financial advisor I like to separate investments #longterminvesting

As a financial advisor I like to separate investments from speculative assets and cars, crypto and artwork all fall into that speculation category.
The reason is that when you value a business you can look at its recurring revenues and profitability, apply a multiple to that, and get an intrinsic value. But artwork, crypto and cars don't produce any income. There's no revenue, no profitability so how do you base a value on something that isn't growing or producing anything?
With art in particular, a really harsh way to look at it is that you purchase it and then just hope that somebody else out there is going to buy it off you for a larger price. Nothing about the asset has changed it's still the exact same thing you're just hoping someone pays more than you did. That's the greater fool theory.
So when people come to me wanting to invest in cars, crypto or art, I like to separate those things from true investments. Real investing is about businesses with recurring revenues and profitability that you can actually value.
Amy Lehmann is an Authorised Representative (No. 1292710) of Consortium Private Wealth Pty Ltd (AFS Licence 495401)

#Investing #FinancialAdvice #WealthBuilding #InvestmentStrategy #personalfinance