Why Collectibles Aren't Sound Retirement Investments

One of my friends has an entire room in his house devoted to collectibles. He's got DVDs, action figures, models, trading cards-just about everything you can imagine, all in its original packaging and maintained in pristine condition. When I first saw this room I asked what on earth I was looking at, and his response was: "This is my retirement fund."

It makes sense on the surface. Collectibles can become extremely valuable over the years, and there are always people willing to buy obscure items at ridiculously high prices. But would I ever entrust my future to a group of collectibles, no matter what the value? Not a chance.

Potential for Destruction

My chief concern about collectibles as a retirement fund is the potential for destruction. What if my house is leveled by a tornado? What if someone breaks in and steals it all? Even a broad homeowner's insurance policy isn't going to replace everything.

Heck, my kids could break into the collectibles vault, open every box, destroy most of my prize collection, all while the babysitter is chatting with her boyfriend on the phone. My point is that anything could happen, and my retirement fund is just too important.

Potential for Loss of Value

Okay, yes, any retirement fund is subject to loss of value, unless it consists of cash locked in a fire-proof safe under your mattress. But neither the stock market nor any other investment vehicle is quite as finicky as the business of collectibles.

You have no idea what your chest full of limited-edition Beanie Babies will be worth in forty years. It's impossible to predict. There are too many factors to consider, too many ways for this type investment to go horribly, horribly wrong. More conservative methods are advisable when it comes to a retirement fund.

Potential for Storage Conflicts

Let's say I devote the rest of my life to collecting action figures from all major comic book series. Everyone likes comic books, right? And maybe I pick up a few valuable books as well just to round out my collection.

Then something happens-I lose my job, the economy takes a tumble, I'm injured or ill-and I have to move to a smaller house. Where do my collectibles go? If I have no room to store them at home, I'll have to spend money to store them somewhere else. And that seems counter-productive for a retirement fund.

Potential for Stupidity

Ah, the big one. I mentioned my friend earlier, the one who inspired this article. Don't tell him I said so, but I think his collectibles are more for his pleasure than for his retirement fund. He might say he's just investing in his future, but I think it's more a way to enable this obsession with action figures and DVDs, and everything else. He likes to look at his collection.

I'm afraid that, if I use collectibles as a retirement fund, I'll be cheating myself out of a future. I'll find myself making poor decisions on purchases just because I want something for my collection, and not because it'll pay off in retirement. For me at least, this seems like a dangerous gamble on my future.

Some people might succeed at using collectibles as a retirement fund, just like some people find success as professional gamblers in Vegas and Atlantic City. But as for me, I'll take the traditional IRA.