​Interesting Investments: Collectibles Better than Gold

Avery-Taylor Phillips  |

Image via Dominique Godbout/Flickr CC

Once upon a time, Beanie Babies took over the world of children’s collectibles. Adults sought them for their supposed future value, with country-specific plushies supposed to skyrocket in value. The Princess Diana bear, in commemoration of her death, was predicted to fetch thousands of dollars in the future.

Then the bubble, where stuffed animals with a “Ty” tag were being traded for a cool $5,000, burst. While rare versions of the Diana bear supposedly go for a whopping $502,000 as of March 2016, a quick search of eBay shows that same bear can be yours for a mere $69.99 plus $3.99 shipping. Most of the “rare” Beanie Babies can be bought from sellers on eBay for less than $20. Not bad, at an original $5 price tag, but certainly nowhere near the projections.

Let’s look at two items that have not only retained their value, but have risen in value faster than gold.

Purses

Yes, your Coach (COH) bag is worth quite a bit of money, though it probably won’t appreciate. But there are designer bags worth getting a prenuptial agreement for: Specifically, the Birkin bag.

The first bags were produced in 1981, by French designer Hermes. The average cost of a Birkin bag is about $60,000, but can go as high as $200,000. Fun fact: The retail industry does about $1.25 trillion each year, and now you are contemplating how much of that is designer handbags, because you can either get a small house, or an expensive purse.

While this sounds like a high barrier to entry for an item meant to carry smaller items, it’s important to remember that Birkin Bags have increased in value by more than 500 percent in the last 35 years, as of January 2016. The bags gained value every one of those years. Meaning if you owned one of the bags for a number of years, you could buy a medium-sized house with the profits. I digress.

For value comparison, the S&P 500 had a nominal average return of 11.66 percent, with a real return average of 8.65 percent. In 1995, the peak average price was 37.2 percent, while the low was -36.55 percent in 2008.

Fantastic, you say, but you invested in gold, not stocks! It’s a much better investment. Or is it? Gold’s annual rate of return averages 1.9 percent, with a real return average of -1.5 percent. The peak average price was in 2011 at $1,571.52, with the average low in 2001 at $271.04.

Since 2001, Birkin bags have increased in value by 25 percent. The lowest increase was in 1986, when they increased in value by 2.1 percent — still better than gold.

There is a small problem with having a bag in common with the likes of Victoria “Posh Spice” Beckham and Kim Kardashian: There is a six-year waiting list to buy the bag.

Legos

Unlike Beanie Babies, there is a toy that has gained value hand over fist. Legos, the Danish building block toy, can also be better than gold in terms of skyrocketing value (and you can build miniature houses, but I digress again).

Every year since 2000, some mint condition sets have increased in value by 12 percent. However, before we continue this discussion, it’s important to note that pre-1999 sets don’t tend to hold their value, so don’t run out and start buying random Lego sets. And, unlike the $5-a-pop Beanie Baby that a child could simply buy with their allowance, the Lego sets that have surged in value start around $70, but are more likely to retail for $200. Note that’s at retail, not aftermarket.

Starting at the top, the most valuable set is the Ultimate Collector’s Millennium Falcon from Star Wars. The set, which retailed for $499.99 in 2007, sells new for about $3,005 and used for $1,865. It has sold for between $5,000 and $7,000 in the past.

Next is the Taj Mahal set, which retailed at $299.99 in 2008, and now goes for $2,381 new and $946 used.

The set to rise most in value? Cafe Corner. Typically, sets that are related to properties like Disney or Star Wars are the best investments, but Cafe Corner retailed for $139.99 in 2007 and is now worth $1714 new, $621 used. That’s about 12 times its original value, new.

It’s not just sets that are valuable, though. Rare characters, called minifigures, can fetch a few hundred dollars by themselves. Many of these were exclusive to events like Comic Con.

But wait, there’s more. Lego store owner and collector Caleb Raff paid $15,000 for a single, one-of-a-kind Lego piece in 2014, having previously bought another single piece for $3,000.

How did Legos become so valuable, when Beanie Babies did not? Lego sets were made in limited quantities, while “limited edition” Beanie Babies were still mass produced.

There are common investments, like baseball cards, comic books, and coins that are collectibles, but purses and Legos certainly stand out as being more interesting investments you don’t hear about every day. And the best part is, with a bit of patience, you can still get in on both of these opportunities.



DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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