Investing in Tangible Assets

Charlie Shipman |

Remember Beanie Babies?  In the late 1990’s, Beanie Baby mania swept the country, with amateur collectors searching frantically at every card shop and kids store to find the latest beanie. Many turned to online stores and eBay, looking for the Beanie Baby that would make them enough money to retire or send their kids to college. Ty, Inc., makers of Beanie Babies helped to fuel this craze by ‘retiring’ certain Beanie Babies, making them unavailable, and in essence, increasing their value.  The Beanie Baby craze lasted through 1999, abruptly ending when Ty Inc. announced that it was stopping production on the toys.

Tangible investments can feel an awful lot like collecting Beanie Babies, reaching heights never dreamed of, but also plummeting without warning, so that the object you’re holding gingerly in your hand today may be relegated to the back of the closet with little fanfare tomorrow.  

Tangible assets vary from large, expensive investments such as real estate, to a small painting by an unknown artist, with a lot of choices in between.  Here are some options if you’re interested in investing in tangible assets:

Real Estate

Both land and improved properties can be a good investment option.  While investing in land can be considered a long-term investment, investing in property can prove to be a good investment in the shorter term, particularly if you’re interested in improving or rehabbing properties and reselling them for a profit.  Others less hands-on may choose to invest in a Real Estate Limited Partnership or Real Estate Investment Trust (REIT), both which carry tax advantages and some risks.

Gold, Silver, and Platinum

People have been investing in precious metals for a very long time. While the market tends to fluctuate more with platinum, both gold and silver can be a good place to start. Gold in particular typically retains its value during rough economic periods, making it a good initial investment.

Collectible Items

The Beanie Baby story above illustrates the risks associated with collecting popular culture items such as toys, comic books, and baseball cards. The goods news is that purchasing these items is usually fairly inexpensive, though it may take time for them to appreciate in value.  Other items such as stamps, rare coins, and fine art may be a safer investment that will also cost more money up front, but tend to bring more stability. Remember, many collectible items only hold their value for a short time, so be prepared to sell your collection when the time is right, or you may end up with a closet full of Beanie Babies.

U.S. Treasury Securities

There are various types of treasury securities you can invest in including Bills, Notes, and Bonds.  Bills have the quickest maturity period, while bonds can be held as long as 30 years. While no one ever became wealthy investing in treasury securities, they do offer a safe investment avenue for those with risk aversion.

If you’re looking to start investing in tangible assets, spend some time learning about the asset you’re interested in investing in, start small, and diversify if possible.  While many of these options may not make you wealthy overnight, they can help you grow a secure nest egg for the future.