An Introduction to Investing in Collectables: Understanding Supply and Demand

Collectables, not to be confused with antiques or vintage items are by nature meant to be collected. Collectables can be described as items intended to be saved in an effort to commemorate a certain event, person or circumstance – with an assumption that they hold value above others, whether monetary or otherwise. What is the definition we most commonly think of when we think of collectables? Stuff sitting in our basements worth a fortune?

Supply in Collectables

Collectables are often worth very little. Why? It is a simply matter of supply. Many times collectables are intended to be saved and preserved. The folks who receive them or buy them tend to place value on them, so they are taken care of and tucked away for future saving. What happens when they want to sell? Everyone still has theirs that they saved, so no one is willing to sell for a premium.

Investing in Collectables

A great example of this phenomenon relates to Beany Babys. These stuffed animals were very popular with children and later collectors during the mid 90′s. Everyone talked about how they would be a great investment, worth lots of money and advocated putting them on display and protecting their name tags with plastic sleeves. What happened when everyone was ready to sell? Everyone else already had that one, and in mint condition. The element of demand must also be there.

Demand in Collectables

The demand side is dictated by what people want. Usually, people do not want collectables, they are actually looking for antiques, vintage items or unique items – things that were hardly intended to be saved or collected. Occasionally though there turns out to be a collectable that a lot of people want at the same time that there are not enough (supply) around to fulfill that need. As a result, prices are increased and the value is increased, at least temporarily.

A great example of this phenomenon relates to The Walking Dead. Even though this series is brand new and even though it will not be difficult to get your hands on the collectables from this comic book and later television show is a result of the demand. There are so many people that want the comic books, the t-shirts, the action figures, etc. that prices have rise. This makes for a worthwhile collectable.

The Problem with Collectables Though

Collectables move in cycles and are not likely to be worth much forever. Items like Beany Baby’s tend to sell for a lot during a short window of time, before which, hardly anyone knew about them and after which everyone already owns them, so no one is buying and no premium prices are paid.

A Better Alternative

Although we use the word collectable interchangeably with antiques or things like stamps, coins or comic books, they really are in different leagues. Of course, their can be coins or stamps made to be collectables but, the vast majority were not intended to be. Therein lies the secret to achieving an item with demand and little supply.

A better investment than collectables would be an item few people are saving or are thinking to save but, will likely draw interest, passion and crazy buyers in the future.

If you are interested in this topic more, I invite you to check out my authoritative guide to getting started investing in Antiques and Collectables. It highlights all of the major reasons to buy or sell a given item and projects what will be hot and what will be not.

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