|By Marketwired .||
|July 17, 2014 10:05 AM EDT||
CHICAGO, IL -- (Marketwired) -- 07/17/14 --
- Among affluent investors, coins (33 percent), art (28 percent) and antiques (28 percent) are the most popular passions
- Almost two-thirds invest in their hobbies because it is an effective way to combine an interest with an investment strategy
BMO Private Bank today released the results of a study on high-net worth individuals (those with at least $1 million in investible assets) and their thoughts around hobby (or passion) investing. The study found that half of the affluent in Illinois engage in some form of hobby investing.
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.
"The affluent in Illinois are keenly aware that hobby investing can be an important component of their overall financial plan," said Zach Lazar, President, Illinois and Florida, BMO Private Bank. "They also recognize the importance of consulting with an investment professional as part of the financial planning process."
The study found that the hobby investments most popular among the affluent in Illinois include:
- Coins (33 percent)
- Antiques (28 percent)
- Art (28 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 why the affluent in Illinois engage in hobby investing is simply because it enables them to combine their interests with investing (65 percent). Other reasons identified include:
- It's fun (55 percent)
- Provides something unique to pass down to heirs (45 percent)
- Provides sound investments that will grow in value (45 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 Americans 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: there is a robust counterfeit market in both these items, 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.