In this installment of our Invest Smart Series we are talking about how to approach and investment opportunity. In Approach to Investing Part 1 we discussed the three areas investors should examine prior to making a purchase. In part 2 we will delve a little deeper into investment approaches.
Investment experts who specialize in collector cars advise potential investors to use a dual pronged approach when considering an investment opportunity.
Hire an expert (or become one yourself)
Collector cars is a highly complex area when assessing a vehicle’s investment potential. Certain cars have certain attributes that could vary in different models, different makes, or even different production years. It is not impossible, but would be difficult to have detailed, specialized knowledge of all collector cars. In fact, the majority of collectors focus on certain genres so that their expertise lies only in those areas. The challenge then becomes diversification.
A smart move is to approach your collection as you would a stock portfolio. Diversification is recommended to minimize losses. If your expertise is only in one or two models, then bringing an expert on board who specializes in different makes and models can increase your collector car portfolio.
Let the numbers talk
Don’t jump on the first opportunity you find, do the math. Factor in storage, transportation costs, maintenance, transaction fees, insurance, opportunity cost, commissions, and consignment fees. You could wind up losing money if you aren’t careful. Commissions alone on the buy and sell end can be a low as 6 percent or as high as 10 percent. Look before you leap and let the numbers talk.
The HAGI Indexes track classic car prices, much like indices do in the financial stock market. The HAGI is an international index that is based on auction sales as well as direct sales. Individual transactions make up approximately 70 percent of the index. However, these indices are not the end all authority. Unlike financial investments, cars vary greatly. A certain color can change a vehicle’s value, or its restoration status can make it a wise investment or a foolish one. Even the individual history of the car can be a game changer. The indices are beneficial when tracking general trends, but then you need to go deeper.
When you’re ready to make your next hot investment Woodside Credit is here to help. Learn more about our collector car financing and find out how easy it can be to add that great car to your collection.