My husband loves collectibles. He has bought nearly every action figure associated with the Lord of the Rings movies. For his birthday last year, he insisted that I get him nothing; instead, he opted to buy a high-end Batman statue/figure. He’s already decided to forgo Christmas in favor of a Darth Vader statue from the same company.
One of his justifications for spending on collectibles is that it’s sort of an “investment.” After all, collectibles can be worth a lot of money down the road, right? (Personally, I don’t care if he spends on them, as long as he keeps it to what we can afford, but he likes to have a rationalization for his spending.)
Unfortunately, how much a collectible is worth later doesn’t depend on its popularity now, or even its “cool” factor. Whether you collect sports cards, movie cards, action figures, or Beanie Babies, here are some things to keep in mind before you “invest” in collectibles:
Is It Mass Produced?
The reality of any collectible is this: The more there are, the less valuable it is. Rarity matters when it comes to collectibles. There’s a Magic the Gathering card that goes for more than $800 in some circles — because it’s rare. And the label “Limited Edition” may not be enough to determine rarity. In some cases, there are still millions of “limited edition” collectibles produced and sold.
Some of the collectibles my husband has are rare. Consequently, they are likely to go up in price. He has one international LOTR scene set that has already doubled in “value” since he bought it. But just because it’s worth more now doesn’t mean that it will still be worth as much later.
Someone Needs to Be Willing to Pay
What happens when the market drops out? At the height of the Beanie Babies craze, people were paying insane amounts of money for little plush toys. Unfortunately, the market dropped soon. Eventually they stopped being the “must have” toy. Now you can get them for less than $5 on eBay. While some versions are still expensive, the demand in general just isn’t there — and that means that they are no longer as valuable as they once were.
This is a possibility with any collectible that you purchase. If you plan to purchase a collectible for investing purposes, you need to consider demand, and realize that you will only get what someone, somewhere is willing to pay.
Keep it in Good Condition
Because my husband is a collector, he cringes at my son’s habits. My son loves Legos, and Lego sets. He has quite a few Star Wars and Harry Potter themed sets. And mini-figures (including some that go for more than $20 apiece). Of course, my son is a 10-year-old boy. He opens the boxes and puts together sets. Some of the older sets have even been mixed around. Mini-figures are missing heads and arms. My husband knows that the Lego sets won’t be worth as much later on as a result.
If you expect to make money later on, you need to keep your collectibles in good condition — preferably in “mint” condition. If you can manage to hit on a rare item that people will want later, and if you can keep it in near-perfect condition for a few years, a collectible can be a decent investment.
What do you think? Do you view collectibles as investments?