Are you fed up with the paltry returns on your cash or stock market investments? How about investing in a classic Ferrari or Aston Martin instead? The value of classic cars rose by 332% between 2005 and 2016, according to an analysis of so-called passion investments made by the world’s richest individuals.
The report, published today by the private bank Coutts, found that rare coins and fine wines soared by 225% and 153% respectively. By contrast, the total return on the FTSE 100 was up about 130% over the same period — and that’s if you reinvested all your dividends.
So should pensioners blow their savings on a Lamborghini, as the former pensions minister Steve Webb memorably suggested in 2014? And with savings rates set to continue at record lows for the foreseeable future, are classic cars a better bet than an Isa or a buy-to-let?
Sales at auction are breaking records. Last month a 1950s Aston Martin DBR1 went under the hammer in Monterey, California, and was sold for $22.6m (£17.5m) — a world record for a British car, according to Coutts. Last year the highest price yet paid for a Ferrari 250 GT was recorded, also in Monterey, with a 1961 SWB California Spider fetching $18.2m.
“Classic cars have provided the healthiest returns since 2005, with average prices rising more than fourfold . . . The most coveted cars continue to go up and the gap between the very best and average only widens.”
So-called alternative assets — investments that do not fit into the normal categories of shares, bonds or commercial property — can be a good way to diversify your portfolio as their value does not correspond to wider stock market movements. In 2008, during the financial crisis, the Coutts classic car index rose 11.4% while the FTSE 100 dropped almost 30%.
Interest in alternative investments is expected to rise amid growing market jitters. The FTSE 100 fell sharply early last week as tensions over North Korea escalated and the US state of Texas was devastated by a tropical storm, although the market had recovered by Friday.
“We usually see more interest in investing in alternative assets such as wine, art, coins, antiques and stamps when there is a lack of confidence in the stock markets. It is often at these times, with increased investor demand, that these assets perform best,” said Patrick Connolly at the adviser Chase de Vere.
The Coutts classic car index only includes vehicles that have fetched more than $500,000 at auction and been sold more than 10 times. It takes account of all the costs involved in storing and maintaining the vehicles. Cars in the index include the Aston Martin DB5, favoured by James Bond and last valued at auction at $698,658, and that $18.2m Ferrari.
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