Everyone knows about traditional investment vehicles like stocks and bonds, and even newer investments like peer-to-peer loans are becoming more popular. These days, in order to find new ways of investing that are off the beaten path you might have to get a bit crazy. If you are willing to do so, there might be some fun and wacky investments in your future. But don’t be fooled by these out-there ideas, as these alternative investment options have proven to be profitable for many investors.
Please note: this article is for information purposes only. Bondora is not recommending any of the investments mentioned in this article. Always consult an investment professional or advisor before making any investment decisions.
Regardless, the more you learn, the more you earn! So let’s take a look at a few wacky investments.
These days it pays to be a nerd, and in some cases it can pay an awful lot. That’s because comic books continue to grow in popularity, and are now seen by many as equivalent to pieces of art. You don’t even have to obtain comic books from a bygone era. Comic books from the last 20-years are fetching high valuations enough to provide investors a return on their money. An old comic you bought for fun 15-years ago at €1 could now be worth €100.
Comics provide such an amazing potential upside opportunity for an investor looking at the long-term horizon. The comic Action Comics No. 1 was bought in 1938 for an estimated 10 cents, sold for $150,000 to actor Nicholas Cage. Cage then sold the comic in 2011 for over $2.1 million. Calculating the return on investment for this transaction is enough to make your head spin.
Even high-profile investors are getting in on the action. James Murdoch, former chief executive at 21st Century Fox, is investing in comics in his own way. Murdoch is using his wealth to put $5 million in comic book publisher Artists, Writers & Artisans.
Obviously you can scour the internet to try and find comics which are being underpriced, but you can also find comics at local garage sales or friends who are trying to clean out their attic. Who knows, you might come across a sea of investment opportunities right before your eyes.
According to The Telegraph, an investment in Legos would return more than the stock market or gold over the past 15-years. This is because Legos kept in their original condition have appreciated in value by 12% on average during that time period. A 2018 study came to the same conclusion, citing Legos as a good alternative investment to diversify an investors portfolio due to its low risk exposure and higher returns.
Some sites are even dedicated to the pricing and investment opportunities available in Legos. Keeping the general public appraised of new releases and price changes for rare and hard to find items. Star Wars themed Legos tend to be the best sellers, and can go for upwards of $5,000. When it comes time for you to look to profit off of your purchase, eBay still presents a great outlet for the sale of Legos. Bricklink is another outlet for selling your Legos, as its marketplace is specifically Lego transactions.
Just be warned, prices for Legos can fluctuate if the company decides to increase production. This means that if you purchase a rare Lego item and the company decides to restart production on that item again, you are likely to lose money on your investment.
Royalties are a great way for musicians and artists to gain an income stream from their work. Yet, even if you are not an artist yourself, you can purchase royalty rights at an auction. Once you own the intellectual property rights to a song or album, you will be paid out for each time that song is played. This investment strategy was made public when in 1985 Michael Jackson purchased the publisher’s share of The Beatles catalogue for $47.5 million.
Sites like Royalty Exchange allow investors to purchase the intellectual property of music, and be paid out in royalties that music produces over time. The site sells the rights to well-known music from artists like Dr. Dre and Kanye West, and even music featured on popular television networks. Just make sure you have a lot of cash on hand, as royalties on the site go from anywhere between $7,000 and $230,000.
Jeff Schneider, president and CFO of Royalty Exchange, argues that music royalties are not correlated with stocks in any way, making them the perfect alternative investment. “It’s not correlated to the stock market in general,” Schneider said. “We’re at the tail end of a nine-year stock market run, and uncorrelated assets seem more interesting compared to something that’s bound to correct at some point.”
Investment expert John Waggoner sees music royalties as a great alternative investment for those willing to shell out the cash. “Music royalties last 70 years beyond the longest living participant’s life, which, if all goes well, makes a very long-lived income stream.”
Just be careful of the price you are willing to pay for such royalties. According to research on the subject, 75% of expected royalty income happens over the first year after release, and goes on to depreciate at a 10% annual rate over the next five years. This makes it difficult to obtain a good return on music that is years old, that is, unless it’s a major hit.
Knowledge before investing
Before you go out and buy 10 new comic books, 4 sets of Legos, and a handful of music royalties, do your homework. It is easy to get caught up in the latest hot investing trends, and you should always be skeptical of anything that looks like it’s too good to be true.
Do your research and become an expert on whatever asset class you choose. Maybe even specialize in a sub-category of one of these investments, so that you know everything there is to know about a small subset of an investment. This could provide you the edge you need to weed out the poor investments from the good ones.
Disclaimer: The information in the post is for educational purposes only, and should not be taken as investment advice. Please consult an investment professional before making any financial decisions.