When A Hobby Turns Into a Profitable Investment

We all have hobbies that we enjoy doing. Some border around our talents and others resonate more we who we are as a person.

I'm passionate about horse riding and if it was left to me, I'll buy one and use it as a means of transportation around the area I live.

But I guess we don't live in the medieval ages anymore, have to abide by societal norms and standards.

In the digital age, there are quite a number of hobbies that have the ability to be monetized.

Most of them seem to be artistic pursuits such as, singing and painting. I think most hobbies have an artistic element to them otherwise individuals wouldn't be passionate about them.

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Collectibles And Memorabilia

In 2021, during the bull market, many of us had the opportunity to familiarize ourselves with [digital] art collectibles as it was booming back then. The jaw dropping prices in which they were bought for caught the attention of many.

People mostly purchase collectibles for personal interest or hobby. However, It's not so recently that we starting purchasing them as an investment.

I think part of the reason is because of globalization, turning a niche market into global niche market, connecting passionate collectors and enthusiasts around the world.

Technological advancements also plays a part because it brought the infrastructure to build these exchanges that they can be traded in.

Unlike collectibles, memorabilia are usually created for a very specific purpose and they carry a more sentimental value. These are items that remind the collector of past events, as in a cherished memory. So people mostly collect them for admiration or preservation.

Examples include autograph from one's favourite
artist or sport athlete. Or travelling to an exotic place and finding exotic items that you decide to keep as a souvenir.

A difference between them is that memorabilia serve a purpose while collectibles can be purchase for fun. A similarity is both are loosely correlated with tradional markets.

As an investment, both collectibles and memorabilia have considerably risen in value in recent years, especially in the digital sphere.

According to Statista, the online art sales totalled around 11 billion US Dollars in 2022.

Why Invest In Them??

This category of investments are on the higher end of risky assets. Their value fluctuates with the whims of the market. But this hasn't stopped some from investing.

People can invest in them for the sole reason of following their passion and hobbies, choosing assets that reflect their personal tastes and interests.

Technically, one could just call it a purchase instead of an investment when one isn't expecting any monetary return on investment.

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Others may see it as a way to diversify their investment portfolio. Perhaps, to hedge against inflation, since this niche market isn't that correlated with the economy.

At the same time, this also exposes them to the huge potential returns that often exceed traditional investments, as some collectibles and memorabilia have sold for record-breaking prices at auctions or online platforms.

Back in 2020, a pair of Air Jordan sneaker worn and autographed by Micheal Jordan sold at an auction breaking record for $560,000. And just last year, Jordan's 1998 NBA Finals Game 1 jersey was collected for $10 million US dollars.

From a general view, one could be investing in them for all the reasons mentioned above, especially if they found an asset(s) that matches all critea.

Value And Potential Returns

With much sentimalism attached to it, determining the real or true value is a hard task.

One could argue there isn't any true value to collectibles and memorabilia since everything is mostly based on perception, which it seems can be irrational.

On the other side of the world, a person who doesn't know who Micheal Jordan is will probably see it as a nice sneaker or jersey without attaching that much value to it.

On a much serious note, The value of collectibles and memorabilia depends on various factors, such as rarity and uniqueness, demand, and market trends.

With regards to potential returns, what I've noticed is that many 'invest' because they're passionate about it, for the love of the game.

Sometimes, the big return finds them somewhere down the road. Seems like it is more of an art than a science.


Thanks for reading!! Share your thoughts below on the comments.

Posted Using LeoFinance Alpha