So you’re considering the purchase of a beautiful and potentially valuable set of antique furniture, a piece of antique jewelry, or an antique toy, tool, or work of art. How do you proceed? We’ve all heard stories of items like these purchased for a few dollars and then sold later for five, ten, or a hundred times their initial cost. How realistic are these scenarios and what steps can you take to optimize your investment? How can you move forward while maintaining an acceptable level of risk?

There are two very important truths to bear in mind before you make your purchase. First, every antique is valued within its own market, and this market fluctuates in accordance with demand. The current value of an antique toy—say, a 1907 stuffed mohair teddy bear has little correlation with the value of an Asian antique vase from the 16^th century. Collectors control the worth of each of these items, and collectors can be fickle. Rarity is not always a guarantee that an item will have value, and neither is a momentary spike in speculative interest (a surge of buyers who are drawn by the possible resale value of the item, not the item itself.)

Second, since this is the case, it is wisest to purchase an antique when you have a real and personal interest in owning that specific item. If you expect to enjoy the antique furniture or antique jewelry for its own sake, and would be happy to keep it for an indefinite period of time, this mitigates your level of risk.

A Few Tips for the Potential Investor:

Don’t spread a wide net. In-depth knowledge is important when investing in antiques, and the more specific your collection, the deeper your knowledge is likely to grow.

Know the difference between investing and speculating. Investing is long-term, researched, lower risk, and requires patience. Speculating often means buying an item that one has no long-term desire to own, intending instead to resell the item as quickly as possible for a profit. Speculation requires a keen eye set not just on the item itself, but on other buyers and collectors in order to gauge shifting levels of interest. Speculation requires strong nerves and a high tolerance for risk. Both investors and speculators benefit from in-depth and specific knowledge– For example, a skill in identifying provenance, an eye for antique furniture construction, or the ability to spot counterfeit components in the mechanism of an antique clock.

Remember the ten-to-fifteen percent rule: Most financial experts recommend keeping art and antiques within ten to fifteen percent of your investment portfolio.

Be aware that some antiques are easier targets for forgery than others. Forgeries tend to rise when an item becomes highly sought after by speculators. When an item seems to attract the interest of serious collectors only, counterfeits decrease.

And finally: Know yourself. Just as we’ve all experienced “buyer’s remorse”, there is a similar feeling that cuts in the other direction. “Non-buyer’s remorse” is more common in the antiques world than elsewhere, since antiques are one of a kind, and an opportunity to buy an item, once missed, may never come again. How high is your tolerance for either of these feelings? What items are you willing to pay a steep price for, and why? The heart of an antiques collector is a funny thing. In the antiques world, purchase decisions are frequently based on money, and just as frequently are based on factors that have nothing to do with money at all.

By Erin Sweeney