The best 18 year investments
As a dad, one of key things you will want to do for your children is to make sure they are set up financially by the time they reach adulthood. The trick is how to achieve that. Sure, you can invest in the usual range of funds, some of the specifically designed for that purpose. But what other assets could give pleasure as well as financial reward?
Toys and magazines
If you spent £100 on Dinky toys in 1985, your investment would have quadrupled in value over 15 years, putting most other investments in the shade.
Remember that any collectible toy and its original box must be in mint condition. So unless you intend to police exactly how your kid plays with his or her toys, it may be an idea to always buy a duplicate set and stash it in the attic for the next 18 years.
According to Money Week magazine, contemporary art prices rose 55 per cent in the 12 months to the end of 2007. Over longer periods, art can deliver astonishing returns. The collector Charles Saatchi bought Damien Hirst’s petrified shark for £50,000 in 1990. He sold it in 2005 for £7m.
That said, at the time of the big economic downturn in 1989-1990, art prices crashed through the floor and took many years to recover.
The key is working out what kind of art will be attractive to affluent collectors in ten or 20 years’ time. For example, in exactly the same way as Jamie Reid, the former Sex Pistols’ graphic designer sells for vast sums to today’s former punks, Britpop-related and even 1960s art will almost certainly appeal to future 50- and 60-year-olds.
A status symbol for many centuries, today your earnings determine what you spend on wine – which is why many of the world’s biggest buyers are Asian or from Russia.
As a result, the Liv-Ex 100, a London-based international wine index that tracks the prices of around 70 big wine brands, is up almost 160 per cent since July 2001, and more than 50 per cent in the past 12 months alone.
If you are buying by the case? Stick to France and go for vintages from excellent years that will age well in the bottle.
If you knew that the value of the book you are reading might be worth ten times its cover price in the space of a few years, would you still bend its spine? For example, a signed hardback copy of Garnethill, the first part in a trilogy by Denise Mina and published almost ten years ago, was originally priced at £12.99. It now costs £150.
The trick here is to identify an up-and-coming writer and snap up all their books as soon as they come out. Make sure they are first editions and signed by the author: they rarely if ever cost more than a normal hardback if bought right away.
Unless you are buying Shakespeare’s Romeo and Juliet, entire collections from one author are worth more together than individual books by several writers. And if you do read them, treat them with kid gloves – literally.
Most of us are very bad investors in shares. We get caught by both the positive and negative hype and tend to buy when prices are high and sell when share prices fall.
So be a contrarian. Buy when others are selling and vice-versa. Banks for instance. They’ve been clobbered by fall-out from the current sub-prime problems in the US. But in the long term, they are bound to do well. I’d be tempted to take a look at shares like Barclays, Lloyds TSB and Royal Bank of Scotland
For those who think we’re heading fore a recession, here’s a question: what will people keep buying when they cut back on all other consumer spending? Food: supermarkets like Sainsbury’s and Tesco are called defensive stocks with good reason.
We might all want to invest in the next Microsoft, or Google or even Facebook. The problem lies with how to identify the next social or technological phenomenon.
Another option is to take a slightly different approach and look at biotechnology, which combines disciplines like genetics, molecular and cell biology, as well as robotics and information technology. The aim is broadly that of modifying biological organisms according to the needs of humanity – everything from food to medicine.
Companies that offer the potential to cure or even alleviate sicknesses like cancer will strike it big. But don’t just look at major diseases: solutions to minor medical problems that affect many millions of people are equally good money spinners. For example, whoever finds a 100 per cent reliable cure for spots will become a multi-billionaire.