Classic Cars: Better Than Stocks, Gold Or Property
When stocks plummeted in 2008, the usual plan would have been to turn to gold. But the price of gold has been wavering, so some turn to property. Alas, luxury property has not been enjoying very good capital appreciation or guaranteed rental yield either. What next? Parking lots? They are not particularly pretty. Wine? What’s the fun of looking but not drinking it?
International real estate consultant, Knight Frank, released a report in October, revealing that classic cars like Ferraris, Bentleys and Bugattis inceased in value by 21% over the 6 months prior, and by 28% compared to the previous year. Property price in central London, a prime investment location, paled in comparison with only a 7% growth in the last 12 months. Meanwhile, gold suffered a 23% decline.
In considering long term investments, ‘hobby’ investment like fine wines, stamps and coins had fared decently during the last decade, with the average value increasing by 174%. The FTSE100, however, showed only a 55% increase, and London real estate performed better with 135% increase. The best performer of the usual investment favourites is gold, with 273% improvement in price.
But the ultimate winner is classic cars, which rose an astounding 430% in value over the past 10 years! The reason behind this remarkable climb is the rarity and limited availability of these items. These cars were made in the 50s, 60s and 70s, and it’s not like you can just make more of them.
The Historic Automobile Group Index (HAGI) monitors 50 of the rarest classic cars. According to the HAGI, these cars financial performance escalated by 39% this year. During the summer, in a private sale, one 1963 Ferrari 250 GTO racer was sold for an unprecedented amount, exceeding USD52 million!
Of course, not all of us have millions to invest in a car, but we can always start smaller. Take for instance the popular burlesque dancer, Dita Von Teese, who is also an avid collector of vintage cars. Among her investment pieces was a 1939 Chrysler New Yorker. At the time of the transaction, her mechanic told her that the vehicle was only worth USD8000. She posted an ad online, and found a buyer from Germany, at the price of USD25 000.
The best thing about investing in a classic car is that you can take it for a ride around town, show it off and look really good riding in it. In Dita’s words, “I’ve found each car that I’ve owned to be a great investment, a thing of beauty to take care of, enjoy and then sometimes let go to someone else.”