Are Guitars A Good Investment? Cons & Pros & What To Look For

Are Guitars A Good Investment? Cons & Pros & What To Look For | integraudio.com

Today, we’ll discuss whether or not guitars are a good investment and what to look for when researching the guitar industry, which is generally expanding daily.

Most investments only involve paper documents stating that you are the legal owner of a certain number of shares in a corporation or some other entity. For example, owning a vintage guitar is a great investment because you can play it and enjoy it now.

In 1999, Eric Clapton auctioned off a hundred guitars to raise money for his Crossroads Centre charity, which assists alcoholics and drug addicts. He made $450k with the sale of “Brownie,” his Sunburst Fender Stratocaster from 1956. The buyer invested in something worth millions in the future and shared a vision.

That’s the whole purpose; name another long-term investment that can provide so much satisfaction without reducing its value. That it’s a classic and was formerly owned by arguably the greatest inventive guitarist of the century doesn’t make it any less enjoyable; guitars are instruments made to be used.

Those can make profitable guitar investments with a thorough understanding of the industry. There are potential risks and gains to consider with any investment. 

Let’s examine the market’s pros and cons so you know what to expect and how to proceed if you invest.

Are Guitars A Good Investment?

You can profit if you know what you’re doing in the guitar market. Aside from being tangible assets, guitars can be more stable in value than stocks, and a wide range of collectible instruments continue to increase in worth. They are also assets that can be used in games or as decoration.

It would take time travel, of course, to know that a particular instrument would one day be worth a hundred times what you sold it for. Nonetheless, guitars make excellent long-term investments for several reasons. Insight into these factors can help you determine whether or not purchasing a guitar is an excellent financial move.

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Pros

  • Predictable Investment
    As an instrument, a guitar is a safe bet for a musician who knows the ropes. The next big star may get a new guitar, but the one they left behind might be worth a pretty penny if they ever make it big. So if you want to get into the guitar investing industry, it will help to know which artists are performing well in terms of returns.
  • Sustainability
    The stock market’s ups and downs have been akin to a roller coaster during the past 15 to 20 years. At the same time, the market for investing in guitars has been far more stable over the same period.
    It isn’t easy to make a lot of money quickly playing guitar, but those ups and downs in the stock market create opportunities to get rich. This, however, ensures that your funds are safe for the foreseeable future and that you will earn a modest rate of return each year.
  • Value
    Here, it’s not simply the guitar’s monetary value but the fame of the musician who played it that matters. Although a 1956 Fender Stratocaster Sunburst will likely fetch a reasonable price, it won’t come close to the $450k Eric Clapton’s “Brownie” fetched at auction in 1999. The value of “Brownie” was not based on its age or materials but on the musician who had played it.
  • Portfolio
    Diversifying investment holdings is a common tactic used by investors to mitigate the effects of market volatility on their portfolios. You may also do this in the guitar investment market; research which guitars are worth the time and money and invest in two or three different kinds.
    Consider adding a few pre-World War II Martins, a few Fenders made before 1965, and a guitar that belonged to a notable person. 
  • Tangibility
    To own a guitar is to own an investment that you can hold in your hands, learn to play, and enjoy. If you’re a guitarist, investing in a rare instrument is more fun than buying a new one. You have to speculate about who used it, what music was on it, and where it might have been.

Cons

  • Cost
    Since high-value resale guitars are essential for a successful investment, the initial capital outlay will be far higher for guitars than it would be for equities and shares. So while a high-end investment guitar could cost you thousands, you can get started in the stock market with just $100.
  • More Guitars Needed
    We just established that a good guitar will set you back at least two grand and that if you want to make the purchase worthwhile, you’ll need more than one. You’ll need to purchase not one but two or more guitars for this to be financially viable. If you want to start climbing the investment ladder in guitars, you’ll need a lot more money than you would for stocks and shares.
  • Hard To Sell
    If you suddenly needed cash and had to sell some of your possessions, there might be better items to try to sell than a guitar. This is because selling assets through auction houses takes time and requires finding the proper buyer. In addition, the auction house must promote the sale in advance if it wants to draw in qualified buyers. This leads us to our next point.
  • Market
    High-end, collectible guitars have a small but dedicated customer base. Or, to put it another way, only a select few people have the disposable income to purchase extremely rare guitars; if they’re not one they’re looking for, you may need help selling them.
  • Repercussions
    As with other commodities, guitars are not immune to this possibility. Any time a well-known collector starts stocking up on an item, the market reacts by increasing the price. On the other hand, if that famous collector unloads all of their stock in a specific brand, type, or model, the price can fall, and you could lose a lot of money if you hold any of that stock.

