The Pros and Cons of the Five Basic Investments | Part 2

In the first segment of our five part series we got to learn about Savings, Money Market Fund, CDs, etc., and how all these are subjected to inflation and how can we save Smart. As we have mentioned in our previous segment we will post an excerpt from the book ‘Learn to Earn’ by Mr. Peter Lynch where we understood there are five basic ways to invest money; by putting it in a savings account or something similar, buying collectibles, buying an apartment or a house or land, buying bonds and buying stocks. So today we are going to learn about the second investment strategy - ‘Collectibles’ or buying things of high value or collecting precious things now which will be of high value in the future when sold.

 

Have a good read.

 

Collectibles

Collectibles can be anything from antique cars to stamps, old coins, baseball cards, or Barbie dolls. When you invest your money in such things, you are hoping to sell them at a profit in the future. There are two reasons this might happen: The things become more desirable as they get older, and people are willing to pay higher prices for them; and inflation robs cash of its buying power, which raises prices across the board.

 The trouble with investing in things is they can get lost, stolen, warped, stained, ripped, or damaged by fire, water, wind, or in the case of antique furniture, termites. There is insurance for some of this, but insurance is expensive. Things in general lose value with wear and tear, although they also increase in value as they get older. That’s the constant hope of collectors, that the age of the thing will raise its price more than the condition of the thing will lower it.

 

Collecting is a very specialized business, and successful collectors are experts not only in the items they collect, but also in the market and the prices. There’s a lot to learn. Some of it you can pick up from books and the rest you get the hard way, by experience.

 Lesson one for all potential collectors, particularly young collectors, is that buying a new car is not an investment. Antique cars are investments, if they are kept in a garage and rarely driven, but new cars subjected to everyday use lose their value faster, even, than money does. Nothing will eat up your bankroll faster than a car will—unless it’s a boat.

 

As the expert has said above there’s not much rocket science to it. He kept it straight and simple as possible. We know smart people have already started collecting. What are you waiting for!!? Go look for things in your house or online or may be start digging your backyard, you may find a big old chest of gold jewels or something antique. In the next post we will learn about ‘buying a house or apartment or land’.

 

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