Getting the Best Value From Collectibles

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.

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.

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.