Diversify with a bike

Collectible motorbikes, symbols of rebellion and liberty, can also be sources of something decidedly conservative: capital preservation.

Owning a classic motorcycle is both lifestyle choice and investment, says Daniel Wade of U.K.-based Paul Fraser Collectibles.

“Typically, collectors are united by passion for motorcycle design, engineering and history,” he says. “While it is certainly possible to make money, my advice is not to buy with that expectation.”

They have one distinct advantage to vintage cars – they take up less garage space.

Edward Doering, director of the Motorcyclepedia Museum in Newburgh, New York, says the closer the vehicle is to its original state, the better.

“Original paint is important, as are decals and accessories,” he says. “Collectors want every nut and bolt [to be] original. Bikes restored years ago may have value, but auctioneers say [such bikes fetch] about half the value.”

Provenance matters too.

“Some of the most coveted bikes among serious collectors are factory works bikes with documented race-winning or record-attempt histories,” says Wade. “They were generally hand-produced in extremely limited numbers.”

Serious investors should expect to pay at least $15,000 for motorcycles with original parts and finishes, says Wade. If you’re buying with an eye to potential profitability, stick to flagship brands such as Indian, Triumph, Brough, Vincent, Harley-Davidson and Ducati.

Today, the highest price for a vintage motorcycle stands at US$520,000, achieved by the 1915 Cyclone Board Track Racer in July 2008.

The next wave

Beyond bikes with racing provenance, Doering says some collectors are now buying bikes from the 1960s and 70s. These are nostalgia purchases, made by people who came of age during those decades. “Many now sell for only a couple of thousand dollars and could double in value pretty easily.”

As for how much of your portfolio could safely consist of bikes, a recent Barclays study finds wealthy people hold an average of 9.6% of their total net worth in collectibles. Doering pushes the envelope, suggesting motorbikes could be a more daring “25% of your investment portfolio.”

But, if your garage of bikes is a large part of your portfolio, like any other investment, you need to take precautions. And, aside from security, that means insurance.

Insuring your collection

Dalton Timmis Insurance, an Ontario and Alberta-based vintage motorcycle insurance broker, requires a detailed appraisal, including colour photographs, for all vehicles every five years.

The appraisal date can’t be more than 18 months old at the time of application for insurance, and the broker won’t accept provincial ministry appraisal forms. A third-party appraisal could range from $65 to $250 based on how unusual the bike is and the distance appraisers have to travel.

To qualify as vintage, your motorcycle must be more than 30 years old. The average cost to insure a bike worth between $10,000 and $12,000 would be $350 to $400 a year. Pricing depends on factors that include where your bike is located; how long you’ve had a license and continuous motorcycle insurance; and whether you’ve been conviction-free for the last few years. Premiums decrease with each additional motorcycle insured. There are also loyalty discounts for staying with the same insurer for a specific number of years.

As with any valuable collection, your main focus should be collecting something that has intrinsic value to you, rather than a pure investment strategy. But, if you have an interest in vintage bikes, it’s good to know that they can also double as a modest addition to your investment portfolio and estate.