Tangible Investments, from Life in the USA: The Complete Guide for Immigrants and Americans

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Life in the USA
Personal Finance
Investments

Tangible Investments
Tangible investments are also part of the market for investments, although a risky one. The term refers to investing in actual physical objects that you yourself hold or have stored. These can include precious metals like gold, silver and platinum, art, antiques, collectibles like baseball cards and old dolls, vintage automobiles, musical instruments, early personal computers, nearly anything. In many of these cases, beyond the financial risk of an investment turning sour, the investors needs to store and often insure the items. These kinds of investments hence often work out best for those who have a genuine interest in maintaining collections of various types for the love of it.

Each form of tangible investment has a community of traders and collectors, usually represented by one or more magazines and numerous websites. One of the problems with tangible investments is that they are subject to the fickle variation of personal taste and the fluctuations of short-lived fads. It is possible to research a market and become knowledgeable about it, but often when you hear a lot about a particular tangible investment the market has already bid up the entire class of items beyond the possibilities of profit. All too often, investors run the risk of buying at the top and suffering substantial losses.

Another pitfall, particularly in the art and antiques market, is that fact that the market is not liquid, as is the case for securities. What this means is that it is not always that easy to locate an appropriate item, and often even more difficult to sell it when the times comes. Professional dealers in these markets commonly sell at retail and buy back at wholesale, resulting in almost instant losses of value to the purchaser. These transaction costs are invariably much greater than the small fees exacted by brokers in the organized financial markets, and render it exceedingly difficult to make money from tangible investments for those who are not experienced insiders.



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