From baseball cards to wine collections, alternative assets introduce fun to portfolios.

A big reason why a lot of people are disinterested in finance is because it’s about as exciting as watching paint dry.

So, after writing about thrillers like Treasury bills, high-yield savings accounts and CDs over the past month, we figured it’s time for something a little more … fun.

And thanks to an Obama-era law, average investors now have access to a whole slew of alternative assets once reserved for Mr. Monopoly and his ilk.

Until recently, if you wanted to invest in startup companies, real estate development projects or trophy assets — like exotic cars and luxury watches — you had to be an accredited investor, meaning those who:

• Have $200,000 or more in annual income.
• Have a net worth of $1 million or more.
• Or are in good standing with a Series 7, 65 or 82 license.

The JOBS Act

But in April 2012, that all changed.

When President Obama signed the Jumpstart Our Businesses Startup (JOBS) Act, one of the law’s provisions stipulated that investors no longer have to be accredited to take advantage of alternative assets.

And thanks to Title III of the JOBS Act, crowdfunding was established, enabling early-stage businesses to sell securities to retail investors. However, this doesn’t just apply to startups whose ultimate goal is to go public.

Companies can now use what’s called Regulation A to securitize anything from Lamborghinis to first-edition Marvel comic books similarly to how a company would register an initial public offering (IPO) with the Securities and Exchange Commission (SEC).

Fractional Investing & Collectibles

These opportunities, including designer handbags, fine art and wine collections, were once reserved for the wealthy.

But now they’re available to everyone.

And platforms that securitize collectibles have branched out beyond luxury goods. Some now specialize in niches like memorabilia and sports cards, the latter of which has produced an average return on investment of 60% over the past five years.

For context, the average return of the S&P 500 over the past 20 years was 10.05%.

These aren’t outliers, either.

One platform recently had an exit that saw a three-card set — including Larry Bird, Magic Johnson and Julius Erving — net $720,000 and provide investors with a 104.5% ROI.

If sports aren’t your thing and you’re a fan of paleontology, you can literally invest in dinosaurs. A triceratops skull exhumed from a North Dakota archaeological site in 1999 is now worth $285,000. Price per share? $10.

If vino is more your speed, the fine wine market gained +14% last year while the S&P 500 lost 19%. In one quarter alone, a platform for investing in fine wine closed four collections for an average ROI of 28.38%.

How about art? You no longer have to have a Monet or van Gogh hanging in your living room to own valuable paintings. Over the past 25 years, fine art has produced an ROI of 13.8% and fractional ownership is now available through numerous platforms.  

TL;DR

Making money from collectibles no longer requires you to be part of the 1% or hoard Beanie Babies and books of stamps. Thanks to SEC-regulated companies, investors can now turn their hobbies into profits. In next week’s issue of The Big Idea, we’ll introduce some of the platforms that can help you add some fun (and profit potential) to your portfolio with alternative assets.