With the introduction of self-managed super funds, diverse, lifestyle investing has become popular. It makes a lot of sense, you get to enjoy something a little luxurious, as it appreciates and is another egg in another basket. Always smart investing classic cars have been one of the most popular investments of this model.
5 ways investing in classic cars can be risky
Other’s will buy a classic car to enjoy and the investment component is not all that important. One thing is sure though, anyone investing in a classic car is investing his heart, his cash and his hopes. Here are some things to consider in a classic car investment.
Be Prepared to Lose
Like any investment, classic cars will not guarantee you a profitable return. Cars are fashionable, even classic cars, so what was a great investment when it was bought may lose its trend factor over time.
In fact, in the year leading up to June 2019, prices dropped some 5% and are expected to drop further. This is in comparison to rare whisky, which over the same period returned 23%. So, be realistic, you may lose money, you may, however, fall in love all over again!
A Lifestyle Dividend
Unlike the precious bottle of rare whisky, that cannot be opened. A classic car is its own dividend. Most classic car investors are enthusiast, they buy a car they have always wanted. It is an emotional investment…always a risk! But it is also its own reward.
It is a symbol of personality, of success, of style. You can use it, drive it, work on it and even modify it without it losing value. And this opportunity to embrace a lifestyle choice full of fun and luxury is exactly what a classic car brings to the owner.
Its own lifestyle dividend and I am sure if you asked any classic car investment enthusiast, they will tell you their classic car is worth far more than a 5% loss!
Research is Key
When buying a classic car for either investment or for fun, research is key. You will probably have a car you’ve been dreaming about for years, in my case a 1964 Karmann Ghia, the poor mans Porsche.
Although I always thought they were cooler and less showy!! There are three ways to buy your classic – privately, dealership or auction. The riskiest of these is usually a private sale, although these also mostly give the best buy price.
If buying privately don’t be afraid to ask questions. You want to get all the information you possibly can about the history of the car. If you feel there’s something not quite right, trust your gut. Like a good piece of art, a classic car should come with detailed provenance.
It is also a good idea to research common problems with that car and how easy parts are to get. Social media forums are excellent for this and most classic cars have a close network or clubs, these are excellent to join.
They will have people in them that live and breathe your dream classic and their knowledge will be invaluable.
Get an Independent Opinion
You will need to get a full mechanical inspection of the vehicle before purchase. This is just a no brainer. A classic car is a rare and fragile thing, and you will need to know, just how fragile it might be.
If the owner is confident, this should be no problem. This report will give you a blueprint of what you’re looking at, and a basis for a price. The other independent opinion you should get is simply a reality check.
Take a mate, your missus, her mother, whoever, but take someone that isn’t emotionally involved in the purchase. They may just be able to see something your passion is clouding, and they will talk you through it so that when you’ve made your decision, your confident that your classic car investment is all you want it to be.
Learn to Read the Market
Follow the market before buying. Magazines and online sales directories are excellent. Look at different models over time and you will get an idea of the overall market and the different players in it.
You will see small fluctuations in the asking price of models, this should give you an idea of what is on-trend and what is decreasing. The largest demographic by a long way for classic car investment is white men between 50-72.
So as a very rough investment strategy for interest only, start looking at sports cars between 32-54 years old. Check out what their prices are doing. These will be the cars the demographic will be looking at, pining for their lost youth. I kid you not, bless them!
So, with careful research, and some independent reality checks, the most important thing to remember about a classic car for investment is. To absolutely love it! After all, you’ve worked hard and have probably already made good financial decisions so back yourself.
It’s a lifestyle dividend remember. Looking pristine in your man cave or out on the road with the missus or the mates, a classic car will give you a simple, healthy thrill. Some of our picks for investment
Investing in classic cars a real payday
Just 36 of the 250 GTOs were manufactured between 1962 and 1964. This includes 33 cars with 1962-63 bodywork (Series I) and three with 1964 (Series II) bodywork like the Ferrari 250 LM. Four of the older 1962-1963 (Series I) cars were updated in 1964 with Series II bodies.
When new, the 250 GTO cost $18,000 in the United States, with buyers personally approved by Enzo Ferrari and his dealer for North America, Luigi Chinetti. This model has since become highly desired by automobile collectors and sales have repeatedly set price records.
The current record for world’s most expensive car was set in June 2018 when a 1963 250 GTO (chassis 4153GT) was sold in a private sale for $70 million. Maybe investing in classic cars could be your next money maker.