Key Takeaways
- Collectibles are items valued at more than their original sale price due to rarity and popularity.
- Condition, scarcity, and demand heavily influence a collectible’s worth.
- Selling collectibles owned for over a year can incur a 28% long-term capital gains tax.
- Proper insurance can protect collectibles from accidents, theft, or damage.
- Collectibles can diversify investments but carry risks like high volatility and counterfeiting.
What Is a Collectible?
A collectible is an item sought by a collector due to its rarity, importance, and interest to the collector. Often, a collectible is worth more than it was originally sold for because of its scarcity and popularity, as well as its condition. Examples include fine art, antiques, toys, coins, comic books, and stamps
Sometimes, collectibles can be new, mass produced items whose value people believe will grow. For instance, products associated with movies with huge appeal to a broad part of the population, such as Star Wars, are collectibles.
Collectibles are not only a fun hobby with appreciation potential with some diversification benefits, but the items can be passed down to future generations. Investing in collectibles has risks, however, including highly volatile values and often a lack of liquidity.
The Intricacies of Collectible Investments
As mentioned above, collectibles are items that usually fetch more money than their original value. Many collectibles can go for a pretty penny, especially if they’re rare. The condition of a collectible also has a great deal to do with its price. Having a collectible in pristine condition means the price can go up. But if an item deteriorates over time, there’s probably a good chance it won’t be worth much—if anything at all.
Collectibles aren’t as common or as great an investment as marketers would have you believe. If the product is still in production, the company eventually sees the market signal and produces more to supply the market.
The store of value that makes a collectible usually doesn’t come into play for many years, and it never comes at all for the vast majority of items. As the number of a particular product dwindles through attrition after its production run is over, some items become collectible due to their relative scarcity.
The term collectible is sometimes applied to new items that are mass-produced and currently for sale. This is a marketing gimmick used to stoke consumer demand. Items currently for sale may run into supply issues that drive up the price asked for by resellers, but this is a different phenomenon from what drives the value of true collectibles.
Important
If collectibles are sold at a profit after more than one year of ownership, you will be subject to a long-term capital gains tax rate of 28%.
Insuring Your Collectible Assets: A Guide
If you own collectibles, consider getting insurance for them. This protection can cover issues like accidental breakage, theft, and floods. Your collection doesn’t need to be worth millions to need insurance.
Several insurance providers offer add-on collectibles coverage to existing homeowners’ policies. Generally speaking, collectibles insurance is relatively inexpensive, but the cost varies depending on the value of your collection.
Distinguishing Between Collectibles and Antiques
People often mix up the terms collectible and antique, but they’re different. All antiques can be collectibles, but not all collectibles are antiques. Officially, to be called an antique, an item must be at least 100 years old. Collectibles can be valuable without being old, unlike antiques, which are valued for their age, among other things. Examples of antiques include furniture, art, and jewelry.
Some antiques can be worth a lot of money. Rare and authentic antiques in high demand may come at a high cost. But other antiques may not be worth more than sentimental value. For example, a piece of furniture passed down from generation to generation within a family may be valuable for emotional reasons but doesn’t necessarily have a high monetary value.
Fast Fact
Numismatics is the study and collection of coins while philately is referred to as the collection and study of postage and stamps.
Pros and Cons of Investing in Collectibles
The top benefit of investing in collectibles is buying items that you’re passionate about.
Advantages
- People usually collect items like sports memorabilia, antiques, or comic books as a hobby rather than to earn money.
- Collectibles can diversify an investor’s assets.
- Collectibles might increase in value over time, but it’s not guaranteed.
Disadvantages
- Investing in collectibles comes with risks like deterioration or damage over time.
- Collectibles don’t provide dividend income, and their market value can fluctuate quickly.
- Collectibles can lack liquidity and often come with high transaction fees and storage costs.
- Counterfeiting is a major issue in the collectibles market.
