The recent sale of a small, porcelain cup for $36 million to a Hong Kong buyer highlights a new trend of buying antiques among the wealthy. But along with bragging rights comes a significant amount of risk.
When Sotheby's auctioned off the Meiyintang "Chicken Cup" earlier this month, some investors might have scratched their heads in wonder. True, it is more than 500 years old and, according to Sotheby's, there are fewer than 20 in the world. It is called the chicken cup because of its decoration, which features a cockerel and chicks painted around the exterior.
Passion investing heats up
The cup, created during China's Chenghua reign, is just one example of the type of rare investment the rich are seeking.
According to research by Wealth-X, worldwide spending on so-called "passion" investments, including art, antiques, yachts, wine and cars, totaled approximately $79 billion in 2013. Asian collectors, in particular, are crazy for these investments, spending $23 billion, a 15-percent increase over 2012.
Wealth-X president David Friedman said in a release that wealthy Asian buyers are moving toward buying rare or unique artifacts, as opposed to material luxury goods. "As the ultra-high-net-worth consumer mindset evolves, there will be a move away from ostentatious displays of wealth to more discreet offerings," he added.
Beware the risks of indulging
Just as with any of the passion investments, collectors can enjoy, or at the very least, look at, their treasures. But for it to be a true investment, collectors have to be savvy about the market. Unlike a traditional portfolio of stocks, bonds and cash, the liquidity of these items depends on current tastes and whether there are any other buyers interested in owning a particular piece of history.
Have a passion for investing in something you can display on your walls? Read these 7 tips for investing in art.
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