For the most part, that pile of junk - I mean "collectibles" - in your basement isn't worth anything. Those Beanie Babies are probably worth less than the $10 you paid for them - and those mid-'60s polka records are not appreciating in value. However, there are some rare objects that have really paid off for the people who were able to recognize their value. We take a look at the collectibles - from stamps to comics, from vinyl records to baby toys - that have generated astronomical returns on investment (ROI). (Everything you need to know about finance, you learned during this toy craze. Check out The Beanie Baby Guide To Finance.)
In Pictures: Consumer "Fads" That Never Faded
Imagine getting an ROI of 1,000,000% over the course of 40 years. That's what happened to the anonymous owner of the first Batman comic who just sold it for $1.075 million, the biggest price on record for a comic book, in February. He bought the 1939 comic for $100 in the late '60s. To make this in a savings account, you'd have to have invested that $100 dollars at an unheard-of interest rate of 26% - compounded annually. Initially, there were many copies of the now-valuable Batman comic; it would take a lot of foresight (or a crystal ball) to even fathom its current million-dollar price tag.
One of the most expensive records ever sold was given to a friend by a member of The Beatles; it was the "White Album" No. 0000005. The first four copies of this record belonged to the "Fab 4", but No.5 went to a friend of John Lennon's. It sold in 2008 for £19,201. Similarly, consider the case of an acetate record by Velvet Underground & Nico, which was purchased at a garage sale in Chelsea, New York, for 75 cents in 2004. Knowing he'd found something special, record collector Warren Hill listened to it and found it was a one-of-a-kind record containing alternate versions of many of the songs that appeared on the band's first LP. Hill later sold the record on eBay (Nasdaq:EBAY) for $25,000. That represents a 3,333,333% return on investment.
When it comes to collectible stamps, value can depend just as much on rarity as on the stamp's story. The most famous stamp is the 1856 British Guiana 1-cent stamp in black on magenta. It is estimated to be worth as much as $3 million, but has not been sold since 1980, when it went for $950,000. Although the price of this tiny slice of history has tripled in the past 30 years, the owner of the stamp, John E. du Pont, could have done better in a high-interest savings account, as the stamp's growth in value represents a 3.9% compounded interest rate. His ROI is about 216% over 30 years. He'd better love that stamp, because he could've made a lot more money with almost any other investment vehicle. If du Pont had put his $950,000 in the S&P 500, he could've earned a return of around 1,000%.
The Holy Grail of baseball card collecting is the famous T206 Honus Wagner. Unlike the Batman comic or the Velvet Underground record, no one is getting a deal on this card. The card last traded hands in 2007 for $2.35 million. It was sold by Brian Siegel to an unknown buyer. Siegel bought the card for $1.265 million in 2000, representing an ROI of 85% over the course of seven years - which isn't bad. Had he been following the S&P 500, he would've done much worse, and he would've needed a compound interest rate around 9.25% to get the same kind of return in a savings account. This card's value stems mostly from its rarity, as only 57 copies (out of the original 60) exist, and this particular one is in the best condition.
Toys are a mostly fad-driven product, but some brands and characters have stood the test of time - and it has paid off for those who have trusted in the product. Profiting from a toy isn't much fun, particularly for children: you have to keep the toy in brand-new condition (no touching!) for about 50 years. The original Barbie goes for around $8,000, and was released in 1959 for $3. If you had the foresight (or discipline) to keep one of these Barbies in its original box, you'd be looking at an ROI of 266,666% over 50 years. To match this in a traditional investment, you'd need to have a 17.1% compounding interest.
When Dave from Kansas saw a news story about someone selling the Nintendo game "Stadium Events" for $13,000, he checked in his basement, found a sealed copy of the game with the $29.99 price tag still on it, and sold it for $41,300 on eBay. Had he taken that $30 and put it in any investment in 1987 (the year of the game's release), he would've needed a roughly 37% interest rate per year to reach the same amount. For this game, Dave got an ROI of 137,666% over 23 years, when the S&P 500 would've netted him around 300%.
For the most part, collectibles aren't going to appreciate faster than the stock market - or even a high-interest savings account. However, in some rare and lucky instances, collectibles can have ROIs that put other investment and savings vehicle to shame. (For more on getting into this type of investment, see Contemplating Collectible Investments.)