Recently, the Wall Street Journal ran a tremendously powerful article http://snip.ly/hm9s0 about how bonds have outperformed stocks since 12/31/1999. Over long periods of time, historically stocks are more volatile than bonds but also outperform bonds over the long term. The question is will this trend continue this century? Since 2000, investors have turned to adding an additional asset class to the cash, stock, and bond mix by putting more money into ‘alternative investments’. These include investments such as REIT’s, commodities, and precious metals.
Increasingly I am getting asked questions about other types of investments. One couple was debating the question about whether it would be better to put $75,000 more into improving their home for long term equity value or would it be better to put $75,000 toward repairing and restoring a 1970 Chevelle that they owned. Without delving into the question of what would get more use, the home or the car, my immediate challenge was around what would provide more potential value over the long term. Especially, if they were willing to part with the Chevelle down the road when they reached retirement.
Most people believe that collectible cars can be great investments. The key here that you must know what you are doing or you may have the same issues of just trying to pick a stock because you like the company. When the math got run according to www.hagerty.com, the data showed that all major indices in stocks and real estate had done better in value over the last three, five, and ten years than holding on to a 1970 Chevelle. If you know what you are collecting, it might make sense to look at diversifying into this non coorelated asset class. If you don’t, you might just get run over.
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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.