|By Marketwired .||
|July 17, 2014 11:20 AM EDT||
LEAWOOD, KS -- (Marketwired) -- 07/17/14 --
- Jewelry, coins and art are the collectibles of choice for the state's affluent
- Nearly three quarters invest in their hobbies because it is "fun" and combines their interests with investing
- Individuals of all income levels need to be cautious when investing in items such as antiques, stamps or classic cars
BMO Private Bank today released the results of a study on high-net worth Missourians (those with at least $1 million in investable assets) and hobby (or passion) investing. The study, the fifth and last in a series by BMO Private Bank examining trends among the affluent, found that 57 percent of the state's wealthy engage in some form of hobby investing. This compares to the national average of 68 percent.
Hobby investing is defined as adding collectible assets to one's portfolio as a means of diversification and, just as important, as a way to have and to hold the things investors love the most.
"We have clients in this market that collect and invest in a wide variety of hobbies," said Kelli Glynn, Managing Director, BMO Private Bank. "While it does provide some additional diversification, we tend to see purchasing collectibles as a passion investment rather than attempting to create additional wealth. Even in this case, it's important to keep the hobby investments to a relatively small portion of one's net worth. There's simply too much risk and too little liquidity."
The study found that the items in which the Show Me State's affluent are most passionate about investing include:
- Jewelry, Coins and Art (25 percent each)
- Antiques (20 percent)
- Stamps and Classic cars (15 percent each)
- Wine (8 percent)
"People who choose to invest in their hobbies often do so because it allows them to feel a sense of engagement without having to spend a lot of time on them. Many hobby investors are keen to create a legacy to pass on to their heirs -- one that is unique to them and reflects their interests," said Jack Ablin, Chief Investment Officer, BMO Private Bank.
Why do People Engage in Hobby Investing?
According to the study, one of the main reasons why Missouri's affluent engage in hobby investing is simply because it is "fun" (70 percent). Other reasons identified include:
- Combines interests with investing (48 percent)
- Provides sound investments that will grow in value (43 percent)
- Provides something unique to pass down to heirs (43 percent)
- Allows for showing off investments to others (26 percent)
Regardless of what influences people to combine their hobbies with investing, Mr. Ablin noted that, as with any form of investing, there are a few cautionary factors Missourians of all income levels need to consider. For example:
Antiques: can be very illiquid and therefore not suitable for those who may need to convert them to cash in a short period of time.
Wine and art collecting: are long-term propositions, so not appropriate for those with a short-term investing horizon.
Stamps and coins: there is a robust counterfeit market in both these items, so investors need to be careful about their authenticity and well educated about the risks.
Comic book collecting: may be trendy today, but the market may not be so strong in the long or even the medium term.
Key National Findings:
On a national level, the study found:
- Two-thirds (68 percent) of high net-worth Americans have a hobby investment.
- The most common hobby investments are coins (38 percent), art (36 percent), and jewelry (31 percent).
- High net-worth Americans are most likely to engage in hobby investments because they find it "fun" (62 percent), because it is a way to combine an interest of theirs with investing (54 percent) and because it enables them to pass something special down to their loved ones (40 percent).
- Four-in-ten (40 percent) say they invest in their hobbies because it is a sound investment which will appreciate in value, with this being a larger motivator for men than women (41 percent vs. 36 percent).
The online survey was conducted by Pollara between March 28th and April 11th, 2013 with a sample of 482 American adults who have $1M+ in investable assets. The margin of error for a probability sample of this size is +/- 4.5%, 19 times out of 20.
About BMO Private Bank, a part of BMO Financial Group
BMO Private Bank offers a comprehensive range of wealth management services that include investment advisory, trust, banking and financial planning to meet the financial needs of high net worth clients. Through integrated teams of experienced financial professionals, BMO Private Bank helps its clients realize their financial and lifestyle goals with solutions that are custom tailored and delivered with the highest level of personalized service.
BMO Private Bank is a brand name used in the United States by BMO Harris Bank N.A. Member FDIC. Not all products and services are available in every state and/or location.
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