Diversifying your investment profile means following the adage, “Don’t put all your eggs in one basket.” Spreading your capital over different industries and asset classes will reduce risk and mitigate volatility in the stock market, and, by investing in an asset untethered to the stock market, you’ll have something to fall back on if it crashes.
These days, you can never be too careful…
The House of Hockey Cards
Sidney Crosby rookie card $5,000 in 2005; Wayne Gretzky’s rookie card sold for US$465,000
Ever since Wayne Gretzky’s rookie card sold for a record-breaking US$465,000 in August 2016, collectors have been blowing the dust off the hockey card binders from their youth and searching for their own hidden treasure. For some, collecting hockey cards is not just a childhood pastime, but an investment that can reap rewards. Wayne Wagner of Wayne’s Sports Cards and Collectibles in Edmonton has seen cards move across his counter for thousands of dollars, the priciest being a Sidney Crosby rookie card that went for $5,000 in 2005. “We tell people to collect to have fun and enjoy it,” he says. “But doing it the right way can obviously have some gain.”
And the right way to collect hockey cards is not so different than following the stocks – there’s a strategy involved. Following players, especially budding rookies, will give you a higher chance of success than diving in blind. “People who bought [Connor] McDavid in 2016 are already reaping the rewards,” he says. “His card has already gone up in value.”
Betting On Bessie
For someone looking to jump into the beef industry, now might be the time. In Alberta, calf and cattle prices have fallen significantly, dropping around 40 per cent since 2016. That’s bad news for current cattle producers, but for an investor looking to buy low, it’s an ideal opportunity to take stake in the Alberta cattle industry. And you don’t have to be a farmer to do so.
An investor can purchase cattle and have a farmer manage them at their feedlot for a fee. Or, an investor can purchase a percentage of cattle owned and managed by a cattle producer, like Ryan Copithorne, a fourth generation Alberta rancher west of Bragg Creek. Copithorne runs Cows in Control Marketing Group, a network of cow-calf producers. “I have partners that work with me where I run cows and calves,” he says. “They are passive investors.”
Despite current low prices, cattle can make for a lucrative investment. Cattle are a liquid asset that can quickly appreciate in value each year if an investor purchases a cow and a calf. “She is going to produce a calf every year,” Copithorne says. “She is a cash-flowing asset.” While there are many nuances to the cattle business, simply investing in livestock is not that complicated. “You just have to find the right manager to look after them for you,” Copithorne says.
The Art of Collecting Fine Art
Pablo Picasso’s Les Femmes D’alger (“Version O”) $179,000,000
Collecting art is no longer exclusive to the wealthy; if done right, art can diversify an investor’s portfolio while providing personal enjoyment and gratification. Like any pricey investment, art collectors must be informed buyers. Realizing which pieces of art you enjoy is one thing; understanding the marketplace is another. Ania Sleczkowska, art rental and sales gallery manager at the Art Gallery of Alberta, says collecting art is a long-term commitment and requires an investor to be active in the art world. “You have to learn how to spot the direction of interest in the art world,” she says. “You want to spot trends before everyone else.”
Sleczkowska says there is an emerging trend of young buyers purchasing reasonably priced works of art for the dual purposes of investment and enjoyment. But if you’re not an expert and want a leg up when considering a new piece, she says learning from art professionals like curators and art appraisers is the best way to go.
Keeping It in Real Estate
Do you want to purchase a rental property? It’s a common investment and for good reason: it’s a tangible asset, it's less volatile than stocks and it’s for the long term. Currently, Alberta is a buyer’s market and it looks like it will be that way for a while: housing prices are down and the federal government’s new mortgage rules – an expanded stress-test to all insured mortgages – could further lower housing prices as some homebuyers will no longer be able to afford a down payment, forcing them to rent and making more homes available on the market. But an economic downturn can make it difficult to secure tenants and a house purchased at a bargain can further depreciate. Despite Alberta’s rollercoaster economy, according to the Canadian Real Estate Association, home sales in the province rose 4.6 per cent in 2016 from a year earlier.
If the optimist in you is committed to investing in real estate, know that the key is location. Look for a home in a safe community, close to schools and amenities and in an area that has potential to grow. For example, the up-and-coming Seton development in Calgary is already home to the city’s newest hospital and within 10 years will include 1,300 multi-family residences, a public library, schools and 16 acres of green space which will all be serviced by Calgary’s Green Line LRT once complete. And, lastly, calculate how much income you will generate from this investment.
What is the typical rent of houses in the area and how much will repairs and maintenance cost?