Book Reviews | 11:30 AM
What luxury bags and pokemon cards can teach us about diversifying our investments
We often fear what we don’t understand, and I truly understand why I copped some negative comments when I posted videos on investing in Pokemon cards at the same time, I was trying to understand how people invested in luxury handbags and vintage watches.
These categories were foreign to me, and I had no nostalgic connection to them, which is why I closed my mind off to them as an investment. However, although alternative investing has its risks, I think it’s important to note that if you enjoy investing as a passion, you can combine two worlds together that you truly enjoy.
I still have memories of my mum taking me and my brother to Big W and buying us a booster pack of Pokemon cards for about $3. These times are honestly some of the happiest memories I have of my childhood. Even today as I write this, I feel super grateful that I get to share those memories with my brother and my mum.
Back then, Pokemon cards were for trading and playing; we certainly didn’t keep them in great condition. For those fortunate few who did look after their cards, they would end up performing as one of the best asset classes ever seen over the next 10 to 15 years.
When it comes to Pokemon card investing and many other types of alternative investments potential returns often rely more on nostalgia and emotional connection than logical return on investment. This has been by far the hardest part of my investing journey trying to separate emotions from logic. However, I urge you to separate your emotions from logic as part of your investing journey.
Building a hedge
So, how do alternative investments fit into my overall strategy? They are my hedge against the traditional investment avenue because, based on historical trends, they have performed in a counter-cyclical manner against traditional assets. These investments now form part of my diversified portfolio, carrying a high level of risk, but this is complemented by the high levels of potential reward.
Let’s take 2022 as an example. The stock market dropped by more than 25 per cent and the entire cryptocurrency market dropped by more than 60 per cent. Some alt coins dropped by more than 95 per cent. However, many Pokemon products actually increased by between 20 and 40 per cent.
Fitting alternative investments into your portfolio
Do I foresee a time in which I would sell all my traditional assets to invest in something like Pokemon cards, given the recent performance? Definitely not, and that’s not the role of alternative investments.
For me, an investment foundation is built on something rock-solid such as real estate. Alternative investments are a side investment and give me another avenue for flexibility. Pokemon cards are also in line with something I enjoy, and being able to look at my card collection is an entirely different experience to viewing numbers on screens.
This does make it sound like I am advocating for people to go and invest into alternative assets. The key takeaway, however, is that you can build your wealth in multiple ways.
Alternative investments are about finding that inflection point between what you enjoy, what you’re good at, where your passion lies, and how your skills can be attributed towards that next level of wealth. Being filthy rich means different things to different people and having a diversified portfolio that allows me enough skin in the game to still enjoy analytical videos about Pokemon cards, nostalgic items and even luxury goods is how I find further enjoyment in investing.
Working out what to invest in
High-end items are more than just status symbols. They’re actually smart investments for people who know how to play the game. You might think, Why would anyone spend thousands on a watch or a handbag?’ Well, just like property, these luxury items can grow in value over time, and the numbers back this up.
Take luxury watches, for example. The global luxury watch market was valued at approximately AU$10.7 billion in 2021, and it’s projected to grow at a steady pace of 5.2 per cent annually until 2030. What’s driving this? More disposable income. People are buying watches not just to wear, but to resell later at a much higher price. It’s like the stock market, but for your wrist.
And let’s not forget about luxury handbags. In Australia, the price of a Hermes Birkin starts at around $16,000. If you’re lucky enough to snag a limited-edition model, especially one made from exotic materials, you’re looking at upwards of $50,000 to $100,000. The resale value? Well, those rare models have been increasing by 14 per cent year-on-year. That’s better than most stock portfolios.
The key here is understanding luxury goods can be more than just things to flaunt; they can actually be investment vehicles. Just like property, they can grow in value and, with the right strategy, you can leverage that growth for long-term gains. It’s about making smart decisions that pay off over time. Keep an eye on the market, do your research, and you could end up making some serious money.
Edited extract from Retire filthy rich with real estate: Your step-by-step guide to building wealth through property by Ravi Sharma (Wiley $29.95), available at all leading retailers. Visit https://www.searchproperty.com.au/
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