Many motorists and car enthusiasts dream of investing in classic cars to own some of the most beautiful and influential vehicles of all time, but what about from a financial standpoint? Classic cars can be a smart investment for anyone looking to grow their wealth over the long term and could be an effective way to diversify your investment portfolio, which is a wise strategy, especially during uncertain times. Ownership can also be an enjoyable experience, and in particular if you appreciate cars.
How Classic Cars Performed Historically
Much like any investment class, it is always helpful to look back at the historical performance. While past performance does not predict future results, it can give you an idea of how an asset class might perform. Historically, classic cars appreciate in value and it was predicted that the market would grow from 30.9 billion US dollars in 2020 to 43.4 billion in 2024. Interestingly, this asset class was one of the few to perform rather well during the pandemic with many people investing in classic cars to enjoy life and driving during an uncertain time.
The Importance of Maintenance
One important consideration when investing in classic cars is maintenance. This is not the kind of investment that you can purchase and then forget about as you must keep the vehicle in good condition in order for its value to appreciate. You will want to maximize its resale value, so you should perform basic maintenance to keep the car in the best condition. For those that have an interest in classic cars, this can be an enjoyable activity. You will need to do things like clean the car inside and out, replace the car tyres when they are worn, and get any repairs carried out. It is also a good idea to drive the car regularly even if it is just around the block as it can be damaging for cars to sat unused for too long.
The Importance of Timing
As with any investment, timing is everything when it comes to classic cars. Ideally, you want to buy a classic for a low price or purchase a vehicle that is not a classic now but will be in the future and then sell for profit down the line. Research is obviously key here and you might be able to find a future classic by looking for high-quality cars that do not have a huge number that have been made globally. The brand of the car is also a good indicator to look for as a Porsche is more likely to be a classic than a Toyota. As the market trends upwards, you should try to hold on to the classic car over a long time frame to maximize returns.
Investing in classic cars can be a smart financial investment and a way to diversify your portfolio, especially if you are a fan of beautiful cars. This post should be informative and help you to make a decision and know how to maximize the resale value.
