[Writer’s Name]
People often underestimate the value of investing in alternative items. This could be justified by suggesting that people lack the knowledge required when deciding to invest in alternatives. Before making an investment decision in this sector it is essential to understand the benefits and drawbacks.
There are several advantages of collectibles. These are portable; which mean people can easily carry them from place to place and history provides evidence of refugees who invested in gold coins. The value of these collectible would be standardized which allows them to be easily traded anywhere in the world unlike other forms of investments. Moreover, the investor would earn a capital gain above the inflation rate by investing in this commodity. Adding to these benefits, the investor can enjoy the appreciation in the value of commodities which is unusual for shares, bonds etc. The aspect of fun in learning about collectibles and getting information cannot be enjoyed by investments in any other form of commodity.
However, one must not get intimidated by the benefits and ignore the flaws which accompany this form of investment. The most prominent drawback is that collectibles require a higher part of initial investment as they are extremely expensive. Furthermore, if people do not have the knowledge about the collectible they are interested in investing then they can be easily conned. Moreover, the market of collectibles is very sensitive to supply and demand which can lead to liquidity problems. Therefore, if an investor wants to sell on a short notice they could encounter a problem in finding an interested buyer.
I would not include collectibles in my portfolio for a two main reasons. Firstly, I do not have the knowledge or interest of investing in such items and this is high risk which would not like to undertake. Secondly, collectibles are not easy to liquidate and in a volatile market I do not wish to take this kind of risk when I have an option of making much safer investments.
