The alternative investment market is growing in rapid numbers - with a record-breaking $10.5 billion in alternative assets bought in January 2022, according to investment bank Robert A. Stanger & Co. Inc.
Alternative investments is an umbrella term typically referred to for any investment outside the traditional stock market. We’ll focus on one specific class that’s gaining lots of traction at the moment: Collectibles.
Collectibles can be both physical assets or digital assets. These digital assets can come in the form of NFTs or online gaming items and collectibles such as clothing or skins for characters that can be purchased in virtual stores.
People typically invest in the collectible market for two main reasons, one being very passionate about the collectibles – think Starwar fans, MLB fans or even people who follow world famous singers and bands collecting autographs and music collectibles.
The other half typically buy alternative assets to diversify their portfolio and are in the market because of the invest side of things. Traditionally alternative assets have been a way that the super rich diversify their portfolio's, in order to achieve less volatile returns. So it's no surprise what the total market value is worth or traded at amongst inestors.
While luxury items might be worth a lot of money, not every luxury asset increases in value over time. It’s an important factor and why we also recommend to do proper research to ensure what you are purchasing or investing in will only gain value with time - instead of losing value, as many physical assets typically do.
Here are popular examples of physical collectibles:
But as we mentioned, there are also digital collectibles. Digital collectibles use blockchain technology to create non-fungible tokens, often referred to as NFTs. An NFT is an asset that can be made from any original digital piece, such as art, music, and even tweets.
If you’ve been following Twitter or the news, you’re probably aware that the NFT market is exploding. In 2021, the global NFT market hit nearly $41 billion, according to blockchain analytics firm Chainalysis. In fact, the NFT market is even outperforming crypto. And it’s definitely here to stay!
So after doing your due diligence, you’ve decided to bite the bullet and buy that Rolex you’ve been eyeing and as well as a fractionalized share of a high-profile NFT. The question you’ll be asking yourself from here on out is: What is this worth?
Here are a few key factors to take into account when tracking your collectibles' value:
Each type of asset class with have their own authentication process and tests to ensure quality and condition of the physical asset. For example, trading cards typically go through a grading process with companies like PSA that gives them a grading number based on cards incircualtion. This can ultimately raise the price of the asset due few of the same collectible being in either prime or GEM Mint condition.
While other asset classes such as watches have to go through an authentication process with specialist trade tools to ensure its legitimate and has not been damaged to determine the value of the watch. Other factors such as being worn or unworn (with stickers) also affects the price with buyers vauling stickered and tagged watches higher than watches that have been worn.
Physical assets are a bit more tricky. You’ll have to take the above factors (demand, condition, rarity, etc.) into account, as well as determine a price estimate for your collectible.
Here are a few ways to go about determining an up-to-date value for your collectible:
If you’re dealing with a digital asset, chances are you’ll either be provided with data directly from the source you bought it from. Or, you can use an online NFT tracking service to give you an estimated value. Different NFTs will have characteristics or traits which make them more scarce or valuable in a collection, other NFTs can be added to the collection which is an addition to transform or grow your NFT. One of the most popular examples is the use is the Mutant Bored Apes, where user’s were airdropped mutant ape serum. This ultimately changed the look and aesthetics of the original NFT.
Believe it or not, most investors of alternative assets are manually tracking the value of their alts. And most are doing it with a plain, simple Excel spreadsheet, with lots of manual data entry and required maintenance. Talk about a *fun* weekend keeping that up-to-date!
If you do want to manually track via a spreadsheet, here are numbers to help provide a very basic rate of return:
Tracking manually is an absolute pain, and there’s plenty of room for error. There are easier ways to track the value of your collectible investments automatically, via alternative investment platforms like AltExchange. AltExchange, unlike other alternative investment management platforms, is free to use for up to $1 million in assets tracked.
This eliminates the need for spreadsheets, hours worth of research, and room for error. Instead, you can see how your investment is performing in real-time, whenever you’d like, and get an accurate representation of your investment performance - just as you would with any stock market investment.
Overall, investing in collectibles can be a more time-consuming, thoughtful process compared to other investments. It requires due diligence that the item you’re purchasing has the odds of increasing in value with time and age, as well as maintaining its status as an in-demand item in the future.
But investing in collectibles can also be quite lucrative when done right. Not to mention, a thoroughly enjoyable process: You get to own something you love, or that interests you, that will only increase in value with time.
We teamed up with AltExchange on this blog post to bring valuable insight on how to value your collectibles. AltExchange was founded by investors, for investors. As the go-to solution to make alternative investing an efficient, accessible marketplace for everyone.
To get started tracking your alternative investments for free, visit https://www.altexchange.com/.
If you’d like to buy, trade and sell Fractions tied to collectibles, check out our homepage: https://www.joinkoia.com/.
At Koia, we allow you to buy, trade and collect fractions of iconic assets, starting from $60. Our experts make sure to source and buy the best assets, and we take care of authentication, storage and insurance. All of the benefits, with none of the hassle.
The articles and information made available on Koia are provided for information and educational purposes only and do not constitute financial advice. You are advised to consult with an independent financial advisor for advice on your specific circumstances.