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This is a guest post by Joe Moore. You can read more about him at the end of the post! Write for us.
We always hear that some people have just made a huge profit on certain type of investment and think if we could make the same kind of money, too.
It is all good dreaming about how good you would be and how much money you would earn. However, some people make money regardless of markets going up or down.
They actually can make even more money when the market is crashing if they know when to short certain stocks as we discovered in recent crises with banking stocks.
When it comes to investing in classic cars there are a few obvious potholes anyone can fall in…even the seasoned dealers. They are easy to fall in love with, be sentimental and being cars, they have many associated problems.
Here are 5 tips to help you decide if you would be a good classic car investor or it is not definitely for you…
1. Know or Learn About Automobiles
Like every investment, you need to know about the things you are going to spend money on. You may be required to know about a few more things than usual when the subject matter is a vehicle.
You should either know about auto mechanics, body work and parts or know people to help you out. You will need to go to a few auctions, study and inspect a few automobiles for every purchase you make. If you are capable of carrying out the essential inspections you would save a lot of money. Otherwise, you will need to take someone with you each time.
2. Be Willing to Do Some Work
“Classic car” has a nice ring to it. However, you are essentially dealing with an old vehicle that may need some work done to it before it can be sold off. You should have a good idea where to start and it’s best to actually enjoy restoring old automobiles. If you do, you would have a great hobby and make money from it. Win-win.
3. You Need to Be Patient
This is not only for investing in autos. It applies to nearly every kind of investment. However, you shouldn’t make the mistake of thinking that you have a rare piece in your hand and thinking you can always sell it.
When the markets are all on the up nearly everything appreciates in value. When markets slow or go down, people stop spending money, especially on luxury purchases like classic cars. You should be able to recognize the good times and make your money in any market.
4. You Will Have No ROI Until You Sell
This is one of the biggest problems with this type of investment. When you invest in property, you get rental income. When you invest in stocks, you get dividends. You spend money on insurance, tax, storage and registration with cars and your only hope is to make money when you sell.
5. Protect Yourself Against Risks
Buildings have relatively low risk compared to vehicles because they don’t move or get stolen (at least, not as often). You have to make sure that your automobile is insured the moment you buy it, because it becomes your responsibility at that point. There are a few things to know about classic car insurance and you should familiarize yourself with those.
You have risk of losing money or not being able to shift the property even you are willing to take a loss. This is part of investing and hoping to make a profit. Things don’t go according to plan. But when your investment is a moving object, which can be driven, your risks are a bit higher.
For example, being in an accident with a highly valuable automobile will reduce its market value considerably. Classic cars generally fetch a lot of money when they are in mint condition. Therefore, you may not be able to enjoy the pleasure of actually driving the vehicle, if you’re only looking to invest. It would be lovely to drive them around but you may be too scared something will happen to it.
About the Author:
Joe Moore has been involved in financial services industry online and offline for about 10 years now. He loves to write about money saving ideas especially on auto insurance. He has been published on several blogs and websites and runs his own blog at cheapautoinsurance.net.