Stocks and bonds are among the most common investments for two main reasons: they promise high returns, and they have a relatively small entry price. Simply put, these assets can increase a person’s wealth significantly after a certain period. But even if this is the case, it’s still not a good idea to channel all your funds only on stocks and bonds. Wealth planning experts would advise investing in tangible assets, as well.
In a nutshell, tangible assets are possessions that have a physical form and can be seen and touched. This means that your house, car, and even your phone can be considered tangible assets. But adding this kind of asset to your investment portfolio can be pretty tricky, too. After all, you have to choose things that acquire value over time, such as the following examples:
Gold
Throughout history, this precious yellow metal has proven to be highly valuable because of its vibrant color and rarity. Gold is incredibly scarce and extremely difficult to mine. And in the coming years, it’s inevitable that the amount of gold to be extracted from the quarries will be depleted. And since the supply of this metal is constantly decreasing at an unprecedented rate, its market value shall continue to increase. This means that if you purchase gold today, you can sell it at a much higher price in the upcoming years.
There are many ways to invest in gold, but the most common is to purchase bullion in the form of bars and coins. The price of bars and coins vary, but it’s safe to assume that heavier bullion will cost more.
Buying bars comes with some disadvantages, though. A single one is incredibly expensive, so it’s not possible to buy too many of them unless you’re extremely rich. And since they’re solid, they’re quite hard to liquidate as well. If you have a single bar in your possession worth a thousand dollars, it’s not possible to convert just 10% of it to cash, in case the need arises.
Wine
Many people fail to realize that fine wine is a pretty lucrative investment. After all, a single bottle of well-aged and properly stored wine can cost a few thousand dollars. But even if it’s quite profitable, it still has a lot of risks. The bottles need to be well taken care of because mishandling them can cause breakage and spoilage. When that happens, your whole investment is as good as gone.
But there are ways to avoid these risks. First is to do proper research as to which kinds of wine are mostly sought after by connoisseurs and enthusiasts. It’s best to learn about specific brands and important regions where the best beverages come from. The time you purchase wine is also something to consider. Wait for a good harvest because this is usually when prices of wine go down a bit. During this period, you can purchase several bottles that you can store and age.
Storage is the most important factor in wine investments. Improperly stored wine loses its flavor and its value. This means you need to have a room at your house that has a controlled environment to ensure that the wine will age well. Temperature, humidity, and lighting during storage affect the taste of the drink, so it’s advisable to place the bottles in underground cellars. If you can’t afford to build a whole chamber at your home dedicated for the bottles, you can rent spaces in facilities that specialize in wine storage.
Artwork
Fine art can be a great investment, considering how a single painting or sculpture can cost a few hundred thousand dollars depending on several factors. But this kind of investment can be pretty tricky and incredibly risky. This means extensive research is needed if you want to purchase art today to sell them at a higher price later. You need to speak with curators, read plenty of books, or even attend seminars. It’s also necessary to have a thorough discussion with your wealth planning manager before you jump into the art sale market.
As a rule, creative works of deceased masters tend to increase value at a higher rate compared to crafts from contemporary artists. But even so, works by contemporary artists that you purchase today can still fetch a significant price in the years to come. This is especially the case when the artist becomes famous and has garnered a good reputation in the field.
The value of art usually lies in its rarity and quality. But its first impression on the viewer (i.e. you) also matters. This means you need to be careful not to be swayed by the words of gallerists because they tend to oversell their products. Since this is the case, it’s not necessarily wrong to rely on your gut feeling when purchasing artworks.
