Everyone has a hobby, something they enjoy spending time and money on. Some hobbies are less expensive than others (like running, but even then that can add up once you factor in all the latest kit). Others can be a labour of both love and investment, like my hobby: classic cars. But, managed well, classic cars can be a hobby that potentially grows your money.
I am from a family of (mainly classic) car and motorcycle enthusiasts. At one point, my dad had 7 classic cars in his garage! I’ve gone for just the one: an Aero 1000 manufactured in Prague in 1933. Only 234 of these cars were manufactured, out of which less than 100 remain, mostly in Germany, Switzerland, the Netherlands, and its home – the Czech Republic.
I love classic cars for many reasons but (apart from enjoying the beauty of these machines) these are the most important ones:
- Owning and driving a classic car is an exciting way to think about how technology has evolved and the impact of automobiles on our world
- You meet loads of interesting people from different countries
- If well managed, it could be a great investment
Geared towards diversified portfolios
According to Coutts, prices of classic cars increased by 257% in less than 10 years. This, along with so-called “passion funds” which allow you to invest in a car without having to own and maintain it, can make classic cars look like an appealing investment.
However, there are pitfalls, and before owning or investing in a classic car, there are lots of things to consider:
- Don’t buy it with heart – some cars may be beautiful while having pretty poor value and minimum chance of growth
- Rare cars, cars with a story, celebrity owned cars and great brands tend to be less volatile and grow faster
- There is a lot of fraud and valuation scam happening – be careful especially when buying overseas. Some people create fake stories about their cars; you may end up buying a full or partial replica.
- Renovation and repairs can cost more than you’d expect – you will often need bespoke solutions
- Old cars are less reliable so if you want to drive your car, you can expect to invest more to keep it running then with a modern car
- You will need a safe, secure car storage and good protection ideally with GPS tracking – don’t assume your garage is good enough
- Insurance can be expensive and many car owners therefore leave their cars uninsured
- If you buy a car, expect it to take over your life! It’s certainly a hands on investment especially compared with lending at Zopa.
Watch out for flat tyres!
Overall, owning a classic car is an amazing hobby, which could be one of the best investments of your life; but also one of the worst ones. So if you do your research, but your car’s value doesn’t grow as expected, just treat it as a part of your family, enjoy a great time out with it, and unlike a stock market crash, you’ll pardon your car the occasional value drop!
Milan Pastor is a classic car enthusiast in his spare time and CRM Manager, Lenders at Zopa during working hours.