Next time you feel hard pressed to justify that expensive hobby of yours, consider this: more and more of America’s most affluent investors are taking up so-called “hobby investing,” and often making good money in the process.
Many of us, whether we realize it or not, collect something as a hobby. Perhaps it’s for the fun of it, for aesthetic purposes, for nostalgic reasons – whatever the purpose we all do it. Wine, art, stamps, cars (wouldn’t that be nice) – many people are realizing that things we collect may hold a bit more monetary value than they may have realized.
More and more Americans are adding their hobbies as investments to their stock portfolio. Seem crazy? Maybe not. While most markets crashed during the recent economic downturn, many of the hobby investment categories “took a smaller dip than the S&P 500, and then recovered more quickly”. These categories are providing investors with low correlations and high returns. Sounds too good to be true, right? Wine collecting, probably one of the most accessible of the categories mentioned, would have returned 13.62% from 1993 to 2013. Pull this stat out anytime you need to justify this hobby. Another hobby many of us wish we had the space and funds for, classic cars, have appreciated by an astonishing 430% in the last ten years.