Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

5 Tricks To Making Money By Investing In Collectibles

There's nothing like lackluster savings rates and an uncertain market to drive investors into thinking creatively about ways to grow their money. From wine futures to pottery, there are numerous places to stash your cash.

But are there any surefire strategies for making sure your investment is profitable? We asked "Antiques Roadshow" appraiser David Rago to share his expertise. Rago has been a leading dealer in American arts and crafts for more than 40 years.

Here are a few of his key guidelines for people who want to profit (hopefully) from their passion for antiques or artwork.

1. Don't Do It.

Probably not what you wanted to hear, but Rago's first piece of advice for investing in antiques is "Don't do it." At least not if you're getting into it purely as an investment.

He said people who get into antiques for financial profit will be shocked by the costs involved with purchasing, insuring and selling the piece -- all of which may lead to breaking even (or even losing money, if you're not careful).

2. Find Something You Love.

Look to what you love, and build your investment from there.

"Part of the return on your investment is how much the piece adds to your life," Rago said. "Just focus on ‘Is this what I really like?' If we're talking about a quality-of-life investment, then we're a lot closer to the truth."

There are endless options, including vintage clothes, jewelry and comic books, and all can be profitable in the long run. If you pick something that doesn't bore you, chances are you will be willing to stick with it long enough to become knowledgeable.

3. Do Your Homework.

"If you're smart about it, you will maximize your chances of doing well financially by doing your homework, going online and talking to the people who collect" whatever it is you are interested in, Rago said.

Watching "Antiques Roadshow" and researching on the Internet is a good start, but become aware of the shows organized around your special area of interest.

"Get on an airplane and look at this stuff in person," Rago said.

The expense will pay off in the end.

4. Build A Network.

Collectors love to talk with like-minded collectors. And as it turns out, in Rago's opinion, the community that gathers around certain kinds of collectibles is one of the key benefits of this type of investment.

"When you go to auctions or you go to a show, you start seeing your peer group," he said. "You have dinner with them -- and that's profit, definitely."

Rago said that while there are millions of people interested in antiques, "when you carve it up into its own specific microcosms, it's not so big. There are maybe 1,000 people buying (a certain type of) art or pottery. Talk to 10 people and see what you get."

You'll also tap into a wealth of knowledge about antiques and the key players in that field.

5. Don't Rush In.

As with many investments, people would be wise to proceed with caution when it comes to purchasing artwork or antiques.

"Take a deep breath and relax. There's always another piece to buy," said Rago, pointing to a friend who waited nearly 10 years to pull the trigger on a Jasper Johns painting purchase.

The Investing Answer: If you're serious about investing in antiques, spend some time now finding the major dealers, websites and publications dedicated to your chosen type of collectible. The investment of time in building a "knowledge network" will prove invaluable in the long term.