You love them. But what makes you think they'll pay the rent?

Collectables are antiques, works of art, wine, jewellery...........typically, objects of desire which are not transient and may therefore be worth more in the future. A few thoughts for you.

• Collectables as investments are sexy. Articles about them sell newspapers. Contact with them is seductive. Your mate at the golf club talks casually about his wine investments to make you feel provincial. There is a whole industry out there of makers, traders, communicators and hustlers whose livlihoods depend on the promotion of this aura. These people make their money out of...........guess who?
• We all have something that we know our great-grandfather bought for 10 old pence and is now worth £2,000. But we long ago junked the ugly painting that our great-grandfather bought for £100 and is now worthless.
• We would love to believe that an antique table we desire but cannot afford to buy out of income is really an "investment".
• All collectables have holding costs (like storage and insurance) which we always underestimate.
• All collectables have a big spread between the buying and selling prices (ever tried to buy and sell the same thing from the same dealer?).
• Broadly (very broadly), your average object of desire is going to maintain its value in real terms, no more and no less. Broadly (very broadly), your average financial investment is going to appreciate in real terms. So the house odds are against you.

Our view
If your financial planning suggests an investment in Index-Linked Bonds, and you believe you have a specialist knowledge in a collectable area, do the following:

• Look at the interest rate on ILBs (1%?)
• Estimate the holding costs, excluding finance costs, of your collectable investment (5%?)
• Estimate your annual dealing costs if you are planning to trade to stay ahead of the game (2%?)
• Add a risk premium (2%?)
• Add all this together (10%)
• That is then the amount by which your collectable stock must increase in value compounded annually in real terms through your skill in trading, or because your collectable of interest happens to be in sufficient demand to drive that sort of above-inflation price increase.

If those numbers stack up, then you should invest in the collectable of your choice instead of ILBs. Or maybe just part of your ILBs (don't let's forget diversification). And good luck to you.

If not, what's wrong with enhancing your passion for {whatever} with a little bit of judicious buying and selling, and justify the amount you (over)spend on it with the knowledge that it may be worth something someday? That's what the rest of us do.

And who wants collectables to be an investment anyway? What could be more vulgar or life-destructive than buying Chateau d'Yquem and never drinking it, or buying a Van Gogh and sticking it in a bank vault?