Ernest Hemingway once said, "There is no friend as loyal as a book."
And if you are one of the many investors who has watched your savings evaporate in the stock market over the last few years, Hemingway's quote is apropos, because there are few investments as loyal as a rare book.
Books — especially rare first editions — are a risk-free way to preserve wealth, in good times and bad. While it is a rather whimsical type of investment, there are many advantages to starting a collection of rare books — including safety, growth, and the overall tactile enjoyment that you simply can't get out of stocks, bonds, or other types of investment.
And while you probably won't get rich overnight, investing in rare books can be an almost fool-proof way to hedge yourself against the volatility of the global economic system.
“At the end of the day, if everything else goes south, you still have a beautiful book that is holding its value,” John Windle, owner of John Windle Antiquarian Books in San Francisco, told CNBC.
Windle explains why collecting books is more akin to a savings account than a short-term investment. Books are not liquid like stocks; if you needed to pull money together in a pinch, your book collection may not be of much use to you...
He also cautions collectors to expect to hold books for at least two seven-year cycles in order to see a significant return.
So if you're the buy-and-hold type, collecting rare books can be a wonderful way to preserve your wealth — and pass it down to future generations.
“The good news is that lifespans are lasting longer. People are living longer and they can use their longevity to ride out market cycles,” according to Andre Chevalier of Rare Books Digest.
“An investment portfolio that includes rare books is better positioned to withstand market cycles and provide long-term growth that extends well beyond retirement day. Rare books have historically proven to hold and appreciate in value in the long run.”
If you think you may be sitting on an old book that meets some of the above criteria, a great resource is AbeBooks. Type in the attributes of your book and quickly find out if it measures up as an "investment-grade" book.
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If you are just getting started, you should begin attending local events such as auctions, fairs, and book sales to broaden your reach and understanding of the sector... And don't be afraid to ask booksellers and fellow buyers about their experiences and expertise.
A book lover is often more than happy to share their love of books with you — and you stand to pick up some valuable tidbits for starting your own collection.
As with other "hard assets" like fine art, wine, stamps, or baseball cards, half of the fun is in the collecting.
Windle sums it up thusly: “If you don't care, there is no point in buying them. But if you really care and you really love them, then there is no downside."
If you are interested in rare books, you may enjoy these other "hard asset" resources from Wealth Daily: