In the Eye of the Beholder

Alternative investments can offer many happy returns

Standard investment portfolios typically include stocks, bonds, maybe some cash. They’re tied to common markets and heavily regulated. Over the last decade, cryptocurrency investment has become so commonplace that even banks have crypto offerings. After a hard crash, even NFTs are trying to make a comeback. They’re hardly the only alternative investments out there. Even if they’re not traditional, there’s a long history of these investments, and they can yield big returns for those who know the market.

Wine & Spirits

Wine investing is a long pastime of enthusiastic collectors. They typically take great pleasure in displaying their bottles in wine cellars and uncorking particular favorites on special occasions. For some, the joy is in collecting and savoring the right vintage at the right time. Others hold onto those prize bottles until the right time then sell them off to the highest bidder. Well-respected auction houses like Sotheby’s put high-end wines up for bid, and there are online auctions on WineBid weekly. It takes a lot of patience to wait for some wines to mature and reach their maximum, and the storage costs can be large. For those just getting started in this alternative investment, Vinovest offers portfolios at as small as $1,000.

Vinovest also has offerings in whiskey, a spirit quickly gaining popularity as an alternative investment. Whiskey investment typically yields a 12-18% return per year. CaskX is another player in the spirits market, with bourbon and scotch holdings from top-flight distillers. Investors can sample the goods and visit their casks to see how their investment is being cared for.

Art

Another space traditionally dominated by connoisseurs, is art, an illiquid asset that can take a long time for investors to realize returns on. But they can get enjoyment out of a piece by displaying it in their homes or arranging for a gallery to store and show it. As another prestige alternative investment, art, especially older works, goes up for sale at auction houses like Christie’s and Sotheby’s. For contemporary art of investment quality, Artnet and Artsy have what investors are looking for. Investors who aren’t themselves passionate enough about art to know what might be worth a lot in the future can enlist the services of an art consultant to guide them.

Toys

Some of the items strewn across your kids’ playroom might be worth a lot to somebody. Well, probably not your kids’ toys, but mint condition versions of the same products. Vintage toys can bring in big bucks, especially when they’re tied to characters being brought back to the forefront of popular culture by a movie or TV reboot.

“There is a synergy between vintage toys and modern re-launches such as GI Joe, Masters of the Universe, Strawberry Shortcake and so on,” James Zahn, editor-in-chief of The Toy Book and senior editor of The Toy Insider, told CNBC.

The sentimental value of toys that make collectors nostalgic for their own childhoods can make them a strong alternative investment. Your Beanie Baby collection might be worthless, but if you have a Mattel Master’s of the Universe Eternia playset in its original packaging, you could get as much as $5,000 for it, Zahn said.

Sports Cards

You might be familiar with the T206 Honus Wagner card that has been making investors money for decades, selling at auction for a record baseball card price multiple times. Most recently, a T206 Wagner went for $6.6 million in 2021. Since then, a 1952 Topps Mickey Mantle card has reclaimed the top spot in sports cards, going for $12.6 million in 2022. Those are rare commodities, but collectors can invest in limited-edition rookie cards of players who might become the superstars of tomorrow. Should that happen, investors can turn a handsome profit when the player’s career ends with Hall of Fame credentials. For more immediate profits, collectors often acquire baseball card boxes in pre-sale then resell them at a big markup before the collections become available to the general public.

Classic Cars

With sales topping $4 billion annually, this alternative investment offers a healthy market. And it’s not just for car guys anymore. Drift Capital now offers fractional investments in classic cars. This means investors don’t have to take on the burden of restoring, maintaining, and storing vintage models that might fetch a high price from an eager buyer.

Unlike some other alternative investments, the classic car market has shown itself to be vulnerable to economic upheaval, but the top models always retain their value. “Cars such as Ferraris that are seen as investment grade have not experienced major and lasting dips,” Drift Capital managing partner Eden Cooper told Penta.

Of course, for collectors, much of the joy is in restoring a classic they love and taking it out for the occasional joyride. As with other alternative investments, returns often come in forms other than money.