Sick of the stock market? How about classic cars or coins?
The rollercoaster ride of the stock market in recent days has left some people feeling decidedly disenchanted with shares. Many of them would far rather have their money in classic cars, coins or art, but have opted for investing in shares as a more sensible option. Now the 'sensible' option is proving such hard work, should they turn their attention to investing in their passions?
A new study from Coutts has revealed that some alternative investments have performed impressively. During 2014, it found that the best alternative investment would have been a classic car - as this particular asset class soared an incredible 40% between 2013 and 2014.
The rest of the top five best performers were Old Masters and 19th Century artworks (which have increased by 10.7%); coins (up 8.5%); rare musical instruments (which have risen 5.5%) and post-war and contemporary art (up 3.4%).
Coutts also looked at gains in the nine years from 2005 to 2014. The top five over this period again included classic cars - which put in an astonishing 399% rise. This was followed by coins at 176%, jewellery at 150%, fine wine at 134% and traditional Chinese works at 108%.
All of them performed better than billionaire trophy properties - which have put in a 97% rise over the period - although they were down 2.2% last year.
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Buyer beware
These investments sound much more fun than a balanced portfolio of shares and other financial assets, and in some cases they have been more rewarding. However, it's worth highlighting that overall passion investments increased by just 0.8% in 2014.
Within the figures were some truly dismal performances - including watches (which lost 17.6%), Traditional Chinese works (down 13.3%), and fine wine (down 9.4%). They demonstrate that in some years there are substantial losses to be made in this sphere.
Even where an asset has had a good few years, there's absolutely no guarantee the good run will continue. Take traditional Chinese works, for example, in 2012-2013 they gained 15.2%, then in the following year they lost 13.3%.
These figures also factor in enormous variations. Just because modern art managed to gain 1% last year, for example, there's no guarantee that the piece of modern art you buy will do the same. And given the high prices of these things, there's very little opportunity to diversify and spread your risk.
Despite all the unsettling news from the stock markets, therefore, for most people, shares do provide a more reliable long-term investment. However, as Mohammad Kamal Syed, Head of Financial Advice and Investment Solutions at Coutts, said: "A sense of excitement and the thrill of acquisition is a clear motivation for lots of collectors."
But what do you think? Does this sort of investment appeal, or does it seem like an excellent way to turn £2 million into £1 million? Let us know in the comments.
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