What To Look For When Investing In A Guitar?

You can’t tell which instrument will fetch that price; it all comes down to how famous and influential the guitarist who owns them becomes and the quality of the guitar. However, a few telltale markers point to future gold mines for the future guitar industry.

Based on historical data, the following qualities are indicative of a high-quality guitar purchase.

  • Owner
    Once upon a time, guitars that had belonged to famous guitarists fetched much higher prices than similar guitars that the stars had never touched. You might hit the jackpot if you can guess who will be the next big thing on the guitar and then go out and buy one (or more) of their instruments. Consider the difficulty of selling an early guitar played by Eric Clapton or David Gilmour in the current market.
  • Range
    In addition to the high price tag that comes with their rarity, unique guitars have a higher risk of being damaged over time, decreasing their value even further. In that case, the value of an intact model would increase significantly. Therefore, making money in this market requires a skillful hand at foreseeing which limited edition model will one day be in high demand.
  • Wood
    Guitars have gained value partly because they were traditionally crafted from now-extinct wood species. For example, guitars crafted from the African wood known as Korina are bound to be more costly than those created from other wood types since Korina is uncommon and challenging to work with.
    Gibson’s flying V and the explorer were the most famous guitars constructed from Korina wood; an Explorer Korina by Gibson sold for almost a million dollars.
  • Build Quality
    Cheap guitars always look cheap, sound cheap, and stay cheap. Investing in a low-quality guitar is a good use of time. A well-crafted instrument made from high-quality materials is always a safe bet when purchasing an investment guitar.
  • Handmade Guitars
    Only machine-built things in a factory are suitable for long-term investments. Vintage instruments of high quality constructed by hand will increase in value over time. They were painstakingly crafted with affection, which comes through in how they sound and feel.
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What Guitars Are Worth Buying?

WW II Martin Acoustic Guitars

Collectors highly seek these early Martins for a variety of reasons. One is that even when constructed about a century ago, only about a hundred versions were made, making them relatively rare. Furthermore, dreadnoughts were widely regarded as the pinnacle of bluegrass guitar design. Finally, many of the best steel-string acoustic guitar builders in the United States may trace their inspiration to Martin.

Old Fenders

As each early Fender guitar was individually crafted, there was a tiny variation in sound from one instrument to the next, even among those of the same model. Because of this, they are more valuable than subsequent Fenders, which were mass-produced after CBS acquired the company in 1965. Pre-1965 Jazzmasters, Mustangs, and Jaguars are progressively gaining value, although less than the more well-known Stratocasters and Telecasters.

Japanese Guitars

In the 1970s, some Japanese guitar manufacturers began making instruments that were near carbon copies of Gibson and Fender models. They improved their process for making these guitars in Japan, whereas those made at home gradually deteriorated for several reasons.

So much so that Gibson and Fender threatened to sue Ibanez unless they altered their guitars’ designs to look nothing like Gibson or Fender’s instruments. The first versions of these “lawsuit” models from the 1970s might fetch a high price nowadays. Warning: these items are now being faked in their own right after being copied from more popular companies.

50 Years Old Guitars

Listening to music that was popular 30 years ago is the best method to gain a head start in the guitar investment business. First, discover which guitars were widely used at the time, then stock up on those models.

Mainly because those that listened to music 30 years ago are the ones who are financially stable today, those folks are the most inclined to seek a vintage guitar, both to relive happier times and to emulate the styles of their musical heroes. If you do this, you can improve the likelihood that your investment will appreciate over time.

Conclusion

If you’ve been thinking about investing and this essay has convinced you, you should know that the risk is justified. Because of the limited size of this industry, you’ll need to be well-informed and patient to close a deal successfully.

Nonetheless, if you put that time to good use by learning as much as possible, the wait could be worthwhile, as the prices on such an instrument are attractive once you begin trading.

Of course, it may take years to recoup your investment, but in the meantime, a guitar like this will make a great decorative piece, and if you share the love of music, then, by all means, use it wisely within the bounds of common sense, where we know it will serve you well.

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