Why You Should Spend Your Spare Time In Hobby Investing
There are markets around the world for all sorts of different collectibles, like sports cards and memorabilia for example and these days a lot of retro things are popular. Bats, balls, shirts, signed rarities from famous people and other small assets are going crazy. People have excess capital and are more likely than ever to go and buy a baseball that was pitched in a specific game by a specific player.
If you have these things in your possession, it’s an example of hobby investing, which can actually be worth a handy little sum.
Lack of supply
Look at old toys from the ‘60s or ‘70s… suddenly they’re going up in value. People have fond memories of some toy they played with as a kid, so when they see it pop up for sale, they might pay $500 for it. And they pay that much because they want it back, but everyone else’s parents threw them in the bin just like their own parents, so they are rare. The nostalgic value is through the roof.
Coining a trend
Different people store different hobby investments. One thing that b Invested founder Nathan Birch has often talked about is his hobby of collecting currencies. He has a few vaults where he stashes coins, notes, bags of pennies and so on.
Some of these coins could hold or increase their numismatic value, either for the materials they are made from, or their appeal as a collectible.
Gold at the wrecking yard
Vehicles are another popular category for collectors. They might like to collect and restore or preserve vintage cars or motorcycles, or they might have realised that certain car types would increase in value later.
Nathan has collected cars over the years mainly for the nostalgic value and he knew the day would come when people would pay money for the cars that were being sent to the wrecking yard 15 years ago.
While working his former job in car advertising, he noticed that before the GFC in 2008, people used to drive cars that were 20 or 30 years old. Nowadays, if someone is driving a car more than 10 years old, people would ask why?
The reason is that car dealers now try to sell you finance rather than a car. The car has become more of a derivative and when it’s 10 years old it becomes disposable.
The result is that a Daihatsu or similar that could have been a $200 car that got sent to the wreckers back in the day, is now selling for thousands of dollars. People are looking for those vehicles.
Other areas could be antiques and collectibles, collecting old ashtrays or old bottles and so on.
Don’t look a hobby horse in the mouth
A factor of hobby investing to consider is that it’s best to avoid buying things that have already gone up in value.
People might be looking for an expensive card or toy from their childhood and they try to buy it, but you’ve only done well if you’ve got a $5 Tamagotchi that’s now worth $500. You wouldn’t want to be the one paying $500 if you’re looking at it as an investment.
One of Nathan’s great value buys over the year has been old mobile phones, like Nokias. By purchasing a lot of old phones that were going to be thrown away for $2, $5, or $10 he has created a decent store of value.
Say 1000 old phones at $5 a pop is a $5000 investment and now these old handsets are no longer available. Say they fetch $100 each online, that $5000 investment has become $100,000.
Nathan likes buying things of value that are below rebuild cost. He thinks about all the electronics and the value gone into the soldering, plus the cost of the metal inside the handsets.
Rather than buying things that have gone up in value, you need to get them when they’re about to be thrown away.
Diversification, not foundation
So, should you get into hobby investing? It’s up to you. You can’t leverage it, it doesn’t bring a cash flow and it is a very niche market so pick your hobbies before investing and make sure you know you’re not building a house on it.