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Cars: Good Investments? You Bet! But Be Careful...

1996

by Bob Kennon

The investment car market has peaks and valleys as do most long-term conservative investments. The general market has been in a mostly flat valley since the last peak in 1990, with a slight trend upward since the initial fall. It is showing strong growth that can exceed many other relatively safe and conservative investments. The challenge of the astute investor is to choose a vehicle he can enjoy as well as a vehicle that has good investment potential.

Currently, most of the American muscle cars and classics of the 50's and 60's still are not showing signs of any immediate increases in value. However, they are remaining steady in pricing after the last pricing decline although most of the 4-door American classics are actually declining in value. The notable exceptions are convertibles. Most cars produced after 1970 are not considered investment quality at this time. Original trucks are becoming popular, but the sale prices are not stable or consistent enough for enough for most investors who relegate them to the hobbyist. Some special 70's and 80's cars will become investment cars in the future, but it is difficult to pick the right ones.

The types of cars that are beginning to increase in value due to an increase in foreign demand are the 50's, 60's and early 70's English sports cars. These cars are quick and fun to drive. Most are convertibles. The designs are straight forward, easy to repair and parts are readily available. The most popular are the MGTC's, TD's, TF's, MGA's and MGB's (prior to 1975), Triumphs, Sunbeams, Jaguars and Morgans.

Other suggested cars are the 1930's US cars that remain in original condition. The true investment-grade cars such as the Rolls Royce, Auburns, Dusenburgs, 12-cylinder Lincolns, Cadillacs, etc. of the 1920's and 30's are always good solid investments and are favored by the serious investors.

Another area of investment is the purchase of a car you drive daily and not lose money when you sell it. The old saying "A dollar saved is a dollar made" is true today. There are many choices, but the general rule is to buy a well engineered car that does not change design frequently and is 2 or more years old, with low miles for its age.

Examples of these are 10-year old Porsches, Mercedes and Jaguars for under $15,000. These cars were the epitome of safety designs and usually have 10 year or longer production runs with minor changes. You can have $60,000+ of engineering at a bargain price. Due to this, most of these cars do not continue to depreciate rapidly and some actually begin to increase in value while expected to last much longer than lower priced, newer cars.

Remember, cars can be a good investment and a safe hedge against inflation, but do your homework first!

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