2022 was a tough year for investors.
The S&P was down 19.64%.
The Nasdaq tumbled 33.47%
Bitcoin crashed 60%.
But one group of investors was UP last year. In fact, they were up 25%.
Can you guess what they invested in?
I’ll give you a hint: they invested in the automotive sector. But not in electric cars, self-driving cars, or anything like that at all.
Today, I’ll reveal exactly what they invested in — and explain how you can take advantage of it to earn big profits outside of stocks.
An Alternative to Stocks and Bonds
To set the stage here, let me explain how the rich invest.
As I’ve written about in recent months (for example, here and here), the rich invest differently.
They don’t have typical 60/40 portfolios. And this difference might explain why they keep getting richer.
You see, according to the Motley Fool, the rich mainly invest in “alternative assets.”
These alternatives include private startups and private real estate deals — the kind we focus on here at Crowdability.
But they also include fine art, fine wine, books — and as it turns out, classic cars…
Vroom, Vroom… all the Way to the Bank
I’ve been obsessed with cars since I was a teenager.
In 1983, after two summers stocking the dairy aisle at the local Stop & Shop, I saved up enough money to buy a fire-engine red 1969 Chevy Camaro. It was $1,600.
Can you guess what that Camaro would be worth today if I’d held onto it?
According to classic-car marketplace Hemmings.com, it would be worth about $100,000:
That’s a return of six-thousand-two-hundred-and-fifty percent.
More than sixty times my money. Wow.
What’s going on here?
Cars as an Asset Class
Collectors of art, watches, and cars tend to seek out uniqueness and scarcity.
For example, a Patek Phillipe watch called the Grandmaster Chime sold for a whopping $31 million. This watch was designed for Patek Phillipe’s 175th anniversary. It took seven years and over 100,000 hours to create. It’s the most complex Phillipe watch ever built, and it features a special inscription, “The Only One.” That’s unique!
It’s a similar story for cars.
Consider a 1955 Mercedes-Benz 300SLR Uhlenhaut Coupé:
Last year, it sold at auction for — get this — $143 million.
But there were only two of these beauties ever created. Talk about scarcity.
A price tag like that is extraordinarily unusual. This was the most expensive car ever sold. Certainly, not every vintage or classic car will turn into a homerun investment.
That being said, according to a 2022 Knight Frank report, from 2005 to 2021, the value of classic cars as an asset class increased 400%. And as mentioned earlier, even when stocks, bonds, and cryptos crashed last year, classic cars were up 25%.
From a financial perspective, that’s very strong performance.
Other Benefits of Alternative Assets
Of course, there’s also a non-financial benefit to investing in alternative assets:
Enjoyment!
For example, you can hang art on your wall, wear a vintage watch, or drive a beautiful old car.
Ready to dive in?
To explore buying a classic car that you can drive yourself as it (hopefully) appreciates, check out websites like Hemmings.com or ClassicCars.com.
Or, on a platform called Rally, you can buy “shares” of classic cars like a 1965 Ford Mustang. Most shares start at about $20 or so.
Red Light!
Keep in mind, all the typical caveats about investing apply here:
For example, don’t invest more than you can afford to lose; invest in what you know; and be sure to dip your toe into the water before diving in.
Furthermore, many alternative investments aren’t entirely “liquid.” That means they can’t necessarily be converted into cash at the snap of your fingers.
So don’t invest your rent or grocery money into these offerings. But if you’re looking to invest like the rich, alternative assets like classic cars are a great place to start.
Happy Investing… and Happy Driving!
Please note: Crowdability has no relationship with any of the startups we write about. We’re an independent provider of education and research on startups and alternative investments.
Best Regards,
Founder
Crowdability.com
