Rare booksTraderLife Guide To: Investing In Rare Books. Photo: Chris Lawton (Unsplash)

TraderLife Guide To: Investing In Rare Books

Many of us love books. Whatever your interests or passions, there is likely to be a volume out there that you can enjoy curling up with.

But have you thought about making money from books using your trading skills?

As potentially valuable rare books are available to buy at relatively low price levels, doing so could be possible even if you only have a small amount of money to invest in this area. And if you are thinking big, note that a manuscript copy of the Book of Mormon, one of the foundational texts of the Mormon Church, was sold for $35m just over a year ago in what was the largest rare book deal ever done.

Be aware, however, that the UK’s Antiquarian Booksellers’ Association for a long time warned against regarding rare books as good financial investments. But they have changed their view in recent years. They now say: “Rare books are not suitable investments for the proverbial ‘widows and orphans’, but this is not to say that those with a little spare money cannot buy profitably on the basis of a little sound professional advice.”

So here are our thoughts on why you should consider investing in rare books and what to bear in mind as you start to build your collection.

Mixing it up

No sensible financial advisor would suggest you put all your investable income into one asset class, and rare books are no exception. However, they can be a good addition to a broader investment portfolio.

This is because the rare book market has very different drivers to many other asset classes that you might trade in, and is immune to an extent to shocks that might affect them.

Tax appeal

Rare books make a great investment from a tax perspective. Most printed books, in the UK at least, are exempt from VAT.

Furthermore, if you eventually sell your rare book or set of rare books for less than £6,000, you will not have to pay capital gains tax on your profits.

Page-turning

With some collectable objects, investors can find themselves unable to enjoy their purchases. It may not be wise to drive a classic car too often. Some vinyl records should stay in their original packaging, while vintage wine bought as an investment can never be served up with dinner.

But any rare books you acquire can usually be read as you wait for their value to rise. This is provided they are handled with care, but there is no need for white gloves – clean, dry hands are fine for most books and manuscripts, according to the British Library.

Where to buy

Once you have decided to invest in rare books, where you go to source acquisitions will depend on your pocket and interests. Try charity shops for rare paperbacks and modern hardbacks, though note some outlets are now sifting their incoming stock carefully to pick out valuable items.

If you want to invest a significant amount on a rare book, particularly an older one, it is best to consult a specialist bookseller in your area of interest before spending any money.

What to buy

As with many investments, the principles of supply and demand are key – the more unusual a book you can find, the more you can expect to make from it.

A good starting point is to look for first editions, which tend to be rare and sought-after by collectors. First editions with dust jackets are even better. Even relatively recently published books that meet these two criteria can be good investments.

Valuation

Other factors that affect a rare book’s valuation include “its condition, its binding, its provenance, and the significance of any inscriptions it may contain”, says ABAA, the Antiquarian Booksellers’ Association of America.

Check also for yellowing and spots, known in the book trade as “foxing”. But there is no need to worry too much if you find these, as they do not necessarily reduce a rare book’s value. They can in fact serve as proofs that an older volume is the genuine article.

Book-collecting prizes

The obvious way to make money out of rare books you acquire is to sell them on, with luck at a good profit. But one fun alternative is to aim for a book-collecting prize, which comes with the added benefit of not having to part with your acquisitions.

You will need to build up a substantial set of rare books in a particular area to enter. Should you win, expect a cash reward and, of course, a sense of satisfaction from creating your collection.