To start I want to clarify that I do not classify real estate as part of my alternative investment class. Many readers of this blog will most likely relate more to the tangible non traditional assets. These assets include antiques, art, wine, jewelry, precious metals (gold, silver), coins, and sports cards.
I would never put money into these alternative investments until I have first focused on traditional assets such as stocks and bonds. In terms of what percentage of your net worth is allocated towards alternative investments can vary depending on your level of comfort. Personally, my goal was to keep my alternative investment allocation to 10%, but it will fluctuate between 10-20%.
3 Reasons Sports Cards Are My Main Alternative Investment
- Sports cards are a very liquid asset. I have built a network of people to whom I can sell any of my cards to if needed and get cash. eBay is typically a last resort, but even then I can sell relatively quickly to get money.
- Sports cards require very little storage costs. If I were to have the same dollar amount in cards in other assets such as wine or gold and silver, then I would most likely need a special storage due to either the sensitivity of the item or the sheer volume. With cards, you can certainly invest in a safe or buy a safe box at the bank, but taking this extra step is not needed.
- Sports cards require very little storage space. Sports cards are comparable to coins in terms of how little space one needs to store these items. Many people like to go the extra distance and display the cards, but for investment purposes, most typically do not. Nowadays Funko Pop figures are very popular in the toy collectibles arena. Whenever I see these figures, I just think about how and where to store all these without the box getting damaged. I think about the convenience of keeping these assets around.
- Sports cards help diversify my risks. Along with my pre and post tax retirement accounts, taxable accounts (stock portfolio), and real estate, sports cards provides a different level of short (<1 year) and long term (3+ years) risk in which the appreciation far exceeds a traditional S&P 500 fund or even individual stocks.
- Sports cards are my passion and have found niches I consider myself an expert. I really enjoy the sports cards industry not only the cards, but the people I meet. I am very familiar with the industry and do consider myself an expert in the sports cards niches in which I profit.