The concept of luxury item investing is fairly wide-ranging and there are a number of strategies to adopt in order to add some diversification to your investment portfolio.
You can invest in actual luxury items such as fine wine, art, classic cars, bloodstock and rare stamps, all of which require a degree of expertize to be able to pick the winners that will show you a good return, or you might consider buying into stocks that revolve around luxury goods.
Luxury goods sector
Analysts estimate the value of the luxury goods market to be in the region of $300 billion and this figure is rising based on the growing demand of emerging economies and the creation of a new wealthy class who want to acquire a diverse range of luxury items.
You can handpick a selection of listed stocks which are operating in the luxury sector or you can even find specialist funds that offer investment in their chosen premium brands portfolio so that you leave it to a fund manager to do the stock picking.
Another alternative investment strategy to consider, is acquiring some physical assets that are considered to be luxury items and do offer the potential for growth in their value over time.
We intend to cover these specific luxury items in greater detail on this site, but here is a brief summary of some of the areas that you might consider investing some of your capital in. Giving you access to some items that can be enjoyed now whilst still offering you the potential to make a profit in the future, if you buy wisely.
The art of fine wine collecting has become much more refined in recent years. The well-heeled gentleman of past generations, could acquire a few cases of claret and store them in the cellar for about 10 years, then drink one case and sell the others for enough profit to start all over again.
Investing in fine wine would have shown you a decent return compared to the FTSE 100 for example between 2003 and 2011, where the most sought-after wines rose by 250% in value. A benchmark index of the 100 most coveted wines is showing a 150% rise in the a 10 year period, so there are definitely opportunities to make profits with the right guidance and selection.
One of the great attractions of fine art investing is the fact that you can acquire a painting that you admire greatly on a personal basis and the pleasure it can bring is even greater when you make a profit from selling it at a later date.
This is a market that often responds to economic conditions and classic car prices have been rising again in recent years, thanks to an upturn in the economy and a wider market of investors looking to acquire a classic car that they can enjoy and potentially profit from.
More investors are now able to participate in bloodstock investment as a result of the introduction of a number of different schemes, which has brought the entry-level cost of investing down to a more affordable level.
This is still a highly volatile and speculative alternative investment which can reward you handsomely or disappoint greatly, so it should form only a small part of your investment portfolio.
Rare and pristine stamps of the highest quality have often proven to be a reliable investment over many years and there are a number of experienced investors who often turn their attention to rare stamp investing when returns on traditional investments are underperforming.