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12-06-2012, 07:40 AM
The Straits Times
Jun 12, 2012
Treasure assets more for show than returns
By YASMINE YAHYA
WEALTHY people buy fine art, antique furniture or expensive wines more to show off or for personal pleasure than to reap financial gains, according to a new survey.
The findings suggest that private bankers might need to rethink how they advise clients when it comes to these treasure assets, as they are called.
The Barclays poll of 2,000 high net worth individuals from around the world found that less than 20 per cent of the 'treasure assets' being held by these people were seen purely as investments.
The level is a bit higher in Singapore: the 100 people surveyed here said that 26 per cent of their treasure assets are meant as financial investments.
Yet 63 per cent of those surveyed here said personal enjoyment was the main reason they bought such assets.
Showing off to others was the next most cited reason, followed by a desire to pass on the assets to future generations.
Precious jewellery, wine and fine art were the most popular treasure assets among the Singaporeans surveyed.
Barclays' behavioural finance specialist, Dr Peter Brooks, said that when private bankers or wealth managers are advising clients, focusing on the financial returns of such alternative assets 'completely misses the point'.
This is especially so as such assets tend to be rather illiquid, and cannot be sold easily.
'My sensible advice is, buy what you like, because if you're trying to buy these things as financial investments, should you need to sell it, you'll find out quite how difficult it is to sell many of these things,' said Dr Brooks.
'And we've seen that much of the returns that these investors are getting is from the enjoyment on the lifestyle side, so you might as well buy what you like to start with.'
About 64 per cent of local respondents owned precious jewellery, 43 per cent had a wine collection, and 36 per cent kept fine art.
Precious jewellery is also seen as a financial investment among many who own it; 67 per cent say they keep such jewellery primarily for financial value.
Precious metals are even more popular as an alternative investment.
Only about a third of those surveyed here said they owned some precious metals, but more than 80 per cent of those who own them said the metals were meant as a financial investment.
Singaporean respondents said the value of their treasure assets should rise by 52 per cent on average within a year after purchase before they would consider selling.
Mr Daniel Komala, the head of regional auction house Larasati, said this might be an unreasonably high expectation.
'If one buys an exceptional piece of art... chances are the price would go up considerably, very often a lot more than just a 50 per cent increase,' he said.
'However, this is more like a medium to long-term investment of three to five years. Gone are the days when people could flip artworks for quick profits within a year or less.'
yasminey@sph.com.sg
Jun 12, 2012
Treasure assets more for show than returns
By YASMINE YAHYA
WEALTHY people buy fine art, antique furniture or expensive wines more to show off or for personal pleasure than to reap financial gains, according to a new survey.
The findings suggest that private bankers might need to rethink how they advise clients when it comes to these treasure assets, as they are called.
The Barclays poll of 2,000 high net worth individuals from around the world found that less than 20 per cent of the 'treasure assets' being held by these people were seen purely as investments.
The level is a bit higher in Singapore: the 100 people surveyed here said that 26 per cent of their treasure assets are meant as financial investments.
Yet 63 per cent of those surveyed here said personal enjoyment was the main reason they bought such assets.
Showing off to others was the next most cited reason, followed by a desire to pass on the assets to future generations.
Precious jewellery, wine and fine art were the most popular treasure assets among the Singaporeans surveyed.
Barclays' behavioural finance specialist, Dr Peter Brooks, said that when private bankers or wealth managers are advising clients, focusing on the financial returns of such alternative assets 'completely misses the point'.
This is especially so as such assets tend to be rather illiquid, and cannot be sold easily.
'My sensible advice is, buy what you like, because if you're trying to buy these things as financial investments, should you need to sell it, you'll find out quite how difficult it is to sell many of these things,' said Dr Brooks.
'And we've seen that much of the returns that these investors are getting is from the enjoyment on the lifestyle side, so you might as well buy what you like to start with.'
About 64 per cent of local respondents owned precious jewellery, 43 per cent had a wine collection, and 36 per cent kept fine art.
Precious jewellery is also seen as a financial investment among many who own it; 67 per cent say they keep such jewellery primarily for financial value.
Precious metals are even more popular as an alternative investment.
Only about a third of those surveyed here said they owned some precious metals, but more than 80 per cent of those who own them said the metals were meant as a financial investment.
Singaporean respondents said the value of their treasure assets should rise by 52 per cent on average within a year after purchase before they would consider selling.
Mr Daniel Komala, the head of regional auction house Larasati, said this might be an unreasonably high expectation.
'If one buys an exceptional piece of art... chances are the price would go up considerably, very often a lot more than just a 50 per cent increase,' he said.
'However, this is more like a medium to long-term investment of three to five years. Gone are the days when people could flip artworks for quick profits within a year or less.'
yasminey@sph.com.sg
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