When it comes to investing your money, you already know you have a multitude of options. But one of the most important factors to long-term success is choosing and maintaining a mix of different kinds of investments. Read on below for an overview of 3 traditional investments and 1 unique trend you’ll want to learn about.
Investing in the stock market is an obvious avenue, but it’s inherently unpredictable and the risks are hard to mitigate. Minimizing the variables affecting a stock market investment is difficult and there are several hidden risks which are important to consider.
Economic events, global politics, and inflation with affect the price of a security, which is subject to market risk beyond an investor’s control. Timing is also key to successful investing but predicting future prices is challenging in the short-term. And finally, many people are simply overconfident and underestimate the role sheer luck plays in investing successfully in the stock market.
2. Real Estate
The allure of owning property is real but is actually an even riskier investment than the stock market. With a home, after calculating the after-tax interest expense on the mortgage, additional insurance, and title costs, the profit you would make likely wouldn’t even keep pace with inflation.
With a full mortgage, and factoring in property maintenance, insurance, and other costs, your gross out-of-pocket expenses often exceed any profit you make. And while real estate is a good way to keep the money you would pay in rent, it likely won’t generate a high enough rate of return to satisfactorily grow your wealth.
3. Classic Cars
Though the market for classic cars has recently done better than other collectibles like coins and stamps, becoming a collector of vintage cars can be a hefty investment and comes with significant carrying costs. A vehicle is a high-maintenance investment with ongoing storage, upkeep, and insurance costs. And when you do eventually sell, you’ll need to pay consignment fees, transaction fees, and transportation costs.
It’s also important to keep in mind that collectible cars are becoming increasingly harder to maintain as technology in the automotive industry advances. There aren’t as many resources available for maintaining vintage cars today, rendering them impractical to use or even keep.
4. Rare Books – A unique investment opportunity
As you can tell, investing isn’t the same as it once was. Trends are turning away from traditional channels and moving towards more profitable alternative assets, like rare books. Collector’s books are a hard asset that help to diversify and strengthen your portfolio. And unlike classic cars, they require no maintenance, are easy to hold onto for decades, and ownership comes worry-free without any additional expenses.
Art books in particular, that are original, of limited availability, contain one-of-a-kind treasures, and are in good condition are only becoming rarer, and therefore gaining traction with collectors. Investing in a rare book is also a unique opportunity to enjoy the control that comes with being able to hold your investment in your hands.
Its value is much more risk-averse and books are much less susceptible to outside factors that are difficult to predict. It’s a tangible investment without the expensive risks of real estate or the stock market. Plus, you don’t need extensive technical knowledge or expertise to understand this kind of investment or to maintain it.
One of the best things as well about owning a rare book is that it’s an investment in more than one way. A visually captivating volume of art is an investment you can gain knowledge and aesthetic enjoyment from every day, that also holds significant artistic, historic, and cultural value.
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