MINNEAPOLIS/ST PAUL, MN--(Marketwired - Jul 17, 2014) -
- Most popular passion among affluent investors is art (27 percent) followed closely by antiques (25 percent)
- Nearly two-thirds invest in their hobbies because it is "fun"
- Minnesotans 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 Minnesotans (those with at least $1 million in investible 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 63 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.
"Most hobby investing usually involves items with which the investor has some affinity," noted Steve Marsich, Twin Cities Senior Managing Director, BMO Private Bank. "The fact that part of the return on investment is how much the items add to an investor's life is one of the reasons this type of investing is so attractive."
The study found that the collectibles in which affluent Minnesotans are most passionate about investing in include:
- Art (27 percent)
- Antiques (25 percent)
- Jewelry and coins (22 percent each)
- Sports memorabilia (17 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 Minnesota's affluent engage in hobby investing is simply because it is "fun" (60 percent). Other reasons identified include:
- Combines interests with investing (36 percent)
- Provides something unique to pass down to heirs (28 percent)
- Allows for showing off investments to others (20 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 Minnesotans 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: have robust counterfeit markets, 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.