Christmas gifts: ideas that keep appreciating
Add value to gift-giving with investment appreciation, writes Stephen Vines
With Christmas fast approaching (have you noticed how that process somehow accelerates in November) the time has come for the financially minded to focus on gifts that will not only please but increase in value. And surely this is also the time to be a tad more imaginative; so let's ignore the obvious and rather boring notion of gifts involving shares, investment funds and other financial products that are hard to touch and feel during the festive season. They certainly have their place in the investment galaxy, but are a bit so-so as gifts.
With this in mind, here are seven gift ideas worth a look even if you end up giving out book tokens or yet more i-something gadgets.
Many people are talking about whisky as the new wine of the investment world as prices for rare and high quality whiskies have recently been rising faster than the price of collectable wine. We're talking about so-called investment grade Scotch where bottle prices start from well over HK$2,000 and can easily rise beyond that level - a record price of over HK$1.5 million was paid for a 62-year-old bottle of The Dalmore single malt last September. But there is a great deal of Scotch available at prices well below this astronomical level. And, of course, the beauty of whisky is that it can both increase in value and be drunk. One bottle for the portfolio and one for the tumbler.
Here's another so-called alternative investment that provides both enjoyment and value. Classic cars such as Ferraris and Bugattis are doubling and trebling in price, but this is not an option for those who are light of pocket. To get on the classic vehicle ladder can be quite reasonable for a car in a bad state of repair but restoration costs, running costs and road taxes for these large capacity engines soon turn the concept of reasonable on its head. However, a rise in price for one of these classic beauties may dispel financial concerns and be a constant reminder of the style and generosity of whoever provided the gift.
Works of art
Forget all that stuff about finding an obscure work by Picasso in the basement and selling it for squillions. The Christmas giver needs to be more firmly grounded and consider how best to turn this popular alternative investment into a worthwhile gift. They will have in mind that at the upper end of this market returns on art investments have been outpacing returns on shares. However, the upper end comes with very high price tags. Few ordinary investors can contemplate being in this market, but may be tempted by into buying trusts that purchase artworks and churn them. This seems a rather dismal way of investing in art because surely the essence of owning art works is being able to view them, preferably in your home. Why not think more modestly of buying lower cost works where the intrinsic value lies in appreciation of the art. If they end up becoming valuable, that's a real bonus; if not, the work is still there to be enjoyed.
Now here's a smart idea for parents sending their children overseas for university education. Not only will the purchase of a small unit provide a place for the offspring to stay while they are at university but parents can be sure of the quality of the accommodation and afterwards can look forward to a reasonable income from letting these properties, which offer good yields even if capital appreciation is more modest. In places like Britain and the United States, investment in university accommodation has taken off as an investment theme.
Yes, boring old bamboo is one of those new investment ideas whose time may well have come. The World Bamboo Organisation claims demand for bamboo will double in the next five years. If this is so, the notion that bamboo is the new timber of the 21st century has some credence. It is a renewable commodity with sound green credentials, so the giver can bask in the warm glow of choosing an ethical gift. This market can be accessed via investment trusts and, more ambitiously, by buying bamboo plantations.
Become a film mogul
Well, maybe not exactly that, but in the past decade a number of film investment schemes have been launched offering investors a chance to take a stake in movie projects. There is something attractive about this, especially for film buffs, but it comes with a large warning because making money in this area is extremely difficult and most of these schemes (much loved in the US for their tax write-off potential) are unprofitable. However, on the off chance that they are, many people will be more than happy to be able to say, airily: "Of course, I was an early financial backer for that smash hit; I'm expecting Spielberg on the line at any moment."
What we are talking about is folding notes denominated in US dollars. Put aside everything you have heard about pressures on the American currency and its likely rise or fall because the fact is that there is no more useful currency in the world. If you have any expectation of travelling it is always wise to pack some US dollars, a bunch of notes that can be used or exchanged practically anywhere you are likely to go. Moreover, there is nothing like the feel of a wad of notes in your pocket, or in your hotel safety deposit box, because whatever is said about the value of various financial instruments nothing speaks louder than cash when it comes to buying most things. So why not put some notes in an envelope with a festive wrapping?