A Guide for the Beginner Antiques Investor

Why Invest in Tangible Assets?

In unstable times, many look for ways to preserve their savings. The question arises: what to invest in to not only avoid losing money but also potentially turn a profit? People often seek 100% guarantees, but in the world of investments, especially in antiques, they don't exist. For a novice making a random purchase without deep knowledge, the probability of success is close to zero.

Before starting, it's important to understand the basic economic terms that affect the market.

Investing in tangible assets is seen as a way to protect capital from inflation. However, it's important to understand that this process requires a thoughtful approach and does not tolerate random decisions.

Who is Antique Investing Suitable For?

Investing in antiques is a field more suited for a mature audience, typically over 40 years of age. At this age, people already have a certain amount of life experience and, possibly, disposable funds they wish to preserve.

For young people aged 20-25, it is recommended to first invest in themselves: in education, learning languages, and travel. Such investments open up more opportunities in life and allow one to feel freer in a global world.

This guide is aimed at those who have already settled their major life questions and have a certain amount of money to invest, whether it's a few thousand or several tens of thousands. We are not talking about multi-million dollar fortunes, where completely different rules and strategies apply.

Example of an Investment in Gold: A Personal Experiment

To demonstrate one option for tangible investments, let's consider a real-life example. About a year ago, a loan of 10,000 euros was taken out to purchase gold coins—Austrian ducats (restrikes). At that time, the price of a gram of gold was 52 euros.

The entire amount was used to purchase about 200 grams of pure gold. A year later, the price per gram had risen to 57 euros. Thus, the 5-euro difference per gram resulted in a potential profit of 1,000 euros (200g * 5 euros).

The total amount to be repaid on the loan, including interest, is 11,500 euros. If the purchased gold is sold at the current price, the proceeds will cover the principal and interest, and there will even be a small profit left over. This experiment shows that even by taking out a loan, one can successfully invest in precious metals, albeit with a relatively low return.

10 Questions Every Investor Should Ask Themselves

For a successful start in the world of antique investing, it is recommended to answer ten key questions. This is a kind of guide that will help structure your approach and avoid common beginner mistakes.

1. What is my goal? First and foremost, you need to clearly define what you want to achieve: preserve capital from inflation or grow it.

1. Is this a pure investment or a purchase for pleasure? Decide whether you will enjoy the acquired item (for example, a painting on the wall) or if it will simply be stored in a bank safe deposit box as an asset.

1. What is my investment horizon? The antiques market generally involves long-term investments. Determine your planning horizon: short-term (1-3 years) or long-term (5-10 years).

1. What is my budget? Clearly define the amount you are willing to invest. This will affect what items you can buy and where.

Where to Buy and How to Diversify Risks?

Continuing to answer the key questions, the investor must think through a strategy for acquisition and risk management.

1. Where will I buy? There are several main places to buy antiques, each with its own characteristics: Shops and dealers: High markup, but there are certain guarantees. Auctions: Lower prices, but a buyer's premium (Aufgeld) of 25-30% is added. Requires the ability to quickly evaluate items. Casual sales (flea markets): The lowest prices, but also the highest risk of buying a fake. Requires deep knowledge.

1. Is diversification necessary? You shouldn't invest the entire amount in a single item or one area. Distributing investments across different 'portfolios' (e.g., paintings, gold, silver, furniture) helps reduce risks.

Storage, Liquidity, and the Main Success Factor: Expertise

The final block of questions concerns the practical aspects of owning and selling antiques.

1. How and where to store the item? Valuable items may require a bank safe deposit box or a home safe, as well as insurance, which entails additional costs.

1. How will I sell? The issue of liquidity is very important. Selling an item is more difficult than buying one. You need to think about sales channels in advance: the same dealer, an auction, online platforms. Each has its own commissions and costs.

1. How to ensure authenticity? This is the most important question. Without expertise and your own knowledge, investing turns into a lottery. It is necessary to study your chosen field in depth.

1. Which field to choose? It's best to invest in what interests you and what you have a passion for. This could be paintings, furniture, coins, weapons, or jewelry. A passion for the subject will make the learning process more enjoyable and effective.

Liquidity and Niche Selection: Domestic or Foreign Art?

Liquidity is one of the most important aspects of investing. When buying an item, you must immediately think about how and to whom you will sell it. For example, when acquiring a piece of domestic art, you should consider that the main demand for it will be in its home country.

Selling Russian art in Germany is more difficult, as there is less demand for it here. Conversely, if you buy something Russian cheaply here, you can sell it more profitably in Russia. The same rule applies to European antiques: they are easier to sell on the European market.

• The 'Order of the Badge of Honour' and the 'Order of the Red Banner of Labour' used to cost 24-27 euros.
• Now their price on eBay reaches 39-45 euros.

Strategy for Beginners: From a Test Purchase to Diversification

For a novice in the world of antiques, practical experience is crucial. Before investing significant funds, it is recommended to conduct a 'test purchase.' Choose an inexpensive item in your niche of interest and try to resell it, at least to recoup your investment.

This experience will provide an understanding of all stages of the process: from sourcing and appraisal to selling and its associated costs. It will help build confidence and cool any excessive excitement. Diversification is also a key element of the strategy. Even with a small budget, it's better to distribute funds among several different items.

Finally, it's important to decide where to buy. Each option—a shop, a dealer, an auction, or a casual sale—has its pros and cons. The choice depends on your budget, knowledge, and risk appetite. By creating a written plan for yourself based on all these questions, you can make your first steps in investing more conscious and secure.