Now you have made your billion dollars, or part thereof, how do you service your portfolio – what are the most attractive, efficient and/or long-lasting options for maintaining your wealth? Maybe you would like to learn a thing or two for advancing your own interests, increasing your wealth if only in a relatively small way? To state the obvious – leaving your money in the bank, any bank, right now is not an option, as the interest you earn would be highly unlikely to even keep pace with the rate of inflation; in other words, you’re losing money. As for stocks and shares, unless you have your own, proven expert who can pick successful individual companies for you, the volatility of the stock markets as of early 2016 is quite likely to leave you sitting nervously on the side-lines.
You have most likely seen such programs as the BBC’s “Antiques Roadshow”, and wondered why… why do people buy or hoard these things, whatever they are? Do not bother with that question, simply ask what?, who? and perhaps where? (such apparent treasures can be found). Regardless of your personal opinion, feelings, ‘they’ are valuable – to someone, often to many.
The following are 10 of the more popular investments made – or at least considered – by the ultra-rich, possibly out of specific interest, but certainly as significant investments as befits prosperous entrepreneurs, or simply managers of their accumulated wealth which they are keen to retain.
The most popular investment, one might say the most obvious from several viewpoints, revolves around Classic and/or Antique cars. Aside from the often aesthetic attraction, Knight Frank estimate that the values of such vehicles in general rose by 17% in 2015 alone, and by an almost mind-boggling 490% in the last decade. Rarity is one factor – a handful of the 1956 Ferrari 290 MM were specifically built to race, and the one designed for racing car legend Juan Manuel Fangio was sold in 2015 for over $28 million. Many cars change hands privately, and so selling/buying price details tend to remain private, but of cars sold at auction, a 1962 Ferrari 250 GTO changed hands for a record $34,365,000 in 2014, surpassing the previous record of $31 million paid for a 1954 Mercedes-Benz W196R racer in 2013. Of veteran cars, made before 1919, and vintage cars(1919-30) the highest known price paid was in 2007 – $7.255 million for a 1904 Rolls-Royce 10hp two-seater.
The second most valuable investment by current appreciation is Coins – not for actual usage of course, but with a rise in general value because of scarcity of 13% in 2015 and 232% over the last 10 years, they occupy comparatively little space and require minimal upkeep. Americans are lucky, or perhaps unlucky as the 1894 Dime coin now has less than 10 known to be in existence, one of which was sold for $2 million in early 2016. In fact, the vast majority of rare, valuable coins have been minted in the US, however, the most expensive coin sold at auction is believed to be a gold Australian $1 million coin, minted and sold in 2011 for over $53 million, a bid apparently based on the gold bullion value.
Another popular investment is in Wine, although invariably not for drinking. Values of appropriate vintages are estimated to have increased by a modest 5% in 2015, but by almost 250% in the last decade. Apparently American investors are most drawn to this asset, as a US buyer is known to have paid $130,000 for five cases of Inebriare In Vitae Cabernet (Napa Valley) at auction in 2014. However, the most expensive bottle ever sold – allowing for inflation – is believed to be a Chateau Lafite 1787, allegedly owned by President Thomas Jefferson, for $160,000 in 1985.
No-one will be surprised that Art is high on the list of desirable investments, although the beauty seen by the eye of the beholder may appear a little warped to you personally at times. Of course that matters not at all – it is the expertly-assessed value of the artist which is of primary importance, and increases in value of 4% (2015) and 226% (last decade) bear out this proposition. Records for artists’ paintings are consistently broken, although the current auction record – $106.5 million for Picasso’s “Nude, Green Leaves and Bust” – was set in 2010. Gauguin’s “When Will You Marry Me?” is believed to have been sold privately for a price in excess of $300 million in early 2015. Of course other modes of art exist too, and perhaps surprisingly books figure prominently, although mostly the property of museums or galleries. The most expensive manuscript is believed to be Leonardo da Vinci’s Notebook, apparently acquired by Bill Gates in 1994 for almost $50 million, adjusted for inflation.
Many perhaps regard Stamps as rather boring, but nevertheless there is a ready market among enthusiasts and careful investors for the rarest ones. An increase in value over the past 10 years of 166% is an indication of a good investment, for those who can afford to bid at auction. The one remaining 1856 British Guiana One-Cent Magenta has set a new record price each of the four most recent times it has been sold, the last time of $9.48 million in 2014. Many others have sold for over $1 million, but are in private collections and so are only available when their value is sought to be realised by the owner – ie almost as rarely as the stamps themselves are rare.
Something that really is often worth what beauty is seen by the individual is Jewellery. Very often the value is vested in the intrinsic worth of the stone or stones incorporated in a piece, some incredibly ornate such as royal crowns and tiaras which, however, are more valuable because of their history, or the person who put them together, so true worth is often difficult to gauge, but overall important pieces have been assessed as appreciating by 4% in the last year. Of course some, such as those incorporated into the British crown jewels, will never be sold, so their value is purely academic.
Diamonds, especially coloured, can be valued by weight, carats, and in fact are often retained simply for that reason, as they will appreciate in value automatically, without the necessity to be ‘set’. However, such is the intrinsic value of diamonds, that invariably they are incorporated into set pieces of jewellery. It was reported that the Wittelsbach-Graff diamond, originally blue and of 35.56 carats was sold to a member of the Qatari royal family for $80 million in 2011. Potentially the Graff Pink diamond is of greater value, but failed to sell at auction in 2013, so the ring cut from an original rough 132.5 diamond retains its last value of $73 million. In May 2016, the Oppenheimer Blue diamond of 40.62 carats sold at auction for $79 million – the battle obviously continues!
Watches are also items of beauty, with the value of the most sought after, assessed by cost of parts, time taken to construct, and rarity or uniqueness, rising by 5% in 2015 and an estimated 67% in the last decade. The most exquisite example is the Breguet Grande Complication Marie-Antoinette, supposedly commissioned by a lover of the French queen,. The watch took over 40 years to complete, finished long after the queen’s demise – current price: $30 million, but is in the L.A. Mayer museum, so unlikely to be sold anytime soon. The highest valued watch potentially available is the Chopard 201 Carat watch, comprising 874 diamonds, apparently the main reason for its sale value in 2000 of $25 million, rather than style and beauty.
The next category sought-after by investors is Chinese Ceramics, perhaps somewhat blasé in comparison with the foregoing, but still bringing considerable sums since the Chinese began trying to restore these items of heritage to what they see as their rightful owner(s), many pieces of which were secreted out of the country by westerners in the 19th century. An auction at Sothebys in early 2016 is expected to fetch bids close to $1 million for vases on offer, which can be expected to appreciate by up to 50% in the coming decade.
Furniture of the right type is also in great demand, although in general the value has fallen by an estimated 29% in the last decade. However, pieces such as those by Marc Newton still change hands for amounts well over $1 million when offered, with a Lockheed Lounge fetching $2.4 million at auction in 2015. The most expensive piece ever to be sold is believed to be a Florentine ebony chest made in the 18th century, inlaid with amethyst quartz, agate, and lapis lazuli among other stones which sold for $36 million at auction in 2004, actually breaking its own record which had stood at over $16 million from a 1990 sale.
So what other worthwhile objects would you consider investing in, assuming that you had the money? Do let us know.