Alternative Investments

12th October 2016

Over 50's

Some people are always looking for new ways to make money, and one of the most satisfying ways of doing it is to invest in something that’ll gain value. Alternative investments refer to anything that’s not shares, bonds, mainstream property or cash. 

Alternative investments give you the chance to invest more directly in areas of personal interest, assets generally being real-world items such as collectibles and precious metals. So here at Asda Money we’ve taken a look at some of the alternative products which are considered worthwhile investments.

Vintage Stamps

Rare stamps are one of the most well-known alternative investments, and are currently showing no signs of falling behind their competitors. By weight, rare stamps are the world’s most valuable products, with the global stamp market reportedly reaching well over £6 billion per annum. In fact, the highest price ever reached for a single stamp at auction was a staggering $9.5 million, for the British Guiana one-cent magenta. 

Stamps have always been a stable investment, and the GB250 Stamp Index has never fallen. The index shows the top 250 traded British stamps, and since its inception in 2002, it has tracked the market’s consistent year-on-year growth.

So what is it that makes a good investment-grade stamp? Authenticity, condition and rarity are the most important factors, therefore any damage, however seemingly small, can drastically affect a stamps value.

If you want to invest in stamps without buying them, alternative investment experts Stanley Gibbons offer an option to invest. By doing it this way, you can start with an initial investment of £1,000, followed by a minimum quarterly payment of £300 thereafter. It doesn’t matter if you aren’t an expert in stamps, as their expert “stock pickers” will look after every aspect of the investment for you.

Forestry

Believe it or not, money really can grow on trees, if you decide to invest in a forest. Alongside the appeal of feeling like you’re doing some good by helping the environment, one of the best things about investing in a forest is that it naturally increases in size each year, without any effort involved from the investor. 

According to the IPD UK Forestry Index, UK woodland has been one of the best performing investments over the past decade. However, buying a forest will typically set you back at least £500,000, so it’s certainly not a cheap option. If you’re interested in pooling money into forestry, there are certain schemes run by companies such as Stellar Asset Management that offer this service. Minimum investments generally range from £15,000 to £30,000 for these sorts of schemes.

When it comes to making money from forestry, the strongest return on your investment is found when the land that you buy increases in value. The value of the trees planted on the land will also increase, and if any of the trees are felled for timber, the investor will receive a share of the profit.

Wine

The wine market has remained stable for a long time, so whether you decide to invest in a rare bottle, case, or an entire cellar, you can almost guarantee decent low-risk returns. Depending on your wine knowledge and preference, wine can be purchased either independently, at a fine wine auction, via a merchant, or through a trader.

Due to the sheer variety of wines out there, you’d be forgiven for feeling unsure about where is best to start. Traditionally, if you were looking to make a good investment you would’ve been limited to wines from the Bordeaux region, such as Château Lafite and Château Latour. However, according to the Liv-Ex Fine Wine 1000 Index, recently wines from Burgundy, Champagne, the Rhone, and even Italy have been doing extremely well in terms of investment value.

If you’re serious about investing in wine and decide to go through a wine merchant, you will typically need at least £5,000 to £10,000 to get started. Even if you don’t choose to go through a merchant, it’s always advisable to get an expert opinion before you go ahead with the purchase.

It’s also worth knowing that fine wine investment is often referred to as being tax-free, which is because it’s exempt from Capital Gains Tax. Whilst wine is definitely more tax efficient than some other forms of investment, we recommend consulting with a tax adviser before you make any decisions.

Fine Art

Investing in fine art has a number of appealing factors, and buying a painting that you’re passionate about can give you a lot of pleasure over the years that you own it. The longer you keep a piece of art, the more valuable it tends to be, although this type of investment definitely needs to be handled with caution.

Fine art auctions attract a lot of interest and continue to increase in popularity. Christies, one of the main global auction houses, reported recently that almost twenty percent of their bidders were new clients, and the actual total number of registered bidders has more than doubled over the last decade. This shows that if you’re intending on investing in a piece of fine art, now is the time to do it.

Last year, figures from the European Fine Art Foundation showed that the market was booming, as 2014’s sales reached a record £37bn. An oil painting by French Post-Impressionist artist Paul Gauguin titled ‘When Will You Marry?’ sold for almost $300m, the highest price ever paid for a work of art.

If you're intending to buy a piece of fine art as an investment, it’s important to choose a popular style or artist, so that when it comes to selling it people are interested. However, because art is such a personal choice, and you’re likely to hang onto it for a long time, be certain that whatever you choose is something you really like.

If you’re considering a big investment, make sure that your life insurance is fully up-to-date, so that your assets are protected. For more information about Asda Money life insurance, click here.

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