Recently released figures reveal which professionals are most likely to put cash into investments which are “too good to be true”.
We’ve talked about classic car investment in the past, and with sellers getting used to describing pretty much any classic car as an investment to attract buyers, we found an interesting theme in the information recently published by Rebus, a company that handles claims for people who believe they have been mis-sold investments.
The figures claimed by Rebus reveal the occupations of the estimated 114,000 UK victims of unregulated investment mis-selling, who have collectively placed around £5bn into investments which turned out to be “too good to be true”.
Clearly the figures have a lot to do with income and the number of professionals employed in each sector, and there are similarities in the cross-section of professions in our client base – but what has this got to do with classic cars?
Classic car investment is one of the areas of “unregulated collective investment schemes” that have been identified as potentially risky by industry commentators. This refers to classic car investment funds and not the act of purchasing a classic car due to its appreciation potential, however during 2014 we have had an increasing number of enquiries for investment cars and there has certainly been a correlation between those wanting to make price gains on classic cars and the the above figures.
What’s the risk?
For those used to making rapid and significant returns on investment the attraction of classic cars is clear – they have outperformed many other investments in recent years according to organisations such as the Historic Automobile Group International, whose book Better Than Gold: Investing In Historic Cars highlighted the increasing values to those outside the classic car industry. The classic car industry is unregulated and this extends to advice on the investment potential of cars, although judging by the number of cars that are for sale that claim to be a good investment or have investment potential everyone is an investment expert. A quick search of classifieds site www.classiccarsforsale.co.uk for the term “good investment” returned nearly 7,000 results on Google with cars from TVR 350i, Subaru Impreza turbo and Reliant Robin all described as good investments.
The phrase “investment potential” which hints more specifically at returns on investment appeared 1,340 times on the same site in Google search with over 200 classified adverts offering cars with investment potential. Google also found the word “rare” 217,000 times on the site.
The risk lies in buyers accepting this “investment advice” and purchasing the car on the basis that they have been assured it will appreciate. Of course this will not always be the case so it is absolutely vital for buyers to take independent advice on the future values of classic cars before they make a purchase based on investment potential. Tracking what has happened to classic cars in the past is easy – understanding what will happen to them in the future is the hard part.