Are Collectibles a Good Investment?
Collectibles may appreciate, but they can be illiquid, costly to insure and store, and difficult to value, with returns varying by individual item.
Somewhere on the balance sheet of almost every high-net-worth family is a line that doesn’t behave like the others. A cellar of first-growth Bordeaux. A vintage Ferrari under a cover in the garage. A watch that took two years on a waitlist to acquire. The industry has a tidy name for these things, “investments of passion.” That phrase is doing a lot of quiet work: it smuggles a financial promise into what is, for most people, an emotional purchase.
So it’s worth asking the unsentimental question directly: are collectibles actually a good investment?
The most recent data offers an answer that is more interesting than a simple yes or no.
The Headline Number That Hides Everything
The Knight Frank Luxury Investment Index, which tracks ten passion-asset categories from watches and wine to art, classic cars, and colored diamonds, declined just 0.4% in 2025, after falling 2.7% in 2024 and 3.3% in 2023, and has risen 38.6% over the past ten years, according to Knight Frank’s 2026 Wealth Report.1 Knight Frank does not publish a standardized five-year composite figure for the index, only the one-year and ten-year figures cited here alongside individual category data. Read quickly, that sounds like stability: a basket of luxury collectibles that barely moved while public markets did their usual heaving.
The Knight Frank Luxury Investment Index is a composite price index compiled from dealer and auction data across its ten luxury-asset categories; it is not an investible product, and its methodology, weighting, and data sources are set by Knight Frank, not Moran Wealth Management. Past performance of the index is not indicative of future results and does not represent the performance of any Moran Wealth Management strategy or account.
But the composite is the least useful number in the report, because almost nothing inside it behaved like the average.
Watches rose 5.1%, led by demand for the hardest-to-source Patek Philippe and Rolex references. Impressionist art surged 13.6%, lifted by single-owner sales such as Gustav Klimt’s Portrait of Elisabeth Lederer, which sold for $236.4 million (the highest price ever paid for a modern work at auction), per Knight Frank’s index results.1 Fine wine, meanwhile, went the other way: the Liv-ex Fine Wine 100 fell 2.5% on the year and now sits down roughly 25% from its 2022 peak.1
A 0.4% “decline,” in other words, was actually a 14-point spread between the highest- and lowest-performing categories. That is the first thing the word investment obscures. You cannot buy the index. You buy one watch, one painting, one case of wine, and the dispersion within a single asset class is wider still.
When “Rare” Stops Being Rare
For a cautionary version of the same lesson, look at what happened to the diamond.
For most of the last century, the diamond’s entire value proposition rested on scarcity: natural, finite, irreplaceable. Then the supply assumption broke.
Lab-grown diamonds, which are chemically and optically identical to mined stones, sold for meaningfully less than natural stones in 2025. BriteCo’s current data put the median natural diamond price per carat at $8,428 that year, against $2,057 for lab-grown, a gap of roughly 76% that widens further for larger stones.2 Separately, TheStreet reported in April 2026 that a one-carat lab-grown stone which retailed near $3,410 in 2020 sells for somewhere around $750 to $1,000 today (a drop of roughly 74%), as production flooded the market.3
The resale picture is more sobering still. A lab-grown diamond now typically retains only about 30% to 40% of its purchase price on the secondary market, per analysis from Goodstone.4
The thing marketed as an enduring store of value turned out to be, for many buyers, a depreciating consumer good.
The point is not that diamonds are bad and watches are good. It’s that “rarity” is a claim, not a guarantee: claims can be repriced overnight when supply, technology, or taste shifts. The categories that held value in 2025 shared specific traits, genuine scarcity, documented provenance, and deep, liquid secondary markets; momentum and marketing were not among them.1
The Costs That Never Show Up in the Return
Even the asset that appreciates rarely appreciates as cleanly as the auction headline suggests. A passion asset has to be insured, stored, maintained, and authenticated. Provenance (the documented chain of ownership) can command a meaningful premium, which is another way of saying that an identical object with a thinner paper trail is worth less. And when it’s time to sell, the spread between what a dealer will pay and what the next collector will pay can be wide, and the timeline can be long.
