
Arguably the most well-known limited edition sneaker is Nike’s ‘Jordan’ range of shoes. Named after basketball star Michael Jordan, these sneakers usually retail for extortionate amounts. For example on SVD – a website specialising in limited edition sneakers – there are various styles of Jordan sneakers retailing for well over £200.
Yet, if you’re able to put aside this lofty price tag, and think about buying sneakers for the sole purpose of reselling them, there’s a chance you could end up with a tidy profit.
Nick Hubble, a leading economist and friend of Money Magpie, explained how he recently purchased limited edition ‘Jordan 4′ Retro Golf shoes for a hefty £169.95. Writing in the Fortune & Freedom newsletter, Hubble explained the shoes might return a profit if he hangs on to them.
He explains: “In case you’re unaware of it, the market for sneakers is red hot. If you’ve got the right kind of sneaker in the right colour combination you can fetch thousands of pounds for the best of the best.”
Hubble goes on to explain how it’s possible for sought-after footwear to rise in value by thousands.
“If you’re a real sneaker-head and happen to have an original pair of Jordan 1 sneakers in the “Chicago” colour set from 1985, unworn and in original box, you can fetch as much as £27,000 (US$32,500) for them”
“For some perspective, in 1985 the shoes were $65. That’s a spectacular 49,900% return in 37 years.”
2. Sports jerseys
Sports jerseys, especially football shirts, are another type of asset that can rise in value as time passes. For example, ClassicFootballShirts.co.uk – a site that specialises in used football tops – lists hundreds of retro football jerseys.
As most are no longer being manufactured, many second-hand tops, especially those in ‘good’ or ‘excellent’ condition are listed for well above their initial sale price.
When we looked, we saw an original ‘Alan Shearer’ Blackburn top from the 1992-94 football season listed for a whopping £250. We also spotted an infamous Manchester United grey away shirt from the 1994-95 season on sale for a massive £500.
Both of these shirts would have been originally purchased for under £50. If they sell that’s a massive profit for the original buyer, even after taking into account inflation.
3. Artwork
The global fine art market was worth over £50 billion in 2021. As such, buying art and hoping its value rises isn’t exactly a unique way to invest. That said, it still qualifies as a non-traditional asset given that art investing is hugely different from buying stocks and shares.
While we might not be able to afford our own Picasso, art is the perfect example of the saying…. “it’s worth what someone will pay for it.” To put it another way, the value of individual artworks may rise or fall over time in line with changing demand.
If you’re interested in art investing, take a look at our comprehensive article that explains how to invest in art.
4. Antiques & watches
If you’ve ever watched BBC’s Antiques Roadshow on a Sunday evening you’ll appreciate that treasures from a bygone era can be worth tidy sum.
The same goes for watches made by premium brands, such as Breitling, Omega, and Rolex.
When it comes to watches or antiques, rarity is often the name of the game. Even if an item is old and in good condition, if it isn’t particularly rare then it’s unlikely to be worth a life-changing amount.
5. Wine & Whiskey
Investing in wine and whiskey is another non-traditional way to invest. Both wine and whiskey mature with age, and it’s believed the older the drink, the better the taste.
That said, if you manage to store wine or whiskey for years, or even decades, there are still no guarantees they’ll be worth more than you paid for them. If this turns out to be the case, you’ll at least be able to drown your sorrows!
Is cryptocurrency a non-traditional asset?
Because there’s no set definition as to what is classified as an alternative investment, cryptocurrency can be considered a form of non-traditional investing.
Yet, like all types of digital assets, buying cryptocurrency carries risk, and there’s a real chance anything you put in will become worthless. To fully appreciate the risks take a look at our beginners guide to investing in cryptocurrency.
What are the drawbacks?
While investing in non-traditional assets is very different from buying stocks, shares, ETFs and the like, the number one rule of investing rule still applies: The value of your investments can rise and fall.
So, if you decide to buy non-traditional assets, there’s a chance your investment will fall flat. Tastes change, and demand for specific assets can vary wildly from one decade to the next.
This is why it’s important to make a real effort to diversify your portfolio. That’s because if things don’t turn out as expected, the performance of your other investments might help to cushion the blow.
Aside from your investments under-performing, there are other risks to be aware of when it comes to investing in non-traditional assets. Let’s take a closer look at them:
1. The lack of dividends
Sneakers, artwork, antiques, watches – whatever non-traditional asset you go with – none of them pay dividends. This means that to earn a return on your investments you’re relying on capital gains.
Compare this to the stock market. Even if your investment doesn’t rise in value, you may still receive the odd dividend payment or two. However, it is worth remembering that not all stocks pay dividends.
2. The ‘faff factor’
Put simply, whether it’s buying bottles of wine, whiskey, or collecting shoe boxes of sneakers, it’s likely there’s a fair amount of ‘faff’ involved in finding the most suitable place to store your chosen asset.
Bear in mind that precious items should be kept somewhere safe, damp-free, and out of sight. If you can’t find somewhere that ticks these boxes, then it may cause a bit of headache.
Also, if you’re worried about theft or damage to your assets, then there’s insurance to consider too. All this equals hassle which doesn’t come with holding traditional stocks and shares.
3. The temptation to consume your assets
Even if you buy a pair of trendy sneakers solely for the purpose of keeping them safe in their original box, a time may come when you’re keen to try them on. Perhaps they fit nicely. Perhaps the vintage sneaker market has recently collapsed.
Under these conditions there’s every chance you’ll be tempted to wear your sneakers regularly, casting aside their investment potential.
The same goes for wine and whiskey. Say there’s no longer a high demand for vintage alcoholic beverages and the market collapses. You may be tempted to cut your losses and crack open a bottle, or two!
Of course the problem with consuming your items is that they become less valuable. In contrast, when it comes to traditional investing, it isn’t possible ‘try on’ or ‘taste’ stocks and shares!
It might seem obvious, but the risk of consuming your precious investments is a drawback that’s worth taking into account if you’re considering investing in real-world items.
Are you keen to learn more about investing? Why not sign up to our fortnightly MoneyMagpie Investing Newsletter? It’s free and you can unsubscribe at any time.
Disclaimer: MoneyMagpie is not a licensed financial advisor and therefore information found here including opinions, commentary, suggestions or strategies are for informational, entertainment or educational purposes only. This should not be considered as financial advice.
Cryptoassets are highly volatile and unregulated in the UK. No consumer protection. Tax on profits may apply.
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