The classic car: Parking your capital in alternative assets

The Momentum UK Team 23 August 2012

The classic car: A status symbol, a nostalgic throwback, and an investment opportunity?

According to the Historic Automobile Group International (Hagi) in some parts of the classic car market prices rose by 20% in 2011- twice the price increase seen on Gold prices in the same year.

At the 2012 Goodwood Festival of Speed a 1929 Bentley became the most expensive British car ever sold at auction, at £5m, while just last weekend (18/08/12) in the USA a 1962 Ferrari 250 GT SWB California Spyder sold for $8,580,000 (£5,431,140).

In spite of the soaring price of a few marques and models, the classic car market is not necessarily only for the very wealthy, with many classic cars being bought and sold for closer to £10,000 rather than over £1m.

In tough economic times parking your capital in a physical investment can seem increasingly attractive. Not to mention the fact that any gains you do make should remain free from Capital Gains Tax when selling a motor car.

Nevertheless, investing in classic cars requires specialist knowledge and there can be significant variation in the potential for increased value between different marques and models. If you are considering such an investment taking additional costs such as insurance and maintenance into account can also be important.

On the other hand investing in classic cars could provide an avenue for investment diversification as prices tend to move independently to stock market fluctuations.

Investing in the alternative asset market is by no means guaranteed to make you a return on your money, but with careful consideration and research prior to purchase you could find yourself on the road to return, and you may have some fun along the way too.