Making Money on Hobbies

I've often suggested that a great way to earn some extra money is to turn your hobby into an income. For some of my thoughts on this subject, see these posts:

• Turning a Hobby Into an Income: How I Did It
• An Example of How to Turn a Hobby into an Income
• Turn Your Hobby Into a Nice Second Income

Along the same lines, Dr. Thomas Stanley recently posted on a young man named T.C. who turned his gun collecting hobby into a huge asset. The details:

At that time he already had 12 years of training by his mentor, his grandfather, who was an amateur gun collector.  At the age of 21, T.C. had a nice collection which included early model Colt revolvers and Winchester rifles.  That collection alone in a good market today would be worth more than $2M.  From the start, T.C. enjoyed reading and researching guns, buying and trading guns, and visiting gun shows with his grandfather.  He loved American history which related well to his interest in gun collecting.

Not bad for a "hobby", huh?

Dr. Stanley goes on to note the following:

Ask a national sample of self-made millionaires the following question: In terms of net market value, what is your number one most valuable asset?  About 5% will answer: tangible collectibles (TC).  In other words, these people are collectors of certain types of tangible and/or collectible assets.  These include everything from antique firearms to coins, gems to precious metals, and stamps to artwork. Most, 6 in 10, of these millionaires are part-time collectors who have other full-time occupations. 

If you asked me what my most valuable asset is I would say my career. (Yes, even though I "only" have 15 to 20 working years left -- if I wanted to use them all.) If you wanted a tangible asset, I'd then say my retirement accounts, followed by my real estate holdings and then my taxable investment accounts.

I don't have any collections of value. No coins, precious metals, artwork, stamps or anything more exotic like guns.

That's where I stand -- how about you? Two questions for you today:

• What's your most valuable (non-career) asset?
• Do you have any collections worth anything of value?

Comments

[Luis]

My most valuable asset are my skills, career and survival. Then followed closely by my two boys who, by the grace of God, are both healthy and intelligent. Besides shelter that is all I need to thrive.

[Matt]

I would not classify this as a “collection in the example” but it is the means to produce items made out of wood. Power tools can be rather expensive and I have production grade tools.I purchased most before we had kids and now that in September they both will be gone away at college I am planning to get back into my woodworking as a side business.

I also collect old tools that people selling know nothing about. One item I found at an estate sale were 3 carving chisels that looked professional quality and when I got home with my $5 purchase for the 3, I found out that they were made in England and would cost $35 to $40 for each chisel. I sold them on ebay for $85.

[Mike Hunt]

My most valuable non career assets are my residence and bank accounts.

Collection-wise, I have many musical instruments that I play and also a nice collection of semiprecious stone buddhas.

-Mike

[Jenny @ Frugal Guru Guide]

I'm not really a collecting sort, but you can make great money under certain circumstances if you are.

1) You have to be collecting something that will stand the test of time if you're not turning things over for a quick profit. PEZ and metal lunchboxes are cool now, sure, but in 40 years, will people care, or will they be the next Beanie Babies?

2) Art, guns, coins, stamps--these things have retained value over a long time, but even they are prone to wide swings in value depending on the market at that time. If you want to make money, you should only buy items that you consider to be grossly undervalued in terms not only of the current market but of the market over the past 50 years or more. 19th century European romantic masters took a HUGE beating throughout much of the 20th century and are only now rebounding. At the same time, do you really think that avaunt-guard piece that consists of a drain in the middle of a piece of linoleum is going to be worth anything at all in 40 more years? Or should that be something to sell quickly?

3) It really only makes sense if it really is your hobby, too. You're not likely to make a great return on your investment in collectibles of any time if you take the value of your time into account. If you're doing it for fun, that doesn't matter. But if your primary motive is profit, there are probably better ways to make money.

[billyjobob]

I've bought and sold guitars throughout my life. Not as a money making hobby, but more of just buying ones I liked and selling them when I needed money or just thought I should get rid of. A few of those I wish I hadn't sold. Even though on one I doubled my money. Today I have six acoustic guitars. I don't think I will ever sell any of them.

[Nick @ AYoungPro.com]

My real estate is far and away my best non-career asset....that or my brain. ;)

[SteveD]

I collect houses.

Real estate started as a hobby -- checking out open houses for fun in 2009 with a friend who was looking to buy. Then I started looking on my own. I realized that if I bought half what I could afford (based on my salary), then I could buy more than one, and leverage the rental income of each previous house to keep buying more. I bought my first, second, and third investment houses all in 2010, and my fourth at the end of last year. Along the way I took online college classes in property management, real estate, and even got my real estate license, just for fun! This hobby has been extremely lucrative -- I got a good deal on every house (I have a great agent), and I bought most at the bottom of the market in 2010.

[Henry]

I once heard an auctioneer say, "Boys, remember, always buy land, guns and coins." Since Dr. Stanley points out that auctioneers tend to produce more millionaires than other careers there is probably some weight to that remark.

I prefer to collect and sell old woodworking tools myself.