Brits Consider Investing In Classic Cars

As the stock market takes them on a roller coaster, many investors are looking into car loans. Why, you ask? They are supplementing their investment portfolio with classic cars. In 2011, average prices of classic cars outpaced returns on equities.

Despite record increases in gold prices, classic automobiles even managed to outperform this popular precious metal.

According to Historic Automobile Group International (HAGI) data, prices in some classic car market segments increased by 20 percent during 2011, while gold prices rose only ten percent. Property prices are declining, equity returns are poor, and returns on savings are almost non-existent.

This has led to a renewed focus on alternative investments like classic automobiles.

When the economy is unstable, investors flock to physical assets with an intrinsic value, especially those available in limited supply. This has led to an increase in antiques, gold, art, rare stamps, and classic cars.

Collectors and hobbyists purchase many of these alternative investments but even traditional investors find their pulse quickening at the prospect of owning a Daimler.

The amount of car finance needed to purchase a classic automobile is often determined by fashion trends. In addition, investors should be aware of depreciation rates and that ownership of a classic automobile does not provide an income stream.

Scratches and dents that appear on the car will decrease its value, while money is required for maintenance and repairs.

Despite this, classic cars can still be a smart way to diversify the portfolio. According to HAGI index founder Dietrich Hatlapa, these automobiles move independent of other investments.

During the past three decades, the HAGI Top index, which measures rare and expensive collectible classic car performance, increased 30 times. This equates to a compounded annual growth rate of over 12 percent.

Gold increased only 2.17 percent each year during the same period.