Recently, there has beena growing interest inunconventional investmentssuch as antiquecoins, stamps, furniture,artwork, and automobiles.
Interestingly enough, in the antiqueauto clubs there happens to be a disproportionatenumber of memberswho are physicians, or more specifically,surgeons. Old collector automobileshave become not only a hobby, butmore recently, big business. Just lookat some of the national auto shows andauctions sponsored by such groups asBarrett-Jackson, Kruse International,and RM Auctions, just to name a few.When you look at the annual returnson conventional financial instrumentsand compare them against the returnson some of the more exotic classic cars,traditional investments have paled bycomparison. But, realize such returnsalso come with risks—as does all typesof investing.
Look for the following qualitieswhen purchasing a classic car:
•Has the car been restored or is itoriginal? If it has been restored, find outif the restoration was cosmetic, mechanical,a frame on or frame off restoration,and whether the restoration was doneto original specifications.
•Do all the numbers match? Determineif the engine and drive-trainthat is presently in the car is the same asthat which was in the car when it cameoff the assembly line.
•What options was the car equippedwith originally? For example, every carmanufactured today pretty much comesstandard with air conditioning, but thatwas hardly the case in 1955.
•How rare is the automobile? It isimportant to know how many of aparticular car and model were produced,and how many still remaintoday. For example, there were 690Chrysler 300E produced in 1959, ofwhich 140 were convertibles and 550were hardtops. Of the 140 convertiblesmanufactured, only about 25 are stillknown to exist today.
•What is the automobile's history?An automobile's history is determinedby the number of previous owners andwho they were. Was that 1961 whiteLincoln Continental convertible ownedby Jacqueline Kennedy Onassis or that1929 Duesenberg Model J Murphyowned by Howard Hughes?
•What original documentation isavailable and can be provided on thecar? Documentation includes the originalbill of sale, the original car manualthat came with the car, servicingdocuments, etc.
Keep in mindthat buying a carfor esthetics is one thingand investing in one isanother. Generally, as arule of thumb, purchasinga car in number-one condition—best on the scale forautomotives—can be veryexpensive. On the other hand,the same car in number-three conditionmay be a fraction of the cost. However,the cost of restoring that same car tonumber-one condition can cost a greatdeal of money. In some cases, cars, oncerestored, may be valued at less thanwhat it costs to restore them.
If you indulge in this hobby, youbetter be prepared to use some elbowgrease and be mechanically inclined, oryou had better be prepared to openyour pocketbook and write some veryhealthy checks when it comes to basicmechanical repairs and maintenance.
So before you go out and purchasean original 1957 Chrysler New Yorkerconvertible with a 392-cubic-inch hemiengine with 360 horsepower, push-buttonChrysler Torqueflite transmission,power steering, power brakes, powerwindows, power seats, push-buttonradio, dual antennas, and wire wheelswith only 56,000 miles, make sure youdo your homework first.
Thomas R. Kosky and his partner, Harris L.Kerker, are principals of the Asset Planning,Group, Inc, in Miami, Fla. The companyspecializes in investment, retirement, andestate planning. Mr. Kosky also teaches corporatefinance in the Saturday Executive and Health CareExecutive MBA Programs at the University of Miami in CoralGables, Fla. Mr. Kosky and Mr. Kerker welcome questions orcomments at 800-953-5508, or e-mail Mr. Kosky directly atProfessorKosky@aol.com.