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Are Decorative Collectibles a Good Investment?
Some people will tell you that collectibles make good investments and others will tell you they do not. Who is right depends on the type of collectible and the definition of a good investment. We will look at the definition and characteristics of a good collectible investment.

Characteristics of a Good Investment
Most people refer to a good investment as something that will increase in value faster than inflation or faster than the commonly available bank interest rates. In these terms most collectibles are not good investments, as most collectibles are mass produced items with low production costs and high retail margins. However, some collectibles do not fall into this category. Here are some of the characteristics of collectibles that retain and increase their values:

Uniqueness or Limited Quantities
This is simply an extension of the principles of supply and demand. When something is unique or limited in supply, demand will push up the price. The common practice of 'retirement' also leads to limited quantities (over time).

If a collectible is hand-crafted by skilled artisans, production will be slower and require better skilled and better trained employees. This raises the cost of production, which provides a natural floor for the valuation, which will be higher than an item produced in bulk by a lower-quality automated process. True collectors will also recognize the skill and inherent uniqueness of such items.

Brand Identity
Many companies all over the world produce collectibles. Some of these companies are well-known for producing quality products and will mark them with their trademarks and other identifiers. Other companies will be virtually unheard of and may or may not use identifying marks. Something easily recognized by either style or markings as a quality brand (e.g. Lladro) will retain its value simply because people will know what it is. An unmarked or unrecognized item could easily be mistaken by many as a cheap mass-produced item, even if it isn't.

Brand Directories & Collector Databases
If a brand is well supported by the manufacturer or by a proactive user group, there will be good information available to new and potential collectors. This information will allow collectors to learn more about their collections, seek out additional pieces and determine approximate valuations. Precious Moments is a good example of a brand with good support. There are identification and price guides available, a collector's club, newsletters, conferences, etc. This information and activity helps to maintain and generate interest in the brand, leading to increased demand and price support. It also helps to communicate to a broader audience which parts of the collection are rare, retired, limited editions or still in production.

If you would like to purchase collectibles that will be the best financial investment then you should consider items that have one or more of the above characteristics.

Defining a Good Investment
Returning to the definition of a good investment, I would like you to consider the purpose of collectibles. Is the primary purpose to increase in value? Or is the primary purpose to provide a sense of enjoyment/pleasure to the collector? I believe in most cases it is the latter. Similarly, the main purpose of a car is not to increase in value; most people would be happy if, after driving their car for 5 years, the value is still half of what they paid. Therefore, if you define a good collectible investment as one that can provide you with 5+ years of pleasure and still be valued close to what you paid, I believe that makes most collectibles a good investment, with some being exceptional investments.

Within the past few years, the collectibles market has been hit pretty hard. Adding to your figurine collection doesn't comes close to a priority when you're finding it hard to pay the mortgage and buy necessities. Many collectors have been reluctantly forced to sell their collections to help survive the tough economic times. Prices have been forced downwards and collectibles are not looking like a good investment to those wanting to sell right now. However, while most collectibles values have declined in recent times, so have many other forms of investment. Collectibles have not lost anywhere near the value of AIG stock and they look a whole lot prettier sitting in their display cabinet!

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