Is it a Collection or an Investment

I have heard from various collectors, “this is an investment”. Hhhmmmmm an investment… If a person collected long enough and managed to pick the right models it very well could be an investment. But I think for most of us that is a myth.

Up front I would tell any person whether they collect and restore old tractors, cars, collect sports memorabilia or models of any flavor, if you want to collect and bank on the appreciated value, live long and prosper. But in reality I think that is an excuse most people tell their spouses to justify spending lots n lots of money plus shipping for a kick butt end dump truck, fly fishing rod, or one more Model A John Deere to restore.

I have seen a cycles when it comes to collectibles. For example most people remember the 747 Big Bud in 1/64 , 1/32, and 1/64 scale. When those came out, it seemed they hit the market at fair value. Then there was a spike in prices for a time where double the money was normal followed by a leveling off. Now the prices are a bit above what they hit the market for again. I have seen this pattern with a variety of models including tractors, in a variety of scales, DCP trucks and on and on. This cycle is pretty typical and is a game collectors and sellers play all the time. The down side is a person selling off a collection hoping to cash in can win or lose depending on where in the cycle they sell. Not so good for retirement.

I know there are collectors that go to very extensive lengths to find every variation to add to the lineup of their Deere or Allis shelves. The problem is, not each potential buyer at an auction or sell off knows or even cares about the a small logo error from the factory, or a subtle color difference so it no longer looks power white but off white. The right collector has to be present to get the premium the model deserves. Pretty risking to bet the farm err collection thinking the world may notice and fully appreciate the slight differences in various models.

From my own experience I thought I would cash in on 1/32 4x4s I had and sold off. I had collected them for 10 or so years. We moved to home where there was no place to show them off and display them. So to eBay and other places they went. What I found was this. I had spent hours and hours searching for variations in each model. Uncovered diamonds in the rough. And amassed a nice collection. When I sold it off though I think I broke even on half or so, made good money on some, others did not bring what they were worth. Go figure?? I did not lose money but it was not a big payoff either.

So here is the deal. Forget about getting rich by collecting models. Collect for the pure enjoyment of it and the fun in finding what cannot be found. Most people would be surprised to come to my house as you won’t find any models. I keep a few in my office and rotate harvest crews in and out I have made. Occasionally if I see some model that catches my eye I will buy it just because it looks so good.

If a person has a nice collection of course make sure a large collection is insured just in case. Create an inventory to protect oneself and keep track of them. But at the end of the day, collect for fun and make sure the 401k and Roth IRA is fully funded. Have fun!