String instruments as capital investment

A stable and fascinating investment option

In a time of low interest rates, high real estate prices and volatile stock markets, many people are looking for alternative ways to safely invest or even grow their savings. In addition to real estate, many people inevitably think of expensive Rolex watches, rare sports cars, fine jewelry or precious metals such as gold when they think of investments. On the other hand, an interesting option, which has both artistic and exceptionally high economic value, are string instruments.

The trade in violins, violas and cellos often reaches five-, six- or even seven-figure sums, raising the question of whether stringed instruments can serve as a safe haven for investment. This article examines the suitability of stringed instruments as an investment, looks at the differences between them and other forms of investment, considers performance, and introduces the potential target audience.

String instruments as an investment

The question of whether stringed instruments are suitable as an investment cannot be answered in a general way. For normal, more short-term oriented investors, investing in string instruments may not be attractive due to their illiquidity. The sales process can take some time. Nevertheless, string instruments can be an interesting option for long-term investors, provided they are willing to wait for a potential sale.

String instruments are considered an uncomplicated capital investment with low ancillary costs and management expenses. In addition, they allow an investment with comparatively small sums and carry a lower risk of loss in value.

Which instruments are suitable as an investment?

Classical Italian stringed instruments from the late 17th century to the early 19th century have shown the highest and most stable performance. Instruments of this period are considered desirable by connoisseurs.

French instruments, especially from selected violin makers, are also very popular. For bows, on the other hand, specimens made by 19th century French bow makers tend to be more interesting. When purchasing a stringed instrument, it is important to obtain certificates of authenticity from recognized violin experts and carefully inspect the instrument’s condition.

The value of string instruments:

A high-quality stringed instrument has a rich history and in a sense is not a dead object, but a “living” being. It has passed through many hands and has been played by various musicians.

The value of an instrument increases the more famous the musician who played it is. The emotional value of an instrument is difficult to measure and may be perceived differently by music enthusiasts. This emotional value makes pricing and selling more difficult.

The market for string instruments is considered opaque, which presents both sellers and buyers with the challenge of finding a trustworthy business partner.

The value stability of string instruments

In contrast to conventional investments, which are often subject to high volatility, string instruments show a very stable performance over centuries. Classic Italian instruments have seen annual appreciation of about six to seven percent in recent decades. No losses in value have been observed so far.

Handcrafted stringed instruments retain their value over the long term and often show a significant increase in value. Over the past thirty years, the average appreciation of high-quality historical string instruments has exceeded even that of residential real estate, at over six percent, and has been only slightly below that of equities, with significantly less risk.

In addition, high-quality instruments offer the opportunity to generate rental income through leasing.

Correlation with the financial markets

A direct correlation between the performance of string instruments and developments on the financial markets is not measurable. One of the reasons for this is that, unlike shares, no continuous valuations are available. Auction prices and works such as the “Fuchs-Taxe” form the basis for observations of the market. However, these sources are updated only about every ten years.

The role of the financial markets

In view of the low level of interest rates worldwide, negative key interest rates from the European Central Bank and the increasing burden of negative interest rates on private accounts, demand for investments in property, plant and equipment is gaining in importance worldwide. High-quality string instruments have achieved a stable performance of about 5-7% per year over the past decades. It can be assumed that similar increases in value can be expected in the future.

Thus, a high-quality stringed instrument is not only a cultural object and a musical instrument, but also a highly interesting capital investment.

Target group of string instrument investors

Typical investors usually include foundations, banks, and wealthy private investors with an interest in music. In recent years, more and more investors from the Asian region have joined in.

Acquisition of string instruments as a capital investment

If you would like to purchase a stringed instrument as an investment, we are the right partner for you. We have in-depth knowledge of the market, maintain trusting contacts with sellers and potential buyers, and are familiar with the necessary settlement processes as well as insurance and import/export regulations. Our experts can prepare value appraisals for instruments, competently appraise unknown instruments, and identify circumstances that reduce or increase value.

Checklist for the purchase of string instruments as a capital investment

Trusted sources

Purchase the instrument from reputable luthiers, violin dealers or reputable auction houses. Check their reputation and experience in the industry.

Certificate of authenticity

Make sure that the instrument has a certificate of authenticity from recognized violin experts. This certificate confirms the authenticity of the instrument and can significantly increase its value.

History of the instrument

Try to get as much information as possible about the history of the instrument. Which famous musicians have played it? Does it have any special features or characteristics?

Instrument condition

Inspection of the instrument by a professional is essential. Look for possible repairs, damage or signs of aging. A thorough appraisal can help you identify any hidden defects or problems.

Sound quality

Test the instrument for sound quality. Listen carefully to make sure it has the sound character and quality you’re looking for. Take into account your own sonic preferences and requirements.

Playability

Try the instrument yourself, if possible, or have a professional musician play it for you. Pay attention to the playability, comfort and response of the instrument to different playing techniques.

Performance:

Find out how similar instruments have performed in the past. Consider the market, demand and historical price trends. Note, however, that past performance is no guarantee of future gains.

Expert advice

Consult a violin expert who has in-depth knowledge and experience in dealing with stringed instruments. An expert can help you choose the right instrument, determine the value, and help you negotiate.

Financial possibilities

Keep in mind that high-quality string instruments often require a significant investment. Make sure you have sufficient funds to purchase the instrument and pay for maintenance and insurance, if necessary.

Return policy and warranty

Clarify the seller’s return policy and warranty terms before you buy. A reputable seller should give you a reasonable return policy and possibly offer a warranty on the instrument.