Give a collectable gift
Why not celebrate Christmas with gifts that have the potential to grow in value rather than end up as junk soon after Boxing Day? Every year families in Britain spend on average £600 on presents and related festivities throughout December, according to data provider Moneyfacts.
But after all the celebrations, most of us have little to show for our outlay, beyond a hangover and a hole in the pocket.
However, if you give relatives or friends the opportunity to make a bit of money, you'll be giving a gift that will be truly appreciated. We've rounded up a selection of some of the most interesting alternative Christmas gifts.
1. Christmas cards
In 1843, the director of the Victoria & Albert Museum, Sir Henry Cole, commissioned the first 1,000 hand-coloured cards, depicting a family toasting Christmas. At the time, these cards – illustrated by JC Horsley – sold for a shilling. Only about nine have survived, fetching as much as £8,469 each at auction.
Thanks to the introduction of a chromolithographic process in around 1860, these cards were packed with vivid colours, superior to those used today. Novelty designs can still be found for a few pounds, but they can rise by as much as 10% a year in value.
By the Edwardian era, Santa-themed cards were popular – and he not only wore red tunics, but purple, green, blue and white. More unusual colours tend to fetch the most. An Edwardian 'hold-to-the-light' Santa card can make a great gift at less than £100, and is almost guaranteed to grow in value – a decade ago it would have cost £20, and even three years ago, just £50.
As with all alternative investments, it's best to keep your gift for at least five years. Store it away from damp, direct sunlight and sticky fingers.
2. Vintage toys
The value of classic rocking horses has more than doubled over the past decade, and you'll pay at least £1,000 for a decent thoroughbred rocker these days.
The heyday of rocking horses was between 1880 and 1914. The top name is FH Ayres, while other names to look out for include G&J Lines Brothers and J Collinson & Sons. When checking the quality of a horse, look for glass eyes and horsehair as a sign of a good make. Elegant carving and the quality of the top plate holding the swinging irons are also signs of distinction.
Prices might not soar in the future, but in the last three years £1,000 rocking horses have steadily climbed in value to around £1,500. Modern handmade rocking horses can also hold value, but they are rarely as well made as the best earlier models.
3. Teddy bears
Bears made by the German toy company Steiff command the highest prices. The firm began making them after Richard Steiff saw performing bears at the circus in 1902, and the term 'Teddy' was coined in the same year, when an American cartoon portrayed President Theodore 'Teddy' Roosevelt refusing to shoot a bear.
The record for a Steiff bear is £110,000, paid in 1994 for a 1905 'Teddy Girl'. Later bears from the 1920s and 1930s can still fetch £1,000, but you can bag a £100 bargain if you find one made in the 1940s or 1950s.
Prices have remained stable in recent years; but if the owner has proof of the bear's provenance, such as authentic photos and verification of previous owners, the value can double. Condition counts for almost as much as a maker's label, so what seems a smart investment can become a tatty buy if the stuffing's falling out.
Other collectable German bear makes include Schuco, Bing and Gebrüder Sussenguth. English makers also have collectable cachet: look out for bears manufactured by Farnell, Chad Valley, Chiltern and Merrythought.
4. Action Man
Nostalgia is feeding the market among grown-up 'boys' who enjoyed playing with Action Man when they were kids and want to share the thrills with a younger generation.
Original action figures made from 1966 onwards have typically been rising in value by about 5% a year over the past five years. The earliest models are the best bet, and are now worth up to £600. Fuzzy-haired Action Man soldier came out in 1970, and rubber-gripped hands were introduced three years later. A boxed figure from the era costs £200.
Action Man returned in 1996 as a less appealing cartoon-like toy, having been discharged from the military, but these later dolls are worthless.
Barbie celebrated her 50th birthday in 2009 but is still a sprightly investment. The first dolls cost £1.70 and, if kept in the original box, are now worth £8,000. If you have a limited budget, you can still find a collectable Barbie with vintage looks for as little as £100, if you look for later models made between 1959 and 1972.
Barbie has enjoyed a buoyant rise in value over the past decade, with prices for the most collectable examples rising on average by 10% a year. But the years have been unkind to many Barbies. Telltale signs to be wary of include copper-based earrings, which can oxidise and cause 'green ear', and a sweaty, pale skin thanks to her unstable plastic body.
Moreover, take an old Barbie out of her packaging and she immediately halves in value. Play with her, and before you know it a great potential investment becomes nothing more than a worthless toy.
6. Vintage wine
You can also celebrate Christmas by investing in a vintage bottle of wine. The Bordeaux region of France offers the best investment – focus on claret from the top vineyards. The year the wine was produced is also a crucial factor, as the weather dictates its final quality.
The big guns to look out for are the five first growths – Premier Crus – of Haut-Brion, Lafite-Rothschild, Latour, Margaux and Mouton Rothschild.
A 12-bottle crate of Lafite-Rothschild cost £1,850 when it first hit the wine racks in 2000. It now costs £13,100, according to wine index provider Liv-ex. In comparison, if you had invested £1,000 in the FTSE All Share in 2000, that lump sum would be worth just £1,084.90 today.
But you can join the party with a modest budget of less than £300. A 12-bottle crate of Bordeaux Calon-Segur costing £275 in 2000 now sells for £600.
