Pitfalls when buying a bit of history
If you're considering investing in a 1916 Proclamation or other historical nugget in the hope that you'll double your money in a few years, be careful. It's important to do your homework before pouring your money into anything.
Auctioneers usually steer clear of advising people to invest in collectables.
"Historical collectables are for collectors – not speculators," said Ian Whyte of Whyte's. "I recommend that only people who are seriously interested in collecting things get involved. There are so many pitfalls with collectables – names can be forged and so on. The price of genuine things can go up – but you need to know what genuine is. If you buy wisely, you will make money, but it's very long-term."
If you believe that you can spot a bargain and could make money from collectables or memorabilia, here are seven rules to play by before investing.
1. Study the market carefully – if you buy at the height of the market, you might never get your money back. Buy during a downturn and you could pick up a bargain. "During the boom years, people were paying three times the value of the object – or more," said Whyte. For example, an original copy of the 1916 Proclamation sold for a record €390,000 in late 2004. Today, you could buy a 1916 Proclamation for between €100,000 and €150,000.
2. The rarer the item, the more valuable it is and the more likely it is to appreciate in value.
3. Know the provenance of an item and the story behind it before you invest. "A medal in its own right is no use," said Jon Baddeley of Bonhams. "Provenance and history are massively important. Be wary of things which don't have provenance. Be careful who you are buying from. Get an invoice from everyone. If something sounds too good to be true, it usually is."
4. If buying at auction, know whether you are purchasing from an individual or a business, advises the National Consumer Agency (NCA). "Consumer rights only apply when you are buying from a business," said a spokeswoman for the NCA. "You do not have the same rights if you are purchasing from another consumer as it is a private sale."
5. Make sure you are satisfied with the quality of the item and that you know exactly what you are buying. "Second-hand goods are 'sold as seen' – you cannot expect second-hand goods to be of the same standard as new products," said the NCA spokeswoman. "There may be some fault, imperfection or wear and tear."
6. Get an expert opinion – particularly if spending a lot of money. "For high value items, such as jewellery, antique furniture or other collectables, we would recommend that consumers take the time to get a clear understanding of the history and value of the item they are buying," added the NCA spokeswoman. "To do this, it may be necessary to get an expert opinion on authenticity and value before deciding to purchase."
7. Know the costs you will be hit with should you sell something. If selling at auction, commission could gobble up as much as a fifth of any price you fetch. You will usually be charged Vat (Value Added Tax) on the commission. You could also have to pay capital gains tax of 33 per cent on any profit you make. Remember the first €1,270 of profit made selling collectables in a year can be earned tax-free.
Sunday Indo Business