Note: This is the second story of four in a series called "Beating the Banks." If you missed the first one, it's about making money by loaning yours: 4 Things to Know About Peer Lending
When Michael Rorrer found a copy of the first comic book featuring Batman in his great uncle's closet last year, he didn't know it was worth about $523,000. And that was just one issue in a stack that sold for about $3.5 million last month. For Rorrer, pure luck turned pure profit, but it was his great uncle's passion for comics that created the opportunity.
In the video below, Money Talks News founder Stacy Johnson talks to three of the world's premiere collectors and checks out the Milhous Collection: cars, mechanical music devices, and other treasures that were recently auctioned in Boca Raton, FL, for nearly $40 million. Give it a look, then read on for more…
We're not likely to uncover a treasure trove in a relative's closet or build a $38 million collection like the one in the video above. But the advice from those pros had some things in common that apply to any collector…
Collecting needs to be a passion, not just an investment. Building a valuable collection requires more than money. It takes time to learn how to spot the intricacies that often separate treasure from trash. And you won't spend time on something that doesn't truly interest you.
In short, choose something so compelling you'd collect it even if had no monetary value.
Scam artists know people try to make money from collectibles, so they try to take money from collectors. Companies claiming to have letters written by Ronald Reagan or letters that Charles Lindbergh flew as a mail pilot have conned people out of thousands, the Better Business Bureau says. Don't hand over money without seeing the merchandise. But aside from using common sense and watching for BBB alerts, the best way to avoid rip-offs is the next tip…
Do your homework. Talk to appraisers about your collection ideas. Check out the Association of Collecting Clubs. Learn how many items have been produced, and how widely available they still are. Get a sense of who considers them "collectible" - the consumer or the manufacturer (who hopes you'll buy every new variation).
Sometimes the most valuable items are the ones nobody paid much attention to at first. To improve your odds, don't blindly collect what everyone else does. Fads rarely stand the test of time, which brings us to the next point…
You can't predict the future, but don't ignore the past. According to a recent story from our friends at TheStreet.com, here are 9 Completely Worthless Collectibles: Hummel figurines, Beanie Babies, Franklin Mint collectibles, Hess trucks, Thomas Kinkade paintings, Precious Moments figurines, Norman Rockwell plates, Lladro statues, and Cabbage Patch kids.
While the "collectibles" in this list may seem dissimilar, they have one very important thing in common: They're not in limited supply. The manufacturer can keep pumping them out until the market is saturated and the fad fizzles.
Here's what an appraiser said to a woman who wanted him to consign the 7,000 Precious Moments figurines she had insured for $110,000: "Precious Moments are worth precious nothing. Leave your door open, your lights on, and your back windows open." Ouch.
Get Protection for Your Collection.
Many of us collected comic books and baseball cards as kids. But we didn't know what the term "mint condition" meant and how much money it adds up to. So if you really want to build a collection of value, invest in whatever safeguards your collection requires: plastic sleeves, waterproof containers, locks, or even a climate-controlled storage space. And don't be surprised if that starts becoming a hobby of its own. When Stacy asked the Milhous brothers why they were selling their collection, they responded, "For one thing, it requires more than a million dollars a year just to maintain it."
Bottom line? A hobby of collecting can pay off, but start by collecting passion and knowledge.
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