This post is designed to address the question “Should I invest in Pokemon?” in the same vain someone might ask, “should I invest in real estate or index funds?” It is not meant to answer the question “Should I collect Pokemon?”, as this is an individual subjective preference.
I’ll preface with a slight rant, in that as someone who enjoys helping friends, family and occasionally neighbours and local residents in my town with their finances (for free) and knows the perils of poor choices, I’m aggravated by the new trend of IG ‘influencers’ and YouTube channels touting Pokemon - ESPECIALLY Modern - as a must-have investment, or implying that Pokemon TCG products are viable as a central asset allocation within a retirement portfolio. Good financial management is not a strength for many people, so this could have a detrimental effect on the financial health of inexperienced collectors or those looking to diversify a portfolio. I won’t be discussing Modern here; while I wouldn’t dismiss it as a potentially good investment, I currently dismiss it as a serious one in comparison to classic, proven investment routes.
In terms of credentials, while I’m not a Financial Adviser by trade, I have a Level 4 Diploma in Regulated Financial Planning via the Chartered Insurers Institute, which is the UK’s standard qualification for becoming a client-facing Financial Advisor/Planner. I am however by no means an experienced Financial Planner. The points made here are not exhaustive, and will perhaps constitute common knowledge to many on E4, especially as smpratte has covered this topic quite extensively on his channel. The overall aim is to spread awareness of the importance of financial responsibility as this hobby becomes more and more investor-centric. To be able to make well-informed decisions will help prevent collectors from getting burned by a hobby that it supposed to bring enjoyment and nostalgia.
The Key Pros of investing in Pokemon TCG (‘Vintage’: WOTC/early Ex era)
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Growth potential. A young TCG as we’re all aware, nobody is yet certain as to the ‘ceiling’ for growth. Pokemon as a franchise appears to be growing. From this we might infer sustained or growth in interest over time.
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One of the most engaging investment asset classes. A tangible asset you can hold in your hand that has personal meaning to you while potentially growing in value makes PTCG an appealing option, and turns the spotlight on the benefits of personal capital growth for those who began less financially-minded.
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Medium-term track record of viability: see Scott’s videos. Now 20+ years old we have visibility of the medium-term price trend, which has been upwards. Out of print, limited availability etc., all the markers of the classic collectable. I will assert that 20 years is not ‘long-term’; see: stock market, Sports Cards, Golden Age Comics.
The Key Cons of investing in Pokemon TCG (‘Vintage’: WOTC/early Ex era)
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Greater risk. All investment asset classes carry risk. But PTCG is unproven in the long-term. We have no 50+ year market trend or analysis. Current growth markers for WOTC rest largely on the shoulders of one generation. This may, or may not, be enough to grow/sustain the hobby. Other generations may, or may not, find equal or greater interest. People’s (read: collectors’) life-cycles and priorities develop and change. Pokemon may have more, or it may have less desirability than it does now. The franchise may not exist in the future; will this be good or bad for the hobby? These aspects must be weighed-up in your risk analysis. This is a subjective guessing-game. The large number of potential variables, in and of itself, should be considered an aspect of ‘risk’.
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The product is illiquid. This means it cannot be easily exchanged for cash. There is a selling process that must be undertaken. While 1st Edition Base Set Shadowless Charizards may sell almost instantly, many other cards might not. Other assets such as stock equities and bonds can be exchanged almost instantly for capital. Consider this when weighing-up how quickly you may need access to the cash locked-up in your collection in the future.
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They are physical products. You have to store them. You may even have to insure them depending on their value. If PTCG forms part of your central retirement investment strategy, you’ll need to give your collection the highest protection reasonably available to you. Keeping high value physical items draws additional risks: theft, fire, accidental damage. It creates additional overheads that will impact your ROI (Return on Investment), such as cost of storage space and insurance premiums. You must assess whether you believe the ROI will outweigh overhead costs, compared to what ROI you may receive from more straightforward and secure asset classes.
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Risk of scamming. In order to capitalise on your collection, at some point you will need to sell some or all of it. If you are selling via eBay, there is a chance that you may get scammed. If a buyer files an Item Not as Described case (INAD) and decides to return you a brick in the mail, there’s a low probability you will get your money back. Look for the most secure ways of selling (3rd party facilitator, PWCC, in-person, F&F payments).
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The fact that you will have to part with your collection one day. If you view PTCG as a pure investment vehicle then this will not be a problem. If you have great sentiment for your collection while also treating it as a significant investment vehicle, you may suffer emotionally when having to part with it.
My Opinion - for what it’s worth - should you invest in Vintage Pokemon TCG?
My TL;DR answer to this is ‘yes’, but only under the following circumstances;
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You have educated yourself financially (a good place to start would be reading 'The Simple Path to Wealth’ by J.L. Collins - possibly one of the best personal finance books ever written. For UK readers, the book is very US-focused however the principles still apply).
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You have defined your long-term financial plan. What are your goals? What level of income do you want in retirement? What are your current job prospects? What are your sources of income and will these expand? What standard of living do you maintain?
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It is no more than a ‘satellite’ investment that you do not solely rely on for your financial future. We cannot all achieve what Scott and Gary have achieved. Your main portfolio should be based on what is proven to provide you with a solid retirement fund: multi-asset, diversified investment funds. An example of this is the low-cost funds provided by Vanguard.
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You already have an emergency fund (generally recommended to have 3-6 months’ worth of salary in an easily-accessible account).
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You have paid off any credit card or personal debts (NOT including mortgage). The interest accruing on these debts is significant and costing you a lot of money. As an illustrative example, if you gain 15% on your Pokemon collection in 1 year, but your credit card APR is 29%, you are still at a net loss of 14%. Please note I haven’t commented on Student Loans here as I’m unfamiliar with the US system; it is very different and sounds a lot scarier than the system we have in the UK!
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You have already prioritised your savings goals (e.g. house deposit, car) and pension scheme (For US readers; 401k, Roth IRA).
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You are willing to hold onto your collection for the long-term (in conventional investing terms this typically means 10+ years), and you are willing to ‘weather the storm’ of market crashes. This same principle applies to all long-term investing. Again, highly recommend the book by JL Collins mentioned above.
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You are not investing based on FOMO, but instead on a foundation of solid knowledge of the product and its fundamentals, and with responsible intentions.
The UK Personal Finance subreddit has a brilliant flowchart for anyone unsure about where to begin financially. You can follow it no matter what stage of your life finances you’re at, and the majority of the principles apply to an American audience too. A Link here: flowchart.ukpersonal.finance/.
I hope this helps bring investment context to the people who need it. I’ve written this all in one quick sitting, so please do add to, constructively criticise or correct anything I’ve stated here so that we can continue to spread awareness of financial responsibility.
EDIT: ShizzleMeTimbers made a good point that I didn’t cover adequately here. When making collecting-investing decisions, you should weigh-up your own appetite for risk. In other words, after considering the points made here, are you willing to take a higher risk and allocate more of your cash to investing in Pokemon TCG? Higher risks often yield the highest rewards, though at the same time can incur the greatest losses if the decision doesn’t pay off. We can all give our own opinions and ‘what-we’d-do’s’, but at the end of the day if it’s your prerogative to allocate more of your capital to Pokemon investment - or collection - then it is your decision alone to make.