None of this appears in a ten-year index return. All of it appears in your actual experience of owning the thing.
The Return That Doesn’t Show Up on the Index
Here’s the reframe worth sitting with. If you bought a watch, a painting, or a bottle purely for the financial return, the data above should give you pause: the outcomes are dispersed, the costs are real, and the “store of value” promise is fragile. A diversified portfolio is designed to spread risk across a range of investments, and it doesn’t need to be insured against theft or stored at the right humidity.
But that framing misses what these assets are actually for. A stock can outperform. A bond can mature. Neither can be worn to a dinner, passed to a child with a story attached, or enjoyed every single day for thirty years. That layered, non-financial return is the one the index can’t measure, and for many collectors, it’s the one they end up valuing most.
A possible financial return and personal enjoyment are two different things a collectible can deliver, and neither guarantees the other. Knowing which one you’re actually buying for, before the purchase rather than after, is what separates an informed decision from a hopeful one.
All investments involve risk, including the potential loss of principal invested.
Some collectors say the pieces they’re happiest to have kept are the ones bought from genuine connection rather than with an exit already in mind, though that reflects individual experience rather than a pattern the data above can confirm.
That’s not a reason to treat collectibles as serious portfolio holdings. It’s a reason to be honest about which job they’re doing. Understanding what you’re actually optimizing for, return, or meaning, or both, is the whole game. And it’s a conversation best had alongside your financial adviser, attorney, and tax professional, not in the heat of an auction.
For a broader look at how passion assets fit into a diversified portfolio, see our guide to understanding alternative investments. And because collectibles often raise distinct questions at death, from appraisal to disposition, see our guide to planning for artwork and other complex assets.
On the latest episode of Quarter Over Quarter, “Beyond the Balance Sheet,” Jarred Kaplan of Provident Jewelers joins Tom Moran and Don Drury to go deeper on exactly this: how to tell a durable collectible from a speculative one, what provenance really buys you, and why the most enduring value in a passion asset is so often the story behind it.
Watch or listen to the full conversation on the Moran Wealth Management® YouTube channel, Apple Podcasts, or Spotify.
Frequently Asked Questions
It depends on the item and what you're optimizing for. Collectibles may appreciate, but returns vary widely by category, and even within a single category, and carrying costs like insurance, storage, and authentication reduce the net return.1,2
Categories that held value in 2025 shared genuine scarcity, documented provenance, and deep, liquid secondary markets; momentum and marketing claims alone did not hold up.1
Illiquidity, valuation uncertainty, authentication risk, concentration in a single item, and the risk that a category's scarcity story changes, as it did for lab-grown diamonds.2,3
Insurance, secure storage, maintenance, authentication, and the spread between dealer and resale prices can all reduce the return an owner actually realizes relative to a headline price gain.
It varies, but collectibles are generally far less liquid than public securities. A sale, whether through a dealer, auction house, or private buyer, can take anywhere from weeks to years depending on the item and the buyer pool.
Most do not. Unlike dividend-paying stocks or interest-bearing bonds, a collectible's potential return comes almost entirely from price appreciation at resale, which isn't guaranteed.
Under current IRS guidance, net long-term gains on collectibles held more than one year are taxed at a maximum federal rate of 28%, higher than the standard long-term capital gains rates that apply to most securities; short-term gains are taxed as ordinary income.5 Actual tax treatment depends on the specific asset, how it's held, the holding period, and individual circumstances, so this isn't a substitute for guidance from a qualified tax professional.
Generally as a small, satellite allocation rather than a core holding, sized so illiquidity and concentration risk don't threaten the broader financial plan, and considered alongside, not in place of, a diversified portfolio of stocks, bonds, and other investments.
Alternative investments may involve complex structures, limited liquidity, higher fees, and unique tax considerations. They are not suitable for all investors and may require accreditation or other eligibility criteria. Investors should carefully evaluate the risks, costs, and potential benefits in the context of their overall financial situation and objectives.
We do not provide tax or legal advice; please consult your CPA, attorney, or registered tax professional for individualized tax or legal advice.