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Accelerating value of classic cars

We all know that the financial markets have been subdued of late. Stock and shares have been stubbornly refusing to rise in quite the same predictable fashion as used to be the case. Every time we see evidence of a recovery, something happens in the Eurozone or there is another drama in the US and we see our shares fall again.

We all know that the financial markets have been subdued of late. Stock and shares have been stubbornly refusing to rise in quite the same predictable fashion as used to be the case. Every time we see evidence of a recovery, something happens in the Eurozone or there is another drama in the US and we see our shares fall again. It is no wonder then that some frustrated investors are abandoning traditional markets and seeking out some alternative investment opportunities. What is more surprising is where they are finding these opportunities and the sort of returns they are enjoying.

Some bold investors have been turning to classic cars and the profits have, in some cases, been stellar. During the last year, for example, top of the range vintage Ferraris have seen prices rise by 55%. Mercedes were a long way behind at 24% and Porsche back further still at 13% but these increases are still miles ahead of traditional stocks and shares. Prices on cars such as these are tracked by the Historic Motor Group (HMG) and their founder, Dietrich Hatlapa, explains the continuing price rises: "It's a cocktail of things: rarity, technical sophistication, racing pedigree and continuing competitive success. But what you can say is everyone who buys one of these cars is passionate about them."

Ferrari continues to outperform the market, proving an attractive bet for investors. Last month a Ferrari 275 Spyder of 1967 vintage was sold at auction for $27.5 million (£17.5 million) in California; the most expensive car ever to be sold at a public auction in the US. The record price for any car is $35 million, which was reached last year for yet another Ferrari, a 1962 GTO 250 made for Sir Stirling Moss. These excellent returns are not just limited to Italian sports car exotica, however. E Type Jaguar's are also accumulating value and top examples can now fetch more than £80,000.

When taken together, the price of classic cars has risen by 28% in the past year, which compares very favourably with the FTSE-100 at 12% and totally trumps gold investments, where the price fell by 23%. Taken over ten years, the returns are even more impressive, with vintage cars rising by 430% against a FTSE rise of just 55%. Gold prices were impressive but a 273% rise was still comfortably beaten by the motors. Industry observers believe that investors like to see some tangible assets in times of financial trouble and a vintage car in the garage provides exactly that.

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