If you have chosen to invest your hard-earned money into comic books, naturally you want to know how much you should be allocating toward this new investment. Let’s talk about investing in comics!
In a past article I wrote, I discussed how ultra-high net worth investors allocate their investments on average, helping to understand how much they invested in the collectibles market as a whole. This is helpful to understand because these are successful investors interested in growing and protecting their wealth. The same principles can be applied to new comic book investors as well! Have you started investing in comics yet?
So, How Much?
When you look at asset allocation of ultra-high net worth investors, they tended to allocate 5-20% of their investable assets in investment-grade collectibles. This doesn’t mean average grades, this would be the best of the best. It also means that they would remove their primary residence and other holdings that are not specifically investments when calculating their investable assets.
For example, if you have $100,000 in investment accounts, cash, investment real estate, etc. then allocating $5,000 to investment grade comic books might be a good fit for you. $1,000,000 investor might allocate $50,000 to one high-grade key comic book and be fine in terms of their asset allocation. Again, I would not include mid-grade books or non-grade books when talking about investment-grade comic books. These would be the top 15% graded examples of the given book.
As a new collector, you might consider setting yourself a monthly budget to set aside for a key book that you can reasonably purchase within 6-18 months. Another strategy might be to allocate those monthly funds to purchasing affordable speculation books. These, you can turn a short-term profit on and put those profits towards purchasing a key investment-grade book. This, you can invest in for the longer term (5-10+ years).
What about Monthly Books?
I would not consider any books that you purchase on a monthly basis to read and enjoy part of your investment allocation. If you are purchasing the books to read, you should not consider them an investment. However, if they happen to appreciate in value you can flip them down the road for a profit. Your entertainment budget should be separate from your investment budget. As with anything, the more granular you can get with your budget the better results you should be able to achieve in the long term.
If you are able to at least put a number on how much you are willing to spend on a comic book as an investment, you can do your research and determine a key book that fits your budget and has long-term collectability/investment value. People often use the term “collect what you love”. This is true to an extent for your investment books as well. There are no guarantees in the collectibles market that they will appreciate in value.
Set your sights on a key book that you will enjoy owning whether it goes up 50% in value or drops 50% in value. It’s impossible to predict the future. Still, key books with long track records of holding their value do have a better chance of continuing that trend. Lastly, I would say that investment-grade collectibles tend to increase in value during turbulent economic times. So don’t be afraid to use a spike in value to sell an investment book. Wait until prices level off. Then, use those gains to purchase a more valuable book or higher grade of the same book at a discount. Most importantly, have fun while you’re doing it!