Can a hobby become an investment opportunity?
My husband is a whisky enthusiast , he would say connoisseur! He attends tasting events, does occasional distillery tours, reads about it and drinks a little. The main part of his hobby is his collection. Comprising of a number of bottles; some limited edition , some older and rarer, they are all unopened.
At some point this interest must have become an investment. Perhaps it wasn’t a conscious decision but he certainly tells people now that it is part of his retirement planning!
For this type of investment the difficulty is knowing when to sell, and perhaps more importantly having the discipline to sell. The peak pricing for his bottles could be 10 years before he intends to stop work so perhaps this being a retirement planning strategy is not really suitable.
I recently had an interesting conversation with a couple. They are financially secure but both have very different views on finances.
For many years he has owned a classic car. It rarely comes out of the garage and needs some money spent on it to get it back up to the condition it deserves. It started as a hobby, I am sure of that. But now he sees the expenditure on it as an investment. His wife, on the other hand, doesn’t see it in this way because she doesn’t believe he will ever sell it, therefore will never see the return on the money spent.
I believe that for some people the ownership of an asset is more important than value and they will never sell.
So if you have a hobby or collection which you feel has turned into an investment the things to consider are:
1. Is it really an investment?
2. When will you achieve the desired return?
3. How easy is it to dispose of the asset?
4. What is the exit strategy?
5. Is it simply better to continue to think of it as a hobby?
If you would like to discuss investments and exit strategies please contact me.
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