From Star Wars to classic cars, these four offbeat investment ideas will give your portfolio a New Hope
As the countdown for The Last Jedi begins, we've been inspired by the rise of film merchandise investment to find these offbeat options to help you diversify
For those readers of a certain vintage, cast your mind back to the summer of 1977 when the first Star Wars movie was released. Back then, few could have predicted that it would become one of the most popular films of all time and one which, crucially, kickstarted the craze for film merchandising. Back then, the three-inch plastic figures of Luke Skywalker, C3PO and other Star Wars characters cost just £1.50. Today, they sell for up to £18,000 each. For those whose plastic toys were relegated to the bin or the junk shop, this is a bitter pill to swallow.
The highest price paid for a Star Wars figure was in January this year, when a Boba Fett, who first appeared in The Empire Strikes Back, sold for £18,000. A Palitoy 33⁄4-inch Jawa in vinyl cape, even with part of the packaging crushed, sold for £10,200 in 2013. Even bashed-up Han Solos or Chewbaccas rescued from the attic can sell for hundreds. But kids’ toys are just one of many surprising (and often surprisingly fun) ways to diversify your portfolio through alternative investments. From wine to cars to gold, there are a wealth of ways to increase your wealth.
Canny investors in this group will be raising a glass or two as the Liv-ex Fine Wine 100 Index, a wine market tracker plotting the hundred most sought after wines, rose for the sixteenth consecutive month in March 2017. The banking crisis of 2008 hit it hard, compounded by lacklustre harvests and a string of poor vintages, and the index went on to fall by a third between 2011 and 2014.
Wine investment is back on track now, though. Traditionally the investment world of wine has been limited to a high-priced set of the best claret wines from the Bordeaux region of France. The most in demand wine producers include the five Premier Cru – first growths – of Haut Brion, Lafite Rothschild, Latour, Margaux and Mouton Rothschild. These are followed by ‘Super Second’ producers that include Mission Haut Brion, Montrose, Cos d’Estournel and Leoville Las Cases. About 80% of the wines in the Liv-ex 100 come from Bordeaux.
The only way to buy is to trust the palates of those who dictate market valuations. The American wine critic Robert Parker, for example, effectively sets the prices. He scores each wine he tastes out of 100, with any wine scoring 96 or above being deemed as ‘exceptional’ and therefore worthy of investment. Investment wine is stored in temperature controlled warehouses. There is no VAT or duty to be paid if the wine always stays ‘bonded’. Wine is seen as a ‘wasting asset’ by Revenue & Customs so escapes capital gains tax – normally charged at up to 28% on the profits earned on assets, including shares, when they’re sold.
Go for gold
Gold has a tangible, immediate, appeal and is often the first choice when someone is considering an alternative investment. For the UK investor, it’s VAT exempt and there is no capital gains tax on certain coins. There will be storage expenses though, unless you plan to bury it in your garden. In which case, do make a map. On a more serious note, it’s seen as a safe investment and one that people often turn to in times of unrest or volatility.
What was once a closed, rarefied world has now become open to all. Click on the ‘shop’ section of London’s White Cube Gallery website, for example, and you can, at time of writing, pick up an original Anthony Gormley lithograph for £3,600. This instant access to one of the UK’s foremost artists is an example of just how accessible art buying has become. But will you make money? There are several art buying indices but these tend to track the top end of the market. There are also art bonds that take the onus off the investor and on to the experts who manage the bond. If you’re looking to buy pieces yourself then start small, say experts, and just buy what catches your eye. If you are looking for more certain returns – head for the bankable names such as Hirst, Emin or Banksy.
Like wine, this is the joyous side of alternative investing. Who among us could not be stirred by the sight of a classic Ferrari sitting in the garage, just begging to be driven? The big question, though, is will you make the right choice when it comes to make and model? Get it wrong and you could be left with a depreciating lemon. Get it right – vintage Ferraris, Porsches and Mercedes-Benz are doing well right now – and you could see your investment accelerate.
The latest price index compiled by Historic Automobile Group International (HAGI), shows that Mercedes-Benz has been the best- performing marque, increasing in value by just over 85% over the past three years. Ferrari is catching it up, with an increase of 65%, and Porsche runs a close third with a rise of almost 60%.
The factors that determine a car’s value are provenance, rarity and, quite simply, how cool it looks. Cars driven or owned by celebrities, particularly Steve McQueen, are always popular. A 1967 Ferrari 275 Spider, identical to the one he drove in The Thomas Crown Affair, went for $27.5m in 2013. But if you’re looking to buy something special now, with a view to future high returns, what are the motors of note? The Porsche 918 Spyder, released in 2014, could be a winner – only 918 of them were made. Low mileage, well maintained Aston Martin and Lamborghinis should also fare well. If you have deep enough pockets, then an original McLaren F1 is also a safe bet.