Perhaps the most traditional way to invest in real assets is to buy an investment property. Many investors feel comfortable with property because it’s something tangible. You can visit it, you can touch it, and you can see its value.
But property isn’t the only real asset people invest in. Art, classic cars, and fine wine have all become popular ways to diversify portfolios — and, for some, to combine passion with profit.
According to Knight Frank, over the last ten years, classic cars have risen by 334%, while fine wine is up 192%. In the last twelve months alone, art prices have climbed 21%.
Collectors have made headlines with staggering purchases. A 1956 Aston Martin DBR1 raced by Stirling Moss was sold by RM Sotheby’s for US $22.5 million. Michael Schumacher’s Monaco Grand Prix-winning Ferrari fetched $7.5 million in New York, setting a world record for a modern-era Formula One car.
These numbers are eye-catching — but they tell only part of the story.
There’s often an emotional connection with real assets. You might love classic cars or collect art because you appreciate the craftsmanship. That interest can lead you to read more, talk more, and immerse yourself deeper in the subject. You become confident — sometimes too confident.
Behavioural science calls this confidence bias. When you believe you know your niche, you can easily convince yourself you’re making a great deal, even when logic might suggest otherwise.
Norman Braman, a well-known US art collector, once said after overpaying for art, “the market will catch up.” He may be right — but only if time and wealth are on your side.
For most people, that’s not the case. If you can’t afford to buy the very best, due diligence becomes essential. Mistakes can be costly.
At a recent investment conference, I heard about a wealthy individual who wanted to buy a 1957 Mercedes 300SL — price tag: over US $1 million. It was painted in the perfect colour, bright yellow, exactly what the buyer wanted. Lawyers were ready to complete the purchase when his adviser urged one last check of the provenance.
With only around 500 cars ever made, it was possible to trace the car’s history. Engineers were brought in, and they revealed they had seen the same car the year before — but back then it was white, and it had no chassis number. Somewhere along the way, the truth had been “massaged.”
Art, cars, and wine are full of such stories. Unlike traditional investments, they are unregulated. There is no consumer protection. It really is caveat emptor, buyer beware.
Before you commit your money, pause and ask:
~Why am I buying this?
~What are the risks?
~Do I understand the costs of ownership and maintenance?
~If I make a mistake, can I recover easily?
~Could this decision impact my long-term financial security?
Real assets often come with the pleasure of ownership, but emotions can easily cloud judgment. The best safeguard is to write down why you’re buying and what you expect to achieve. Having a written record of your reasoning helps bring clarity, especially when enthusiasm runs high.
If you like the idea of owning real assets, start by thinking carefully about your motivation and your risks. Once you’ve done that, come and talk to us.
At The Wealth Coach, we help clients build frameworks for making good investment decisions, whether regulated or non-regulated. We don’t make recommendations on non-regulated investments, but we do help you think critically, ask better questions, and ensure your decisions are well considered.
If specialist expertise is needed, we’ll bring in the right professionals for you. The more thoughtful your process, the greater your chances of achieving a positive outcome.
Nic Round is a Chartered Financial Planner and Chartered Wealth Manager, authorised and regulated by the Financial Conduct Authority.