Want to diversify your portfolio? Try violins…

That’s the word from a recent Reuters article discussing how well these musical instruments hold their value. They won’t give you huge returns, but apparently are pretty consistent with a long-term return after inflation of 3-4%:

CEPR calculated that over the period 1980-2006, violins gave a real return — after allowing for inflation — of 3.97 percent.

That compared with 9.18 percent on the U.S. S&P 500 stock index, 6.63 percent on U.S. Treasury bonds and 7.74 percent on works of art.

Over the longer term of 1850-2006, however, violins gave a real return of 3.3 percent, beating U.S. Treasury bonds which yielded only 2.19 percent.

I’m not sure if this will convince anyone to go out and get a violin – after all, without knowledge of musical instruments and specific violin makers you’d be relying mostly on the word of a violin broker to make sure you’re paying an appropriate price (all of the ones I’ve dealt with have been very honest, but you never know…). It’s a bit easier if you already play the violin and can physically pick it up and try it out, distinguishing between a higher or lower quality instrument based on sound and playability. For anyone out there who already owns a violin, congratulations – you’ve made a good investment. For me, I can only hope that my musical-investment will at least partially offset the money I am currently losing on my home as the housing bubble continues its downward trajectory. 🙂

~ Lily

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