LAST SUMMER, BILL GROSS

, billionaire and chief investment officer of bond firm Pimco, sold his collection of early British stamps for $9.1 million, nearly four times what he paid for them "It's better than the stock market," Gross

reportedly

said after the auction. (He gave the proceeds to charity.)

Buying collectibles for any type of profit, however, is typically a much riskier bet than putting money into stocks. But in light of the Dow's 8% tumble this year and the real estate market's own precipitous slide, investors are finding that collecting such things as stamps and rare bottles of wine is more attractive and, comparatively, less risky than it was before.

If sales by major auction houses are any indication, the collectibles market is booming. Total auction sales at Christie's in over 80 categories, including fine art, photographs, collectibles and wine came in at $6.3 billion last year, nearly double the amount for 2005. Auction revenues at Sotheby's totaled $833.1 million in 2007, up 40% from two years earlier.

Be warned, though: Buying art, antiques and other collectibles is no guarantee you'll turn a quick profit. "There are no blue chips in antiques and collectibles. The market is entirely trendy. If you can't react to trends, you don't belong in this marketplace," warns Harry Rinker, author of "Sell, Keep, Or Toss?" That's mainly because most collectors pursue items out of a personal interest or passion. So not only are these items less liquid than stocks, they're also unpredictable in terms of their value.

With enough due diligence on your part, however, there are ways to improve your chances of making a good investment. A serious oenophile (a.k.a. wine connoisseur), for example, will know to hang onto that bottle of 1994 Dominus Proprietary Red because chances are high they can sell it later at a tidy profit.

Before you start collecting, here are some basic guidelines you should follow for different categories.

Art

For art enthusiasts, going by taste alone isn't enough. Making a good investment entails a great deal of research. First, you'll need to hunt down the history of the artwork, and specifically how much it has sold for in the past to get an idea of its worth. A track record on the secondary market (art sold at, say, an auction or by a dealer) tells you the artist's work was at some point in demand. Provenance (the history of the work's ownership) and auction sales results on most artworks can be checked on

Artnet.com

,

Artprice.com

and at major auction houses.

Buying straight off the gallery wall particularly if it's a new artist that no one's heard of isn't a smart move if you're thinking about long-term investment potential. "That is akin, from my point of view, to buying an IPO. You don't know how this artist is going to behave in the marketplace," says Scott Zema, an appraiser and author of "Three Steps to Investment Success: Buying the Right Art, Antiques, and Collectibles."

Another consideration: "Only buy the original and one-of-a-kind of anything, whether art, antique or collectible if you want to have a chance of owning something that will increase in value," Zema adds. Even original prints produced and signed by the artist get you into dubious territory; they're original, but they come in editions of several hundred or thousands, and less easily retain higher value, he says.

Antiques

Anyone who's watched "Antiques Roadshow" can tell you it's tricky to assess an antique's investment potential. Of course, you'll want something you can appreciate and enjoy, just make sure others appreciate and enjoy it too. Otherwise, there will be no demand for the item when it comes time to sell, says Daryle Lambert, author of "31 Steps to Your Millions in Antiques & Collectibles."

Buying antiques at auction "is like buying a new car," says Rinker. "When you drive a car out of the showroom, it loses value." Dealers, galleries and auction houses can take commissions and fees of up to 50% of the cost of an item, he says. So, much of what you're paying for is their profit.

Also, don't jump in blindly, hoping to make a quick buck. Being duped into buying a fake is a risk hasty collectors often face, says Lambert. With so many reproductions on the market, if you're not capable of distinguishing between real and fake, you should consult an expert. Susannah Ryder, financial advisor and author of "Don't Call the Thrift Shop: What to Do With a Lifetime of Well-Loved Possessions," suggests novice collectors look to dealers' associations like the

National Art & Antique Dealers Association of American

to find dealers by area of specialization. "They have that knowledge, they know the market, and they have experience," she says.

Collectibles

Much like fashion, collectibles which include everything from stamps to vintage toys is a trend-driven market. But unlike leg warmers, some collectible trends don't experience a renaissance. The market for Depression-era glass, for example, was strong in the late 1970s and 80s, but has since dropped off dramatically. Like many categories, it became overpriced, says Rinker, and the glass was often put aside and left unused, so younger generations had no appreciation for it. It's a category that won't see future appreciation, Rinker says.

Honing your trend-spotting skills comes in handy here. "The only way to be an investor is to follow trends, get in at the bottom, get out in the middle or near the top and certainly not hold at the fall," he says. To bone up on what's out there and what's popular, Ryder suggests going to shows, talking with dealers, reading trade publications and researching your particular area online. If you were inspired by Bill Gross's big stamp windfall, for instance, the American Philatelic Society and online stamp portal StampListing.com are good places to start. Information and price listings on everything from vintage toys to jukeboxes can be found on Kovels.com.

Wine

Wine has grown into an asset class all its own thanks to increasing world-wide demand and rising prices. According to the Liv-ex 100 index, an electronic wine-trading exchange in London, fine wine prices rose 39% in 2007, making the S&P 500's 3.5% gain look downright measly.

"There are a lot of new economy millionaires trying to acquire the trappings of success, and wine is considered one of those," says Stephen Bachmann, CEO of Vinfolio, a wine shop and information site.

Most important when deciding what wine to buy is that it has proven ability to appreciate in value and age well in the bottle. This means the wine is "investment grade," says Bachmann. To qualify as investment grade, the wine should have a solid rating from recognized critics. He suggests that beginners consider red Bordeauxs, since they have longer track records, making them a relatively safe bet.

Here are a few other things to remember when collecting wine:

: A sales transaction with a major auction house can carry a fee of about 15% of the market value, which is paid by the seller.

Transaction costs

: A wine held too long will diminish in value, says Stephen Reiss, a certified wine educator. So if a wine is close to its peak drinking window, it's time to sell or drink.

Age

: Keep in mind that a bad review can lessen a bottle's value.

Tastes

: Figure the cost of storing the wine in ideal conditions into your returns. Many collectors have cellars that use as much as $100 a month in electricity, says Reiss.

Storage

Tax/Estate Implications When you sell a collectible defined by the IRS as tangible property that derives its value directly from its rarity and popularity you have to pay taxes on the proceeds. Items owned for more than a year carry a 28% capital-gains tax, higher than the 15% for long-term capital gains on other investments. (Even gold exchange-traded funds are taxed as collectibles by the IRS because the fund holds physical bullion.) One way to soften the tax blow is to sell other investments at a loss, says Nadine Gordon Lee, president of wealth-management firm Prosper Advisors in Armonk, N.Y. Recording a loss from the sale of a stock or mutual fund could help offset the increase in value of a collectible, thus eliminating (or reducing) its capital-gains tax liability. If you don't sell, think about a long-term plan for your collection. If you decide to gift art or other collectibles to charity, you or your heirs can avoid capital-gains taxes on those items altogether. If structured properly, you may also be entitled to a charitable income-tax deduction or your heirs may get the benefit of an estate-tax deduction after your death, Lee says. Another technique for people with pricey collections is a "qualified disclaimer." If you and your children are uncertain about which pieces to keep, sell or give away at your death, you can bequeath the items with a provision that allows your children to disclaim the property and instead give it to charity, thus avoiding having to pay estate tax on it. It allows heirs up to nine months from the date of your relative's death to decide what to do with the assets, says Lee. (This makes sense for individuals with $2 million or more in assets going to nonspouses. In 2008, individuals can transfer up to $2 million in assets to future generations without the federal estate tax. But the tax goes up to 45% on estates worth more than that. The amount is scheduled to increase to $3.5 million for 2009.)