ALTERNATE INVESTOR
Purchasing Antiques as an Investment
Is there anything attractive about the purchase and sale of used furniture from an investment perspective? When I say used furniture I'm referring to items described as antiques. While antiques are really nothing else but used furniture, many items have appreciated in value since the time they were originally crafted. That increase in value over time is definitely something worth investigating as a potential investment vehicle.
Let's define what type of item is considered as an antique. An antique is defined as a collectible object such as a piece of furniture or work of art that has a high value because of its considerable age.
I want to key in on two points of the definition as an investor, the item needs to be a collectable and it also needs to be of a considerable age. These two points jump out at me as far as giving a particular item value. And they should be the primary things you pay attention to if you are interested in buying antiques as an investment.
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Is the item a collectible piece, to the point that many others would desire to own it? That's the essence of this investment strategy. What we need to formulate now is a way to seek optimal conditions for purchasing antiques that are collectables and having the ability to sell them at some point for a profit.
The Antique Collectors Club (ACC) has actually compiled an index of values from it's inception in 1968 till now. Their index reflects growth in antique trading values of more than 20 times the price of similar items over the last 40 years of recorded values. The index had a recorded value of 100 in 1968 and in the year 2015 the value of the index was 2149. I tried to find the current value of this index and found that information to be somewhat elusive.
There are also other reports that the ACC Index is not a proper representation of antique values because of ever changing demand and furniture trends, styles, and fashions. Although the index has gained value from its launch in 1968, in the recent years from 2008 - 2015 the index has lost considerable value.
So what type of antique should you purchase? One that you like is a criteria that should top the list. There is a very high probability that to see your piece appreciate in value you will need some luck and a fair amount of time to transpire from your date of ownership, maybe as much as 20 years. So one may have to look at that item for a very long time, and possibly carry it around to the different places one may call home throughout one's lifetime. Liking your antique is very important.
Functionality is also at the top of the list as far as the requirements of an antique purchase. If in fact you need to have a piece of furniture in your life for 20 years, it should have a functional use for you or your family members. Storing China and table setting accessories, or clothing, pianos for the player in the family, or even a chair you can actually sit in, are some ideas you can use if an antique item is in your sights to give as a gift or purchase as a home furnishing.
Authenticity is extremely important when purchasing an antique for an investment. The authenticity will also be required to insure your item for theft or damage. It will be well worth the fee of a professional appraisal by a third party of your choosing before the purchase of your antique. This will also provide credible documents for selling opportunities in the future.
Buying authenticated antiques usually takes place at an auction or through a broker, and they add on a fee anywhere from 25 percent to 30 percent to the purchase or sale price of your item. Today's investor must always bear in mind that the interest rate for 10 year US Treasury notes, rated as one of the world's safest investments, yields less than 2.5% annually. So a gain of 25 % over 10 years would be the equivalent, and that is a very good return on investment. When it comes to buying and selling antiques, that same percentage for the transaction fee may eat a sizeable hole in any potential profits.
The condition of the item is also critical to the possibility of potential gains from the sale of the antique. There are many amateur carpenters in the world that have fixed a dresser draw or put a hinge on a dangling cabinet door. That is not the level of craftsmanship necessary to maintain a collectable antique. If those were the type of repairs performed on Grandma's hand me down dresser it may not have been able to appreciate in value. Your possible purchase must be thoroughly inspected for any of these type of imperfections.
At the conclusion of this exercise it is safe to conclude that the investment opportunities from buying and selling antiques are limited. The time for a piece to appreciate in value is significant, and the transaction fees are high. If you find yourself compelled to purchase an anique be satisfied if that item becomes a family heirloom. The odds of an antique becoming an item for financial gain may only come if the antique is found through the unawareness of an unknowlegable seller or if that item is given to you.