When it comes to investing your capital, the first thing that probably comes to mind is bonds, stocks (like we wrote about last week) or real estate.
But did you know that there are many other asset classes you can invest your money in for returns?
And did you know that startups are making it easier than ever to discover these assets and invest in them to generate returns?
This week, I’ll walk through two of the biggest “alternative assets” and which startups are focused on making it easier for anyone to invest in them.
Investing in Collectibles
Baseball is the All-American sport… a popular national pastime for as long as I can remember.
As such, stories abound of limited-edition, mint condition baseball card selling for hundreds of thousands or even millions of dollars. It turns out that baseball cards are a lucrative asset class to invest in and are part of a wider emerging asset class commonly called “collectibles.”
There are all sorts of collectibles out there such as:
- Antique coins and stamps from ancient empires
- Sports cards
- Pokémon cards
- Limited edition books
Each of these collectibles is attached to a bigger area of cultural relevance like a sport, era of history or popular game or movie.
Hardcore fans of these cultural phenomena are passionate collectors of these limited-edition items and it turns out they’re willing to pay a fortune to satisfy their passion. For example, a limited edition Honus Wagner baseball card sold for an eye-popping $6.6 million last summer.
A bunch of startups have launched in the last few years trying to make it easier for investors to invest in collectibles and for collectors to more easily find and collect items they’re hunting for.
Probably the most famous company in this space so far is Rally.
On Rally you can invest in all sorts of collectibles from comics to sports gear used by famous athletes.
Outside of Rally even the traditional crowdfunding platforms like StartEngine are getting in on the action.
Investing in Luxury Products
While investing in collectibles is an exciting off Wall Street option for investors, the world of luxury products has long been an asset class that generates great returns. There’s only one problem… luxury products like art, wine, and classic cars cost a fortune. That’s why investing in these things has been reserved for the ultra-rich.
Now that’s changing quickly.
While baseball cards might sell for millions, rare pieces of art can sell for hundreds of millions. The most expensive painting ever sold is Salvator Mundi by Leonardo Da Vinci. It fetched $450 million in 2017.
When it comes to investing returns, there’s much disagreement on whether fine art is a good asset class to invest in. For example Citibank estimates that returns on art investing can be as high as 7.5% per year while others estimate returns over the last 300 years have been a measly 0.6% per year.
Either way, if you’re interested in investing in art, a number of startups have launched in the last few years that allow you to buy a fraction of a rare piece. There’s MasterWorks, Artopolie, ArtSquare, Maecenas and many more.
And just like with sports card, it looks like StartEngine is also starting to sell rare pieces of art such as this painting by famous artist Andy Warhol.
If fine art doesn’t float your boat, how about fine wine?
It’s a well-kept secret, but fine wine is one of the best performing asset classes over the last few decades. A recent article in Forbes mapped out the magic of investing in fine wine:
“If you had invested $100 in the fine wine market in 1952, your investment would now be worth $420,000. On the other hand, $100 invested in the stock market would now be worth a modest $100,000.”
These numbers are astonishing.
The problem is that bottles of fine wine can cost tens and hundreds of thousands of dollars. But just like with fine art, a range of startups are fractionalizing bottles of fine wine and making it easier for anyone to invest smaller amounts to buy stakes in bottles and thus benefit from the returns. Startups like Cult Wines, VinoVest, RareWineInvest and others are all opening the door to novice wine investors around the world.
If fine art and fine wine doesn’t do it for you, then the most fascinating fractionalized investing platform I’ve ever come across is MyRacehorse where – you guessed it – you can buy shares in the returns and profits of high-end racehorses.
Just like wine and art, racehorses can cost millions of dollars and are out of reach for small investors. However, MyRacehorse allows anyone to invest as little as $100 in a racehorse and participate in its potential returns.
As an investor it is important to diversify your investments across a range of different assets to ensure your portfolio is balanced and protected. Bonds, stocks, and real estate are all important. But so are alternative assets and collectibles. And now, thanks to innovative startups, even the most expensive of these are accessible to everyone.