Investing in Vintage Basses

[Jim Carr]

Originally Posted by Groover

... or buy 150 SX basses at $100 a pop, then sell them at a reasonable $200 5 years down the road and voila'... you've doubled your money

I'm skeptical of this type of scheme.

Storage, shipping, tax, insurance, maintenance, inflation, credit costs, and dollar value of your time will eat most of it. You are competing in those areas with ebay hacks and GC. Good luck.

[uOpt]

The devil is even more in the details than it appears at first.

For example, in the guitar world the prices for pre-CBS Fenders have gone down, however there is now a much bigger gap between common colors and rare colors. If you could somehow predict that not only vintage Strats go up but also that you need a rare color then you would still make money. Predicting that isn't trivial since at the time when you would have bought it the rare colors were already much more expensive, it's just that the gap was smaller. So at the time, without foresight, how do you justify spending the extra money for the rare color? For all you know the color price the same in 5 or 10 years.

[nukes_da_bass]

Originally Posted by Groover

... or buy 150 SX basses at $100 a pop, then sell them at a reasonable $200 5 years down the road and voila'... you've doubled your money

Only the old headstock models- I don't foresee the new headstocks appreciating that way.
The old headstock is no longer available in USA- hence the appreciation in what they can fetch on the used market.

[GregC]

Originally Posted by ShowLow

Clarification--the limit went up for 2013!

http://www.irs.gov/Retirement-Plans/...ibution-Limits

Whoops, that's what I get for scanning the page too quickly. Thanks.

Originally Posted by Jim Carr

+1


+1

2013 contribution limit for a Roth IRA is $6,500 per person if you are over 50, $5,500 if under 50—unless doing a rollover. Since you, OP, have not indicated your age, family size, salary, net worth, current savings, debt, or risk tolerance—all the investment advice offered above is likely wrong.

Since you seem unaware of Roth contribution limits, you are likely just starting to save. IMHO, you would would be foolish to buy a '55 P-bass with retirement savings. I have a '55 I bought for $250 in 1973, and while it is a great old instrument, I also have been investing for retirement since 1983. I am now a retired music teacher and spend a lot of time in Hawaii and play bass in several bands.

That is possible because my wife and I have saved and invested diligently. Our investments have been index mutual funds and real estate. Since our musical instruments are valuable, insurance, climate-controlled storage, an alarm system, and maintenance all take their bite. I don't consider them investments, I consider them to be musical instruments—tools for making music. That they have in some cases appreciated a few thousand dollars is basically irrelevant.

Investments are not just a few small assets that appreciate, they are something you can buy enough of to generate a fortune or at least an income stream. These are things like an education, a trade, real estate, commodities, a small business, stocks, bonds, mutual funds, ETFs, even cash in certificates of deposit. One, or even ten vintage basses don't really add up to much of an investment considering the risks. They are just not diversified or durable enough.

Q: Can you imagine what $10K in mutual funds will become if you add $10k a year and make 8% for 10 years? 20 years? 30 Years?

A: $166,455.00 in 2023, $504,229 in 2033, 1,233,459 in 2043.
In case you are worried about inflation, stocks are actually a good bet in inflation—assuming we are not having hyper inflation—in which case nothing, not even gold or bullets will save you.

US Investment Average Annual Real Returns from 1802 to 2012, adjusted for Inflation (210 years of data)

Stocks: 6.6%
Bonds: 3.6%
T-Bills: 2.7%
Gold: 0.7%
Dollar:-1.4%

Source: Jeremy Siegel, http://www.cobank.com/~/media/Files/...rum/Siegel.pdf

In any case, ignore the gloomsters, doomsters, gold bugs, elves, tinfoil-hatted gun nuts, and chicken littles. Listen to your wife. Save for your old selves. No one else can, and time will slip away. You will be old someday if you are lucky! Do you want to be poor, too?

Honestly, you can get the sound, feel, and look of a '55 by looking for a Fender CS single coil, or by having one built. There are a lot of good custom builders who can create a relic '55 that will look, feel and sound great for well under $5k. BTW, have you played a RW P-bass? They blow away 90% of the vintage P-basses I have owned or played and cost ~$800 used.

Excellent post!

[Jim Carr]

Originally Posted by GregC

...Excellent post!

Thanks for the kind words!

[GBassNorth]

Originally Posted by Jim Carr

+1


+1

2013 contribution limit for a Roth IRA is $6,500 per person if you are over 50, $5,500 if under 50—unless doing a rollover. Since you, OP, have not indicated your age, family size, salary, net worth, current savings, debt, or risk tolerance—all the investment advice offered above is likely wrong.

Since you seem unaware of Roth contribution limits, you are likely just starting to save. IMHO, you would would be foolish to buy a '55 P-bass with retirement savings. I have a '55 I bought for $250 in 1973, and while it is a great old instrument, I also have been investing for retirement since 1983. I am now a retired music teacher and spend a lot of time in Hawaii and play bass in several bands.

That is possible because my wife and I have saved and invested diligently. Our investments have been index mutual funds and real estate. Since our musical instruments are valuable, insurance, climate-controlled storage, an alarm system, and maintenance all take their bite. I don't consider them investments, I consider them to be musical instruments—tools for making music. That they have in some cases appreciated a few thousand dollars is basically irrelevant.

Investments are not just a few small assets that appreciate, they are something you can buy enough of to generate a fortune or at least an income stream. These are things like an education, a trade, real estate, commodities, a small business, stocks, bonds, mutual funds, ETFs, even cash in certificates of deposit. One, or even ten vintage basses don't really add up to much of an investment considering the risks. They are just not diversified or durable enough.

