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How I Made $30,000 on a Guitar: The Secrets of Profitable CollectingBy
Wednesday, August 22, 2012
A couple years ago, I bought a guitar for $30,000...
It was the most I'd ever paid for a guitar – by far. But I knew what I was doing... I know guitars.
And I know what big collectors are willing to pay for when it comes to collectibles. I'll share that with you today.
Just over a year after I bought that guitar for $30,000, I sold it for over $70,000. Minus the dealer's commission, I received around $60,000 – for a profit of around $30,000.
Making profits in collectibles is not as easy as I made it sound though...
It really does require hundreds of hours of becoming an expert in whatever that collectible is. And being an expert isn't enough... It is a minefield out there. You have to follow certain rules, or you won't make money.
Here are a few rules – from my guitar purchase and sale – that you can easily apply to any collectibles... from antique cars right down to thimbles:
If you want to make money in collectibles, follow these rules.
Don't get me wrong here... I am not a snobby collector. I don't live and die by these rules. I am a guitar player first and foremost, not a collector.
Just a couple nights ago, my colleague Brett Eversole (another avid guitar player) and I got to meet guitar legend Steve Vai... Here's a picture of me with Steve Vai's personal guitar, called EVO. And a picture of Brett, with the legend himself:
So I don't care if a guitar has a replaced tuning peg... or if someone wrote their name and phone number on the back. If it's not perfect, I can get a GREAT price on it, compared to the collector's price. But I do this knowing I'm limiting my profit potential... I know that when I ignore ANY ONE of my rules, I am giving up essentially ALL my potential for real profits.
It is possible to make real money in collectibles... I made a $30,000 profit selling one guitar. But it is a long road...
You have to acquire a great deal of knowledge (which almost has to be a labor of love). And you can't break any of the rules above – otherwise you're limiting your ability to make any money at all, after expenses and dealer commissions.
It is doable... Become incredibly knowledgeable, follow the rules above, and you can succeed.
Good investing,
Steve
Further Reading:
Last month, Steve told DailyWealth readers how to make a 20% guaranteed gain in a real asset. It might sound too good to be true... but it's not. "It's a low-risk, high-reward idea," he writes. "And it provides some diversification from gold, commodities, and real estate."
DailyWealth classic: Back in 2008, Steve's friend and rare-coin expert Van Simmons shared the key to making money in collectibles. Read more here.
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