Jewellery is the most popular collectible investment in the UK, a recent study by Lloyds Private Banking has revealed.
The study shows that out of the one in six UK investors who hold collectibles in Lloyd’s portfolios, 9% of them invest in jewellery. This compares with an average of 7% investing in other hobby investment items.
The report also reveals that investors are willing to part with large sums of money to invest in what they love. On average, £18,700 is the most spent on a single jewellery investment, with more than one in five (21%) spending more than £50,000 on an individual item. Women are also most interested in this particular asset class with almost half (46%) of investors being female.
Investing in pastimes can be a highly profitable investment option with jewellery investments set to yield a return of 35% over ten years. Respondents reported an average best return on a single item of 39% overall. However the study found that one in eight investors have seen a 100% return on an investment.
Overall the majority of investors are satisfied with the performance of jewellery in the last year (61%) and satisfaction grows the longer the investment is held (67% over ten years).
The majority of hobby investments are driven by an investor’s personal interest for the asset class – this is the case for jewellery, where 25% of owners link their investment to personal sentiment. A further 20% say they choose to invest for purely financial reasons and 22% to build a personal collection. Other high value asset classes predominately driven by personal interest are art (53%), antiques (50%), and whisky (44%). For those who do invest in one of these classes, alternative investments make up 18% of their portfolios on average.
Markus Stadlmann, CIO, Lloyds Private Banking, says: “In investment terms, work and play do not need to be mutually exclusive, and with the right investment approach it is possible to make your interests pay.
“Often tangible assets, such as jewellery, retain their value and are not eroded by inflation. Over the long-term, these types of assets do not closely correlate with more traditional equity and bond markets, and therefore offer diversification opportunities. Investing in something you enjoy is a great way to make your portfolio unique to you.”
Alternative investments are expected to see more inflows over the next ten years. The study found that jewellery will attract significant amounts in the future (1 year: £7,800, 5 years: £13,200, 10 years: £14,600).
The largest investments will continue to go towards classic cars (1 year: £16,500, 5 years: £21,700, 10 years: £21,400), and watches (1 year: £12,100, 5 years: £17,500, 10 years: £19,900). Investors in fine wine are expecting the strongest level of return in the long term (48%) whilst classic cars are predicted to perform better in the medium term at 41%.
Stadlmann concludes: “Investing in what you love is not a new phenomenon. Savvy investors have always looked to profit from personal interests. However, it is vital to remember that you are dealing with predominately private markets. It is therefore highly important that before you invest in your favourite piece of jewellery, car, watch or wine, you do your research. From the start you must be clear on your motivation behind the investment. You must also consider all costs, including: purchase, restoration, storage, upkeep, and insurance. And be sure that items have all valid documentation, to ensure that you give yourself the best chance to make your pastime pay.”