Q: Can you imagine what $10K in mutual funds will become if you add $10k a year and make 8% for 10 years? 20 years? 30 Years?

A: $166,455.00 in 2023, $504,229 in 2033, 1,233,459 in 2043.
In case you are worried about inflation, stocks are actually a good bet in inflation—assuming we are not having hyper inflation—in which case nothing, not even gold or bullets will save you.

US Investment Average Annual Real Returns from 1802 to 2012, adjusted for Inflation (210 years of data)

Stocks: 6.6%
Bonds: 3.6%
T-Bills: 2.7%
Gold: 0.7%
Dollar:-1.4%

Source: Jeremy Siegel, http://www.cobank.com/~/media/Files/...rum/Siegel.pdf



In any case, ignore the gloomsters, doomsters, gold bugs, elves, tinfoil-hatted gun nuts, and chicken littles. Listen to your wife. Save for your old selves. No one else can, and time will slip away. You will be old someday if you are lucky! Do you want to be poor, too?

Honestly, you can get the sound, feel, and look of a '55 by looking for a Fender CS single coil, or by having one built. There are a lot of good custom builders who can create a relic '55 that will look, feel and sound great for well under $5k. BTW, have you played a RW P-bass? They blow away 90% of the vintage P-basses I have owned or played and cost ~$800 used.

Jim,
I agree with GregC, this is an excellent post and removes a lot of the discussion about cherry picking start and end dates for stock or gold or other investments. It (very surprisingly) indicates that gold has a much worse track record than other investments. One could make an assumption that specific types of stocks (i.e. consistant dividend growth stocks) may have faired even better than the overall stock market average of 6.6% growth (of course that would need to be confirmed first). Which would even further separate the stock investment strategy from the gold investment strategy.

All that said, diversification and a balanced portfolio is the key so I don't see anything wrong with a small percentage (1% to 5%) of the OP's investment in vintage or collectible instruments as long as he is very knowledgeable of what he's getting into and thoroughly confirms the authenticity of the investment and gets it at a reasonable price. If he can do all three then he could consider this a portion of his investment strategy, if he can't then he should stick to more sound and traditional investments that have less emotion tied up in them.

I have less than 1% of my total investments in bass and guitar gear and it's doing quite well to date, even in spite of it not really being a sellers market right now. My bass and guitar investment growth is far outpacing my stock investment growth over the same time period. I suspect both will improve as the market gets stronger but I don't ever see my percentage of investments in bass and guitar gear to rise above 1% of my total investment plan. So it remains more of a hobby than an income source and it does have its perks and risks. The perks being great, the risks being relatively low.

[Jim Carr]

Originally Posted by GBassNorth

Jim,
I agree with GregC, this is an excellent post...

Thanks!

Originally Posted by GBassNorth

...All that said, diversification and a balanced portfolio is the key so I don't see anything wrong with a small percentage (1% to 5%) of the OP's investment in vintage or collectible instruments as long as he is very knowledgeable of what he's getting into and thoroughly confirms the authenticity of the investment and gets it at a reasonable price. If he can do all three then he could consider this a portion of his investment strategy, if he can't then he should stick to more sound and traditional investments that have less emotion tied up in them...

Sure, but if his $15k is 1%, that means he has $1.5 million invested and has pretty much finished saving, unless he plans on retiring in Manhattan, Northern California, Maui, or South Beach.

If his savings is $150,000 it's 10%, and so on. I suspect he is young and getting started. I think after he and she save the max in their tax-deferred plans, put some aside for emergencies, and the kids educations, then why not go for a vintage bass? I'd get it insured.

[beggar98]

Originally Posted by GBassNorth

Jim,
I agree with GregC, this is an excellent post and removes a lot of the discussion about cherry picking start and end dates for stock or gold or other investments. It (very surprisingly) indicates that gold has a much worse track record than other investments. One could make an assumption that specific types of stocks (i.e. consistant dividend growth stocks) may have faired even better than the overall stock market average of 6.6% growth (of course that would need to be confirmed first). Which would even further separate the stock investment strategy from the gold investment strategy.

All that said, diversification and a balanced portfolio is the key so I don't see anything wrong with a small percentage (1% to 5%) of the OP's investment in vintage or collectible instruments as long as he is very knowledgeable of what he's getting into and thoroughly confirms the authenticity of the investment and gets it at a reasonable price. If he can do all three then he could consider this a portion of his investment strategy, if he can't then he should stick to more sound and traditional investments that have less emotion tied up in them.

I have less than 1% of my total investments in bass and guitar gear and it's doing quite well to date, even in spite of it not really being a sellers market right now. My bass and guitar investment growth is far outpacing my stock investment growth over the same time period. I suspect both will improve as the market gets stronger but I don't ever see my percentage of investments in bass and guitar gear to rise above 1% of my total investment plan. So it remains more of a hobby than an income source and it does have its perks and risks. The perks being great, the risks being relatively low.

I would say that considering any sort of collectible, aside from maybe fine art, as a part of your retirement strategy is not very sound. I would look at it the same as trying to pick stocks (as opposed to investing in the market as broadly as possible)- OK if that's what you want to do with your extra money, but only after retirement and other essential financial planning is covered.

[zfunkman]

Vintage instruments are terrible investments. There are a lot of non professional musicians and former professional musicians that make really good money in their day jobs and they have absolutely no issues in dropping $3000 on a 1962 P-Bass. Thus, the prices for vintage instruments are way too high. Furthermore, they are overated in their sound and playability (my opinion). However, if you play any vintage instrument and it just "sings" to you and just plays and sounds awsome is everything you've been looking for, then buy it if you can afford it. But as an investement . . . bad idea. The only value of anything is what anyone is willing to pay for it.