Investing with passion.

AuteurDonnellon, Brien
Fonction Money

Art, jewellery and wine have become increasingly popular for investors in these times of economic uncertainty. Nowadays, bad news on the stock market is often good news for collectors and sellers, as many investors search for a safe haven. These investors not only seek a fair return, but also wish to enjoy their investment. Let's explore some of the ways to invest where your passion lies.

Arguably, the key to choosing the best "passionate" or alternative investment is to differentiate between luxury goods and genuinely rare items of emotional value. For example, it is possible to obtain a discount when purchasing a luxury car, jet or yacht, but not a famous or rare painting.

Investment funds

An investment fund might be the best bet for inexperienced investors, or those with insufficient cash. Many fund companies have designed funds to incorporate this unique asset class. Unlike most individuals, fund managers can pool the knowledge and experience of their network of international experts to search for and identify specific investment opportunities. Such funds should be able to manage risk in their portfolios at several levels. However, even though you have handed over the responsibility to specialist fund managers, like all investments, investment in art, collectables and other passion investments can pose substantial risk of loss.

For many reasons, investors often decide to go it alone, so let's look at three of the investment segments:

Luxury watches

The best watches increase in value; however, like any luxury product, it is important to know the difference between the collectable and the simply expensive. Similar to a car, the moment a watch is taken out of the shop it loses value; therefore, a novice buyer should beware.

Probably the simplest way to begin is to buy a vintage or rare piece from a specialised auction organised, for example, by Christie's or Sotheby's. Since 1980, Sotheby's has offered a separate category for specialist watch auctions in Geneva, London, Hong Kong and New York, and is recognised as a pioneer in this specialised field. The auctions include pocket and wristwatches with timepieces from the 16th to the 21st centuries.

Sotheby's holds the record for the most expensive watch sold at auction: the Patek Philippe no. 198.585--known as Graves Supercomplication--sold for US$11,002,500 in New York in 1999. Completed in 1952, the 18-carat gold pocket watch took over five years to design and manufacture and contains 900...

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