Tangible investments: Investing outside the financial sector
Published Mon, Oct 15, 2012 Updated Tue, Feb 16, 2021
If you live in the Western world your confidence in the financial sector will have been shaken to the roots in recent years. Interest rates on savings are at an all-time low in Britain. The Eurozone is troubled, with several countries facing sever austerity programs for the foreseeable future. The US has had its share of problems and the banking industry has taken a pounding.
In 1988 the Wall Street Journal tested economist Burton Malkiel’s theory that “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts”, by creating the infamous Dartboard Contest. Staffers threw darts at a stock table while a bunch of investment experts picked stocks the usual way. They compared the results after six months and found that an ordinary person investing passively would out-perform the professionals roughly 50% of the time.
Finding a good return is often a challenge at the best of times, even more so when the economy is in crisis. So what about alternative longer-term ways to invest for the future? Are they a realistic way to generate a healthy return on investment?
Gold is rare, beautiful, desirable – and you can actually hold it. That’s why gold is often the investment of choice when economies take a downturn and the financial markets look far too unpredictable for comfort. Gold prices fluctuate but they tend to rise on the long term.
Good quality jewellery
This rarely loses its value and if it’s by a respected maker or contains particularly good stones, it represents a comfortingly tangible investment.
Art can generate a fortune, but you need to know your subject. Take the British artist Damian Hurst, whose work includes sharks and sheep in formaldehyde and a diamond-studded human skull worth millions. He unexpectedly shot to fame when the art collector Charles Saatchi discovered him. If you have a nose for great art you could be onto a winner. If you have a decent amount of cash to invest, buy in help and advice from an art buying professional.
This can be an excellent long-term investment but it’s another area where expertise is essential. Expert investment support is a good idea here, too. In 2011 the world’s most expensive bottle of white wine sold for £75,000, a seriously useful sum!
These can be tricky. Trends come and go. One minute traditional oak furniture is popular and demand pushes prices up. The next minute nobody wants it. The market for good Chinese art is booming at the moment as the country becomes wealthier and individuals invest in bringing the best Chinese art back home. Nobody can predict what is going to gain value in the long term. But on the positive side good quality items, rare pieces and works by good makers almost always increase in value.
Property can be a sound investment although, as many of us know to our cost, the market booms and busts on a cyclical basis because it’s tied to general economic performance. Over-extend yourself and you could end up in trouble. Get it right and you could be in line for a very comfortable retirement indeed.
Investments of most kinds tend to perform best over the long term. If you buy well and hang onto your investment rather than trying to make a fast profit, you stand more chance of getting a good return when you retire. Expertise is key to making almost any investment pay. And there’s no such thing as certainty!