Can making money be joyful?

By Peter Andrew

The trouble with having money is that you usually don't. Have money, I mean. Okay, you may keep a wad of banknotes or bag of gold coins somewhere safe, but generally speaking the only joy people with money have comes from bits of paper from their banks and brokers. In fact, in the digital age, they often have to print out their own bits of paper if they want hard-copy statements.

Now, I'm not for a second denying the warm feeling a person can get from seeing lots of zeroes in balances on high interest savings accounts and on portfolio statements. But the emotions involved are generally low-key: those of satisfaction, pride in achievement and the sort of contentment that comes with financial security. Excitement and joy are much rarer, except when a killing's just been made.

Choosing luxury investments

So you can see why some look for more. They want to own tangible assets that they can enjoy every day, and maybe show off to their friends: artworks, perhaps, or classic cars or antique furniture ... there's a long list of possible luxury investments. But which is the smartest choice?

The Knight Frank Luxury Investment Index tracks globally the returns different sorts of assets have provided over the last decade. And it reveals some amazingly profitable classes. During the period spanning the last quarters of 2004 to 2014, some of those returns have been:

1. Classic cars: 487 percent
2. Art: 252 percent
3. Wine: 234 percent
4. Coins: 232 percent
5. Stamps: 195 percent
6. Jewelery: 168 percent
7. Furniture: -28 percent (Yes, that is a loss!)

It's worth remembering that this period covers the credit crunch and Great Recession -- and recalling the roller-coaster ride home prices took over that period. Our homes are the only serious (usually) appreciating asset most of us have. And CoreLogic reckons that, as recently as the first quarter of this year, 10.2 percent of all mortgaged homes were still underwater, meaning their market values were lower than the amounts owed on the mortgages they secured.

Phew! You can get an average return of 487 percent over 10 years and get to ride around in a classic car, or you can sit in an underwater home. Why doesn't everyone rent their home and have a 1962 Ferrari 250 GTO, one of which sold at auction for $38.1 million last year?

Some downsides

There's a good reason these investments tend to be the preserve of the super-rich, and it can be summed up in one word: volatility. True, few are going to complain about the 16 percent growth in classic car prices seen in 2014 -- but those who bought in 2013, which saw a 47 percent surge, might be disappointed.

And, while the art market has been strong over the last decade, it's actually seen greater price variations than equities, real estate or even gold. Worse, artists come in and out of fashion, meaning your painting could lose value while others are appreciating rapidly. You need a strong stomach and a big bank account not to find such swings in your fortunes stressful.

You may also need plenty of funds to keep your valuable asset safe and in the sort of condition that should see it appreciate. Classic cars may need heated garages, and spare parts on rare models no longer supported by manufacturers can be eyewateringly expensive. And, speaking of watering eyes, insurance premiums are often extortionate and insurers may demand costly additional security. In other words, owning something valuable can be expensive, onerous and worrying.

Finally, it can take a long time to sell this sort of asset. Yes, you can probably find a dealer or fellow enthusiast who would be willing to buy yours quickly, but often at a bargain price. You may have to wait many months for the right classic car or art auction that might get you its real value.

How the rich get richer

The advantage the rich have is that they can afford to buy during market slumps when everyone else is feeling broke, and to wait to sell until prices are high again. You could see that in action during the real estate slump after the credit crunch.

If you're in that happy position, owning a beautiful and rare or unique object could bring you real pleasure -- and profit. But, if you're not, you might be better off sticking with the lesser but still considerable contentment that comes with a diverse investment portfolio and some healthy balances in your high interest savings accounts.