Thinking of Becoming a SPORTS CARD or AUTOGRAPH Investor? Is it 4 YOU? Watch Before You Start
December 12, 20217 min read
Should investing in sports memorabilia be part of your long-term investment portfolio? You buy a few pieces, put them away in a vault and hope they appreciate in 10-20 years. Well, that depends on a few characteristics which we will discuss in just a moment.
First off, long term sports memorabilia investing isn’t for everyone. Yes, we see all these blue check marks on the social media channels who have million-dollar collections appreciating very nicely. Gives the impression that it is easy or that anyone can and should do it. There are people out there that are very successful at picking long term holds. No doubt about it. Yes, sports memorabilia can be a solid long-term hold, but is it for you? That’s what today’s topic is all about. Hopefully, it will bring you some clarity and make that decision a bit easier.
I am not your investment advisor. What I am going to touch on today is just meant to get you thinking about whether or not you should be investing in sports memorabilia long-term. Keep in mind this will be very generalized so always do what’s best for you and your current situation.
Who is it for?
The type of person who is doing long term sports memorabilia investing has a couple key characteristics.
They have a passion and deep understanding of sports. They know who the G.O.A.T.S. are and which athletes are popular among collectors.
They know which types of items are collectible and sought after.
They can almost see into the future. Have a good track record of picking winners and seeing underappreciated assets.
They have deep connections within the industry allowing them to find rare items and great deals.
Probably the most important characteristic, and one I will dive into today is they can financially afford it.
Buying the type of memorabilia that will 5x or even 10x over the next 10-20 years takes some serious cash and financial planning. You have to be able to buy the item outright (not borrow money) and sit on it for 10-20 years. Meaning you won’t have access to that money because it’s stuck in your collectibles.
You have to be financially stable to do that. Look at it this way, people that do long-term sports memorabilia investing as one of their main investments in their portfolio aren’t hurting for cash. This is extra money they have after doing all their other investments such as real estate, mutual funds, etc.
In order to invest in sports memorabilia long term, your financial house must be in order first.
I’m talking about you have solid housing, you can cover your rent or mortgage with ease each month, 6 months of emergency funds in cash, and no consumer personal debt.
Ideally having other more proven and consistent investments already funded. Such as your 401k or Roth IRA.
While sports memorabilia certainly has taken off in the past few years and the future is bright, it doesn’t have a long-proven track record just yet for most collectibles people are investing in. Not saying it won’t get there. I believe it will as more and more data becomes available and people come into the industry and see these types of items as viable long-term investments. I just can’t sit here and tell you that each and every type of sports memorabilia will be worth more in 20 years than it is today. Who knows what the demand for trading cards or graded video games will be at that time. I’d like to think it will be much higher, but we just don’t know.
What I am saying is backing proven companies or mutual funds with 20-year + track records for most of us is a better option that investing in sports memorabilia long-term.
It’s a lot easier explaining and showing your wife your Raymond James statement than comps on eBay on what your collectibles might currently sell for.
This can charge depending on your age. If you are young and not married and have extra cash on hand and want to be a bit riskier with your investments, then you may fall into the category of a sports memorabilia long-term investor, should you meet all the other characteristics I just talked about.
However, if you are in your 70s, long-term sports memorabilia investing probably isn’t for you since you personally probably won’t reap the benefits of your investment. Should you want to buy it for someone else and have the financial resources to do that, that’s another story.
What we want to avoid is investing in sports memorabilia when our financial house isn’t in order.
Currently, 8 out of 10 Americans live paycheck to paycheck. Nothing wrong with that if you are working hard to get out of that cycle. We’ve all been there at some point in our lives. I remember making $15 an hour in my 20s at a sports memorabilia store in California and thinking I had arrived! Half the money I made went to my rent and car so I was constantly scrounging for cash each month.
At that point in my life, no way I should have been investing or even collecting sports memorabilia. I was just trying to pay my rent and buy food.
It just kills me when someone asks if I offer payment plans on the items I sell. The answer of course is no. It’s not that I couldn’t, I just don’t believe in paying for something that is a “want” with money you don’t have.
My answer is always the same, please save up, and when you are ready then reach out.
Let’s take a quick look at 2 different investing outcomes to help give you something to think about before making that jump into a long-term sports memorabilia investor.
Scenario #1 - You take $10,000 and put it in a traditional mutual fund. Of course, it has had its share of ups and downs, but since 1926 the S&P 500 has averaged about a 10% rate of return each year.
If we added nothing to that investment, in 10 years that $10,000 would be worth about $25,000. In 20 years about $67,000. Guaranteed? Of course not, nothing is rarely guaranteed in investing. However, given the historical data we have going back to 1926, it is a fairly safe bet that 10% rate of return on average would continue.
Scenario #2 - You take the same $10,000 and buy 10 different $1,000 collectibles you believe in and put them away in a safe (or any other combination, such as 2 $5,000 items for example).
Some questions you want to ask yourself are what are the odds all 10 of these items double in 10 years? What are the odds they 6x in 20 years like our mutual fund example? What happens if they don’t go up in value at all or even worse lose value? All scenarios are possible.
What I am getting at is treat your collectible investments much like your crypto investments. If they go way up in value great. If they go to 0, it’s OK because the money invested in them is money you could afford to lose. It isn’t your rent or food money. But it also isn’t taking away from proven investments with long track records. Most sports memorabilia doesn’t have a track record that goes back to 1926.
Who knows sports memorabilia may actually outperform the S&P 500 in the future. That is highly possible. It is also highly possible our entire economic system implodes because DC can’t stop spending borrowed money.
I just hate seeing people get burned in the sports memorabilia industry. I’ve seen so many posts on social media this year on people joking about their investment in athlete “fill in the blank” tanking because of various reasons. While all funny on social media, that is real money that is being lost that has a real impact on people’s lives.
Imagine explaining to your wife that your sports memorabilia investments are down $5,000 or $10,000 on something she probably didn’t want you to buy anyway. That has to be a drain on that relationship.
I have no way of quantifying this, but I am 100% positive divorces have happened because of reckless investing in sports memorabilia. Whether that is buying into sports card breaks or buying something one couldn’t afford. Due to recent price fluctuations, 100% there are people out there that have currently lost thousands of dollars.
While that is a bad thing in of itself, it would be WAY worse if that was with money that was borrowed or money that was meant to go towards rent, your kid’s college fund, other proven investments.
Let me be clear, there are some great long-term sports memorabilia buys out there. Tons of opportunity. I know it feels like I am not excited about the future.
However, I want you to make sure before you make that jump into an investor, that you understand sports memorabilia can be a risky venture. Lots of market manipulation, highs and lows, and not a huge pool of data to pull from just yet. Just because items are appreciating now, doesn’t mean it will always be that way.
In the financial world there are investment professional out there with decades of experience who can teach you what you are investing in. We just don’t have that yet in the sports memorabilia world so you are sort of stuck at going at it alone. It can be very fun though. Just make sure you do it with money that you actually have and buy items you can afford and personally believe in. Not just because some blue check mark says so.
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