Is It Still Worth Investing in Physical Assets in 2025?

In a world marked by the volatility of traditional markets and a growing demand for diversification alternatives, passion assets are emerging.

But what exactly are passion assets? Are they really a good investment? What are the risks and opportunities?

Below, we’ll provide an economic overview of this trend that’s turning wine bottles, artworks, and baseball cards into valuable assets in many Americans’ portfolios.

What Are Passion Assets?

Passion assets are physical items that hold intrinsic and emotional value for the investor. Unlike stocks or bonds, they don’t generate cash flows but can appreciate over time based on their rarity, condition, demand, and cultural trends.

Among the main types of passion assets are:

• Fine and rare wines
• Artworks (in various forms)
• Luxury collectibles (watches, cars, coins, comics, and more)

For many investors, these assets represent not only a profit opportunity but also a form of personal expression and emotional connection to the object.

Why invest in passion assets?

Portfolio Diversification
Passion assets have low correlation with traditional financial markets. Thus, during stock market downturns or periods of high inflation, these assets can maintain or increase their value, acting as a hedge for wealth preservation.

Hedge Against Inflation
In times of high inflation, physical assets like wines and artworks tend to retain their value better than liquid financial assets, which suffer from currency devaluation.

Limited Supply and Global Demand
Scarcity is a key driver of appreciation. Whether it’s a 1982 Bordeaux bottle or a painting by an emerging artist, limited supply combined with rising global demand drives prices up.

Personal Pleasure and Social Status
Beyond the financial aspect, there’s the intangible value of owning a unique, historic, or artistically significant object. For many investors, this factor weighs as much as the potential return.

The Wine Market: More Than Just a Toast

Investing in rare wines gained prominence in the U.S. after the pandemic, driven by increased demand for luxury goods and the consistent performance of indexes like the Liv-Ex Fine Wine 1000.

According to the Knight Frank Wealth Report, fine wine prices appreciated at an average of 10% per year between 2018 and 2023.

Bordeaux, Burgundy, and Champagne wines lead investor preferences, with limited editions and iconic vintages becoming true liquid assets.

However, investing in wine requires specific care, such as storage under ideal temperature and humidity conditions, authentication certificates, and traceability.

Art as a Financial Asset

The art market has always been a safe haven for high-net-worth investors, but the sector’s digitalization is democratizing access to this universe.

Platforms like Masterworks allow people to purchase fractional shares of artworks by renowned artists like Banksy and Basquiat.

This way, it’s possible to invest in art with contributions starting at $500, making the market more dynamic and robust.

However, investing in art requires knowledge of trends, authenticity verification, and the artist’s track record.

Collectibles: Watches, Cars, Cards, and More

The collectibles universe is broad and diverse. In the United States, the fastest-growing sectors are:

• Luxury watches (Rolex, Patek Philippe)
• Classic cars (Ferrari, Porsche)
• Sports cards (especially baseball and basketball)
• Vintage comics and toys

The sports card market experienced a boom during the pandemic, with multimillion-dollar sales and a 200% increase in transaction volume between 2020 and 2023.

Luxury watches, in turn, have become such sought-after stores of value that brands like Rolex have years-long waiting lists.

Scarcity and item condition are key factors driving appreciation, especially with platforms like Rally and Collectable, which allow fractional investments in rare items.

The Risks of Passion Assets

Despite their emotional appeal and appreciation potential, investing in passion assets is not without risks:

• Low Liquidity: Selling a piece of art or a classic car can take months, unlike liquid financial assets that are quicker to convert.
• Maintenance and Insurance Costs: Storage, conservation, and protection against damage are recurring costs, especially for items requiring specific conditions.
• Market Volatility: Cultural trends and shifts in consumer behavior can affect demand and prices.
• Forgeries and Frauds: Authenticity is one of the biggest challenges, especially in the art and collectibles markets.

Therefore, it’s crucial that investors stay well-informed, seek specialized advice, and diversify their portfolios, avoiding high concentrations in passion assets.