Successful investing in collectibles demands not just passion but also a canny method, Moneylife finds out, after spending hours with a top collector Rajan Jayakar

It is a fairly ordinary thing—an old, yellowish envelope with three rectangular stamps stuck on top with postal cancellation of 26.1.1950. There are plenty of cancellations of that date. Holding it out to the sunlight filtering through his office window that overlooks the Bombay High Court, well-known solicitor Rajan Jayakar remarks, “The stamps are fairly common, issued to commemorate the Indian Republic Day. But do you know why this envelope is invaluable?”

He points out to a little image of a book printed beside the address. “This image of the Constitution of India, together with the three commemorative stamps makes this envelope one of its kind in the world,” he says. “I acquired it at an international exhibition in New Delhi this January. The price was double of what I had expected, but then,” he smiles, “the satisfaction I get when I look at this item is priceless, particularly from a lawyer-collector’s perspective.”

That ‘intangible value’ is return enough for any passionate collector, says Mr Jayakar, one of Mumbai’s best-known collectors. Investing smartly in collectibles can also be a prudent (and cultured) way to save and earn returns. However, this hobby requires research, passion, a method, and funds to start and nurture a collection.

The most valuable and famous collections are usually those of paintings, stamps, sculptures and coins, but passionate collectors are known for quirky collections as well. From the largest collection of locks spanning several centuries (by Prof V Raghunathan, of the GMR Varalakshmi Foundation) to bottle caps, flight boarding-passes, bangles or, as in the case of Mr Jayakar’s latest hobby—memorabilia of Shammi Kapoor’s films—the hobby itself becomes a source of pleasure. The manner in which collectors price—and value—collectibles is no less fascinating. A unique item when added to the collection increases the collection’s value multiple times—for instance, from the monetary perspective, Mr Jayakar’s envelope is much more valuable than one with merely the stamps on the envelope.

So, can one make smart investments in collectibles?
From Mr Jayakar’s perspective, a passionate collector will never make a good investor, because he would rather die than consider selling something he holds so dear. Having said that, “An investment in collectibles is no different from investing in markets or financial products. You study the object thoroughly, know its scope, the past record of price escalation and decide how much you want to invest, which is the best auction house to deal with and make an estimate of expected returns over the years,” he says. In short, an investor has to be smart, pragmatic and completely dispassionate—and there are plenty of such investors in various antiquities.

In a fascinating presentation (on 18th March) at the Moneylife Foundation—a not-for-profit organisation that promotes financial literacy, Mr Jayakar said that most children collect stamps, coins, cigarette/matchbox labels, marbles etc. This childhood hobby can become a passion or an investment only if it is recognised, encouraged and nurtured correctly by parents and teachers that will make a general schoolboy collector into a specialised collector. This is crucial, because, fascinating as they sound, great collections are not merely about money but careful research, good networking, negotiating skills, quick decision-making and the tenacity to spend long hours scouring markets, bidding at auctions and meeting people to get the right objects to add to your collection.



How can you start a collection?
The first step is to identify what you want to collect and what you can afford. It is better to start randomly and then focus on something specific. The second step is to acquire as much knowledge as you can on the subject so that you can graduate from being a general collector to specialised collector. Mr Jayakar says that it may be better to focus on a small sub-category or period and aim to own everything on it, rather than build up an unorganised huge collection. For instance, if the general collection is of stamps on flowers, that can lead to a specialised collection of roses. There are collectors whose passion is to garner full sets of certain types of collection—just completing a precious period tea-set or dinnerware or a group of paintings of an artist instantly adds tremendous value to the collection—as a whole, it is more valuable than the total value of individual pieces in that set.

Take Peggy Guggenheim, for example. Born and married to ‘old money’, Peggy went on to become one of the greatest patrons and collectors of modern abstract art. Before World War II, she collected paintings by the then emerging surrealists for her museum. However, Peggy’s haphazard collecting spree did not go well with her museum’s finances. So, after 1939, she trimmed her plans, consulted experts, and toured the Continent searching for new masters. The result was one of the most valuable collections of early 20th century abstract art from USA and Europe which includes 10 Picassos, three Dalis, 40 Ernsts and eight Miros. It is housed at the Solomon R Guggenheim Museum (named after her uncle) in New York.

Since most of us don’t have Peggy’s resources, we start even smaller. Starting without appropriate homework, including the right source, is a recipe for getting fleeced. Like all collectors, Mr Jayakar too swears by Mumbai’s quaint chor bazaar, whose extremely savvy dealers are a tremendous source for serious collectors; they are knowledgeable and build a rapport with them. Thereafter, the dealers will hunt all over to procure objects desired by the collector.

The basic information for a collection is easily available from auction catalogues, manuals, books and specialised journals that are available on almost everything—and, these days, there is the Internet.

Importantly, for every collection there is a club or society of collectors that also bring out specialised magazines. For instance, the British Matchbox Label and Booklet Society, the Philatelic Congress of India, Numismatic Society of India, Museum Society of Bombay or the Bombay Local History Society. Joining groups/clubs specific to your collection allows you to meet knowledgeable collectors and dealers, without whom collectors cannot survive, and vice versa. It helps you know where you stand, compare notes and get encouragement and validation. This is an important step because it helps you complete your targeted collection, have a fair idea of the material available on it, what other collectors have and whether you have a chance of putting together a reasonable collection on the subject. You also begin to learn how and why certain items are valued and which ones are more sought after than others. For instance, it is possible that most of the material on your chosen subject is already in museums or with other genuine collectors and very little comes into the market for sale—or is far beyond your means. Then you know that it would be very difficult to piece together a substantial collection. However, it is never too late and the collection can be started at any time.

“Sometime back, I came to know about a society which completely floored me,” says Mr Jayakar. He was leafing through a collector’s magazine when he was in London attending a Fair of Picture Postcards, where he saw a photograph of the annual meeting of a Button Society. “Imagine”, he chuckles, “there is not only a club for people who collect buttons, but they meet regularly and were having a yearly meeting of members where they would appoint a president, secretary, treasurer and other office bearers.”

Being in touch with the collecting community is the best way to keep yourself updated about new discoveries, exhibitions, auctions and other events. Networking plays an important part in collections—it allows you to trade your ‘extras’, sometimes even to buy out a smaller collection. Sometimes a collector, who decides to focus on a narrow subject for a more complete collection, will dispose of other minor collections and, if it fits into your collection, it can enhance your collection. With time, such collectors either donate the surplus to museums and societies, or give them away for a small price to other collectors. It is better to collect directly from them rather than through the dealers. Normally, a senior collector is more than happy to dispose of his ‘extras’ to a junior collector at a reasonable price. Knowing the value of what is available is also important while buying from dealers. This brings us to auctions which are often viewed as an arena of prodigals for waving their money and the perfect place to upstage rivals. For collectors, auctions are often the place to find specific items crucial to completing their collection. Rare treasures have surfaced at obscure auctions throughout history and, contrary to normal belief, sometimes, you can get rare items at unbelievably cheap prices at such auctions.

The big four collectibles such as coins, stamps, paintings and sculptures have ready markets. Clocks, furniture, vintage cars and other antiques also have markets. On the other hand, though there are collectors of esoteric stuff like Victorian gowns or bonnets, they are not easily saleable commodities and such items appear in auctions only once in a while.

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