Expert’s view

Making money: five alternative investments for 2022

Diversify your portfolio with quirky investments such as Lego and digital art

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The Star Wars Millennium Falcon is one of Lego’s best-performing sets

The Star Wars Millennium Falcon is one of Lego’s best-performing sets

Lego.com

Lego beats gold 

Researchers at Russia’s Higher School of Economics made a startling discovery last month, said Mark Sweney in The Guardian. “Investing in Lego is more lucrative than gold, art and wine.” The study looked at the second-hand prices of 2,322 “unopened” sets from 1987 to 2015, and concluded that the market has risen 11% annually – a better long-term return than almost every other asset, including stocks and bonds. 

The best-performing sets include the Millennium Falcon, other Star Wars models, and the Taj Mahal. But the key message, if you want to build a nest egg, is that “not all sets are equally successful”, said Professor Victoria Dobrynskaya in The Times. Top performers have gained 600%, while others have proved lossmakers. Prices tend to rise two or three years after a set disappears from the shelves and very small and very big sets usually do best. Above all, it’s important “to be a fan” and “know the market”. And probably a good idea to keep them well away from compulsive builders…

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Cat and dog (Image: PXhere.com)

PXhere.com

Pet company shares

Rather than buying a puppy or a kitten for your children, why not buy some “shares in a pet company instead”, said David Brenchley in The Sunday Times. You’re unlikely to get “smiles and thank-yous” in the short-term, but you’ll give them “entry into an increasingly successful corner of the stock market”. The obvious question is whether the pandemic pet craze, which has fuelled big rises in animal-care shares (ranging from retailer Pets at Home to vet specialist Dechra) has legs. 

The Dogs Trust reported that calls from owners seeking to re-home their pets rose 35% after lockdown lifted in July last year. Even so, many fund managers still feel the sector is ripe for investment. For a broad-brush approach, try ProShares Pet Care ETF, which tracks a variety of firms and has gained 119% since March 2020.

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whisky-new.jpg

Getty Images

Fine wine and rare whisky 

It was a vintage year for wine lovers in 2021 with collectors and tipplers “having a great time of it”, said Chris Carter on MoneyWeek. The value of fine wine rose by 13% in the year to the end of June, according to research by analytics company Wine Owners, and this was a far better performance than products such as watches and classic cars.

Fine wine is not the only alcoholic drink that investors have a taste for. Whisky investors will also “have much to toast in 2022”, The Scotsman reported. In its outlook report for 2022, whisky investment firm VCL Vintners said across all age statements, “prices are steadily increasing and the ‘majors’ are becoming scarcer”. 

Also expect to see “continuing strong investment” by millennials into whisky. The “instability of the markets” under the forces of Covid variants, supply chain bottlenecks, and the energy transition, is pushing investors to “seek alternative ways to grow their money”, said Stuart Thom, co-founder of VCL Vintners. And a “growing number of savvy millennials are finding whisky”.

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Everydays – The First 5000 Days (2021) by Mike Winkelmann

Christie’s

Traditional and digital art 

Investing in art “may be a great idea if it’s something you truly love”, said Amy Bergen on MoneyUnder30. However, it “can be risky, so you need to do your research”. Art is a long-term investment and profits won’t happen overnight. “Experts recommend art investment for patient investors with a time window of ten years or more, so think long term,” she added.

Historically, investing in art was “something only the nobility and the wealthy enjoyed”, said Jarvis Dobrik on ValiantCEO. However, the emerging market for digital art and non-fungible tokens (NFTs) has seen more companies, auction houses, artists, celebrities, collectors, and investors “getting in on the act”. Some investors are seeing “considerable returns” on their crypto-collectibles and other digital assets. Is NFT art a good investment and can you make money? The answer is yes, Dobrik said. NFT art can be considered a “short and long-term investment”. 

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Hermes handbags (Stan Honda/AFP via Getty Images)

Stan Honda/AFP via Getty Images

Luxury collectibles and stocks

It was a strong year for the luxury goods sector in 2021, the FT reported. And analysts forecast that this year “will be even better”. 

In Knight Frank’s Wealth Report published last February, Hermés handbags topped the luxury investment index for the second year in a row, followed by fine wine. The average price of the French fashion house’s bags rose by 17% in 2020, while wine saw a 13% incremental value on investment.

Luxury stocks “have a place in almost any portfolio”, The Motley Fool said. These stocks have “a history of outperforming the broader market” and are relatively low-risk investments. Three stocks it advises to buy include US upscale home-furnishings company RH, luxury giant LVMH Moet Hennessy Louis Vuitton, and sports car company Ferrari. 

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