‘Don’t be afraid to take a risk’

We’ve all heard the conventional advice that the best investments are those made in the stock market, saving in a 401(k) plan, and buying a home. But younger generations are beginning to tout non-traditional investments, such as buying Birkin bags or other collectibles, as reliable ways to earn extra income.

Influencer and WWE wrestler Logan Paul recently said that it pays to go beyond the normal scope of investing.

“If you’re young, you can spend money and invest in a variety of ways that may make more sense to you than in a traditional conservative environment like the stock market,” he told Fox Business Network’s “Big Money Show” on Tuesday.

Paul has certainly taken an unconventional investment path: He recently put up for auction a rare Pokémon card that he purchased in 2022 for $5.3 million. The former WWE United States Champion actually once wore the card around his neck during matches, saying it was “the rarest card in the world” and “the Holy Grail.” This card is a PSA graded 10-panel Pikachu illustration card, of which there are only a few dozen left in the world. But Paul’s card is the only one to receive a 10/10 rating from the Professional Sports Sanctions Agency (PSA).

Paul said he plans to auction the card in early 2026 and expects it to sell for between $7 million and $12 million, which would bring him about $2 million to $7 million. He also believes collectibles like Pokémon cards have “outperformed” the stock market over the past two decades.

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“If you have money, don’t be afraid to take risks, especially if you’re young,” Paul said.

Global wealth management firm AES says collectibles such as wine, manuscripts, classic cars and rare art can bring “reasonable” returns to investors, but they often don’t deliver the same long-term gains as investing in stocks.

According to the AES report, between 1900 and 2012, the nominal annual return on collectibles was 6.4% and the real return was 2.4%.

“While the returns are reasonable, they are well below the long-term returns of investing in the stock market,” AES CEO Sam Instone wrote. However, “that’s not to say these collections aren’t suitable for certain investors.”

Still, Gen Z men have become obsessed with investing in these collectibles, which some believe will beat Nvidia stock and the S&P 500. They may have a point: Pokémon cards have seen the greatest long-term growth in value of any card category. According to the data provided, it has grown by 3,261% over the past 20 years wealthPreston Fore from Card Ladder. Even the one-year investment is up 46%, which is higher than Nvidia’s 35% gain and the S&P 500’s 17% year-to-date gain.

“The trading card hobby has entered a new era, driven by technology, innovation, community and the perfect balance of modern creativity (new settings, storylines and characters) and old-school nostalgia,” said Adam Ireland, vice president and general manager of global collectibles at eBay. wealth. He also said that eBay users searched for “Pokemon” nearly 14,000 times per hour in 2024.

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Other collectibles such as the Hermès Birkin bag have also caught the attention of young investors, who believe buying one is more valuable than investing in gold. But recent reports indicate that the return on investment for these rare handbags is no longer what it once was. The average resale premium for Birkin and Kelly bags – a metric that compares auction prices to their retail costs – has fallen from 2.2 times their original value in 2022 to 1.4 times as of November, according to Bernstein Research’s Secondhand Pricing Tracker. To put that into perspective, a Birkin bag initially purchased for $10,000 and resold in 2022 would cost more than $22,000, but a bag that originally retailed for the same price would be worth only $14,000 on resale today.

Overall, while investments in collectibles can offer strong returns, they can also be a very risky investment based on liquidity risk, concentration risk, cost and maintenance, potential for bubbles, and tax treatment. Economic Times.

“It is true that some people earn income by buying and selling collectibles on a regular basis,” the Consumer Credit Union said. “However, wealth is determined by the whims of buyers and the rise and fall in popularity of specific items. While the stock market may fall, its value tends to be higher over time.”

This story originally appeared on Fortune.com

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