Wealth Insights

The luster of collectibles as an investment

Explore how to fit your passions into your wealth plan.

• Collectibles as an investment may add diversification to a wealth strategy, but their value depends heavily on condition, rarity and market demand.
• Proper documentation, insurance, storage and tax planning are essential to protecting the long-term value of a collection.
• Thoughtful estate planning may help ensure a collection reflects your legacy and is transferred according to your wishes.

Sometimes, an alternative asset is as familiar as your favorite luxury accessory. We’re talking about collectibles, a term which includes everything from autos and antique jewelry to wine and watches.

Most collectors start out buying what moves them without an intentional investment strategy for the collectibles. For most, it’s less about financial gain than personal satisfaction. However, collectibles have the potential to hold value and at times may deliver a return if you can provide proper sourcing, careful storage and adequate insurance to protect against accidents, theft or damage.

The pros and cons of collectibles

Because collectibles may react differently than traditional stocks and bonds, some investors view them as a potential source of diversification. There are even online companies offering fractional ownership of collectibles, though you can’t take your shares of a classic BMW for a test drive, unfortunately.

Keep in mind that the condition, demand and scarcity of an item may significantly influence its worth and selling one owned for more than a year could trigger the maximum federal long-term capital gains tax rate of up to 28%. Short-term gains are typically taxed as ordinary income. Intentional planning may help prevent taxes from taking a larger chunk of the collection’s value than you expected.

Love you, but not your stuff

There’s also the risk that your heirs will take one look at your stamp collection, shrug, and sell it at auction for a fraction of what it’s worth.

If you’re a serious collector, it’s important to incorporate your collection into your estate planning by considering who might steward it and including the proper appraisals and documentation on provenance. Professionals from the Appraisers Association of America typically recommend having collectibles appraised every 3 to 5 years, depending on the item.

Collectibles as part of a bigger story

For some collectors, prized possessions become more than personal treasures. They become a way to create experiences, support causes or leave a lasting legacy.

Consider North Carolina native Jon Collins-Black, who amassed a multi-million-dollar collection of gold nuggets, rare coins and precious stones. In a move that sounds more like fiction than finance, he placed the items in five bespoke treasure chests hidden around the United States and published a puzzle book containing clues to their locations. His treasure hunt demonstrates how collections can take on a life and purpose beyond ownership alone.

Others use their collections to create impact. Florida philanthropist and fashion enthusiast Harriett Lake chose to turn her passion for haute couture into a charitable legacy. Before her death, she sold her renowned collection at a high-profile event and directed the proceeds to Harriett’s Charitable Trust, which supports healthcare and arts organizations. Her example illustrates the power of thoughtful planning to turn a collection into a force for good.

Passion paired with planning

Ultimately, the value of a collection extends beyond what it may fetch at auction. Whether it’s a vintage handbag, a rare car or a carefully curated wine cellar, collectibles can bring meaning, enjoyment and a personal dimension to wealth. The key is to view them through both a passion and planning lens. Thoughtful documentation, insurance, storage and estate planning are advised to help protect what you’ve built while making it easier to pass along your legacy.

When incorporated into a broader wealth strategy, collectibles have the potential to serve as more than treasured possessions. They can become a lasting reflection of your interests, values and life story.

Talk to your Regions Wealth Advisor about:

1. How to incorporate collectibles into your planning.
2. Having a family meeting to discuss your intentions and wishes.

Want to get started with wealth planning?
Our wealth management guide can serve as your starting point.

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Sources: Christie’s, Sotheby’s