A top wine should be stored at least 10 years, although leaps in the market may mean trading within a year is an option. If the wine is 'bonded' in a warehouse, the investment can also gain from generous tax breaks. Storing wine under bond will typically cost £5 to £15 per case a year, including insurance against loss or damage.
7. First editions
First editions of classic novels can be financial winners. For a timeless seasonal tale there's nothing to beat Charles Dickens' A Christmas Carol, first published in 1843. These days, a copy published by Dickens' original publisher, Chapman and Hall, is worth £17,500.
Although this classic may be beyond your pocket, a 1978 first edition of The Snowman by Raymond Briggs for £40 could be an option. It's unlikely to soar in value over the coming years, but it should certainly not fall – and it'll provide priceless returns as a gift.
Harry Potter is another Christmas favourite. A first edition of the first JK Rowling novel, Harry Potter and the Philosopher's Stone, published in 1997, can sell for five figures, but the seventh and final book – Harry Potter and the Deathly Hallows – in first edition can be bought for as little as £30.
8. Collecting stamps
Stamp collecting is the most popular hobby in the world, so a rare stamp is the perfect gift for any philatelist in the family. According to data from Stanley Gibbons, the most collectable British stamps have risen in value by an average of 10% a year in the past decade.
Sadly, the vast majority of stamps are worthless; it's only the most unusual or rare stamps, in pristine condition, that are deemed to be investments.
As a rule of thumb, you should expect to fork out a minimum of £200 for a quality stamp of investment value. Just as if you were buying a second-hand car, you should find out about the seller as well as the stamp's history. Seek out members of the Philatelic Traders' Society for professional advice.
9. Football memorabilia
Football fans can share their devotion off as well as on the pitch with soccer memorabilia – this also makes great original Christmas presents. In the past 10 years, the most sought-after match programmes have more than doubled in value and other rare items like badges and caps have also shot up.
Programmes from FA Cup finals make great investments. The most collectible programme of all is the 1915 FA Cup final of Chelsea versus Sheffield United at Old Trafford, which can sell for £15,000. It was dubbed the 'khaki' cup final due to the large number of soldiers in the stands following the outbreak of the First World War and it was the last match played for four years.
10. Film posters
Over the past couple of decades vintage posters previously purchased for just a few hundred pounds have risen to several thousand, and continue to climb.
The great artwork gives this investment extra appeal. The 1958 Alfred Hitchcock movie Vertigo is one of the best examples, as it boasts iconic artwork by Saul Bass that makes it worth £5,000. The same poster fetched £300 in 1990.
Horror and science fiction have proved to be among the best genres for movie-poster investors because they enjoy an avid fan base that never seems to fade. Cult movies also tend to maintain value, as there is always strong demand.
Posters for iconic modern movies, such as an early poster for Quentin Tarantino's 1992 Reservoir Dogs, are currently worth £500, and are rising fast in value. Others include the 1995 computer-animated Toy Story, which can go for £300.
Condition is key for collectors, so only the best surviving examples will do as investment gifts.
Do I need to pay tax?
Alternative investments escape capital gains tax if they are your personal possessions and worth less than £6,000. If they're worth more, you are liable to be taxed upon sale – on the amount of profit or capital gain made, rather than the total value.
But even then, an alternative asset may escape tax if it's deemed to be a 'wasting asset' – something with a shelf life generally considered to be less than 50 years, such as wine, or other alternative investments involving machinery, such as clocks. Wine should be stored in a bonded warehouse, ensuring no VAT or duty will be paid on it until it is released.
How seriously should I take my 'off the wall' investment?
Mark Dampier, head of research at financial adviser Hargreaves Lansdown, believes an alternative investment could be a great idea as long as it only plays a marginal part in your portfolio. "As long as they're no more than 10% or 15% of your portfolio, alternative investments can be a great idea – and a fantastic Christmas gift," he says.
Dampier believes anything from shotguns to sports cars could be a good bet: "Investments like classic cars and wines traditionally seem to do well. But even more unusual ideas like shotguns are now being used as heirlooms."
He thinks an interest in the subject is key to their appeal, and advises looking for the best quality you can afford and seeking expert help before parting with any cash.
Invented by a Frenchman in 1954 and ironically introduced in the UK on 1 April 1973, VAT is an indirect tax levied on the value added in the production of goods and services, from primary production to final consumption and is paid by the buyer. Its levying is complex, with a number of exemptions and exclusions. For example, in the UK, VAT is payable on chocolate-covered biscuits, but not on chocolate-covered cakes and the non-VAT status of McVitie’s Jaffa Cakes was challenged in a UK court case to determine whether Jaffa Cake was a cake or a biscuit. The judge ruled that the Jaffa Cake is a cake, McVitie’s won the case and VAT is not paid on Jaffa Cakes in the UK.
Capital gains tax
If you buy an asset – shares, a second home, arts and antiques – and then sell it at a later date and make a profit, that profit could be subject to CGT. You don’t pay CGT on selling your main home (which is why MPs “flipped” theirs so regularly) or any securities sheltered in an ISA. Individuals get an annual CGT allowance (£10,600 in 2010/2011) but if you have substantial assets it’s worth paying an accountant to sort it for you.