Pros
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Allows you to collect things that you’re passionate about
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Items can be passed down to future generations
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Some diversification benefits
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Appreciation potential
Cons
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Collectibles are notoriously volatile
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Collectibles are not income-generating assets
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Lack of liquidity
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High transaction fees, handling, and storage costs
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Buying counterfeits is always a possibility
Noteworthy Examples of High-Value Collectibles
There are genuine collectibles that are extremely valuable, namely trading cards and stamps. The most valuable collectibles in the world include the T206 Honus Wagner baseball card issued by the American Tobacco Company in 1909. Honus Wagner cards almost always sell for over $1 million if they are in good condition. In August 2022, the card sold for a new record of $7.25 million, which is an impressive haul for a card that was stuffed in cigarette packs as a gift.
Another example is the Treskilling Yellow. This is a misprinted Swedish postage stamp that sold for somewhere around $2.3 million in 2010.
Pop culture icons often end up as collectibles that appreciate over time. Rare comic books featuring Spider-Man, the Hulk, and the Fantastic Four have joined stamps and baseball cards as collectibles. It is difficult to predict what the next million-dollar collectible will be, so you or your estate might get lucky—just don’t bank on it paying for your retirement. But feel free to hang on to the stuff you love and hold dear.
A good example of a mass-produced item being marketed as a collectible can be found in the Beanie Baby fad of the 1990s. Ty, the product’s manufacturer, produced hundreds of small plush toys with a floppy, bean bag-like feel. Consumers went crazy over them, believing they would become valuable one day. Hard-to-find limited editions became valuable when they were released due to resellers snapping up the refreshed stock. However, most of the plush toys were so widely owned that they never became valuable, becoming garage sale castoffs instead, although a few became worth money to some collectors.
The table below highlights some of the other most expensive collectibles in their categories.
| Collectible | Value | Year Sold |
|---|---|---|
| Super Mario 64 video game cartridge | $1.56 million | 2021 |
| Patrick Mahomes NFL card (autographed) | $4.3 million | 2021 |
| Spiderman comic (single page) | $3.36 million | 2022 |
| 1933 double eagle coin | $18.9 million | 2021 |
| Lindbergh matchbook | $6,000 | 2015 |
| Stefano Canturi Barbie | $332,000 | 2010 |
| Marilyn Monroe white pleated dress | $5.6 million | 2011 |
Where Can I Sell My Collectibles?
Online marketplaces make it easy these days to sell collectibles. Aside from the obvious eBay, you can sell your collectibles on websites like Etsy, Craigslist, Facebook Marketplace, Bonanza, and Ruby Lane. Even e-commerce giant Amazon has a thriving collectibles market.
Local swap meets, flea markets, and collectibles stores offer a face-to-face way to sell your collectibles.
Where Can I Sell My Coca-Cola Collectibles?
Coca-Cola collectibles are regularly bought and sold on big online platforms like Facebook Marketplace and eBay. Of course, Coca-Cola collectibles remain very popular, so selling them through local classified ads or at a flea market should be a relatively easy process.
Where Can I Sell Avon Collectibles?
Both Facebook Marketplace and eBay have robust markets for buying and selling Avon collectibles.
What Collectibles Are Hot Right Now?
Pokémon trading cards became a hot item, as of the summer of 2021. The BBC reported that a sealed box of Pokémon cards from the late 90s, which retailed at around $100 back then, is worth upwards of $50,000.
The sports card trading market was on fire in 2020, with returns that topped the S&P 500. Thanks to restless stay-at-home boredom, demand for both Pokémon cards and sports cards was largely fueled by the economic crisis and COVID-19 lockdown.
The Bottom Line
The best way to begin investing in collectibles is to choose those that interest you and that you’re passionate about. Then, start small and try to buy only from reputable dealers and sellers with a track record of good reviews.
It’s important to understand the risks, including potential deterioration, lack of liquidity, high transaction fees, and potential price volatility. Consider insurance to protect valuable items from accidental loss or damage. Finally, appreciate them for personal enjoyment reasons rather than solely for financial gain.