If you are going to invest your hard-earned cash in something, it makes sense to spend it on an asset that will appreciate in value and offer long-term financial security. But just as most things in life aren’t free, much of what we buy today will have less value in a few weeks, months or year’s time.
However, here are a few of the hot-ticket items you should consider investing in if you are looking to make a considerable return over time.
Rare Art
Art is often seen as a good investment, as it is not affected by volatile market conditions or stock market activity. According to the Deloitte Art and Finance Report (2019): ‘Art is thought of as an asset class that holds its value.’ It has the strongest positive correlation with the price of gold than any other asset class reviewed in the study. Irma Stern is currently the most valuable South African artist, and her paintings sell for on average R6 million. A sought-after Irma Stern could be worth as much as R50 million, according to Henley’s Africa Wealth Report (2022). Art collection is now also moving online with reports that 88% of high-net-worth (HNW) traditional art collectors are expressing an interest in buying digital art in the form of NFTs.
Property
While property often requires a significant financial outlay, by working with a bond originator to secure a competitive interest rate, it could be one of the best long-term investments you make. ‘Property is a tangible asset that appreciates in value over time,’ says Carl Coetzee, CEO of BetterBond. ‘It is also a good hedge against inflation because as this increases, so too does the value of your property.’ Although house price growth has slowed as interest rates have started to increase, Lightstone reports that national year-on-year house price inflation was at 4.46% (figures for end of May). Furthermore, by making improvements in your home, you could also increase its value, says Carl.
A buy-to-let property can also be a reliable source of monthly income. Depending on the type of property and its location, you can expect a substantial rental yield. According to TPN data (August 2022), the rental yield on sectional title properties in Mpumalanga and the North West is above 11%, followed closely by Gauteng which has a yield of 10.8%. ‘Sectional title properties are always a good investment, as there is a strong demand for homes that offer security and lock-up-and-go convenience.’ Student accommodation is another excellent investment option, especially in university towns such as Stellenbosch where there is just not enough accommodation on-campus to meet students’ needs.
Luxury watches
Watches and wine are the strongest two asset classes for luxury investments, according to the Knight Frank Luxury Index report for 2021. The Africa Wealth report, produced annually by Henley & Partners, notes that popular watch brands for South Africa’s high-net-worth-individuals include Patek Philippe, Breguet, Vacheron Constantin and Audemars Piguet. The prices of these collector’s items range from US$20,000 (R347 195) to well over US$1 million (more than R17 million).
Fine wine
More than just a nice-to-have at a celebration or a lazy, weekend lunch, wine can be a profitable investment. In fact, the more wine that is drunk of a rare collection, the more sought-after and valuable the remaining bottles become. According to Wine Cellar, traders in local and international wine, no two vintages of wine will ever be the same, so the demand will always outweigh the supply of rare wine. The Knight Frank Wealth Report (2022) found that wine with a 16% increase in value delivered the highest average return in its review, outperforming art, rare whisky, vintage watches and classic cars.
Classic cars
New World Wealth’s in-house indices point to an 84% increase in classic car prices globally over the past decade, making this one of the best performing investment categories. In South Africa, the most popular cars owned by HNWI include the Mclaren F1 from the 1990s and the Ferrari 250 GT SWB and Ford GT40, both from the sixties.
Collectibles
It often starts as a hobby or a fad, but collecting items like first-edition comic books or popular action figures could end up being a lucrative pursuit. Most amateur collectors start with stamps, as they require little initial investment. Coins that are no longer in circulation, or that were released to mark an event, may also become increasingly valuable over time. Sneakers have become popular in recent years, but they have to be brand new. The original Nike SB What the Dunk was sold for $120 dollars but is now worth more than $5 000 (over R86 000).
Collectible toys are also big business. If you want to cash in on these in the future, be sure to keep any items you buy now in their original packaging and choose wisely. Toys released to coincide with a movie or anime are likely to be more sought after in a few years’ time. Just to give an idea of what your toys could be worth – a vintage Barbie from 1959 is now worth about $23 000 (almost R400 000), according to Investopedia.
As with most collectibles, the value of sports memorabilia is determined by its rarity and significance. It could be an autograph on a trading card, or a World Cup Rugby jersey signed by the whole team. If your sports item is in an excellent condition, and is highly sought after, it could be a good investment. Argentine soccer legend Diego Maradona’s shirt from the 1986 quarter-final when he scored a goal against England sold for a record-breaking R141 million in May this year. Locally, Springbok jerseys are always in demand, so hold onto that signed shirt from Siya Kolisi or Eben Etzebeth – it could be worth a pretty penny in a few years.
Also see: Smart spending guideline
Follow BONA for more!
