Previously in this column, we discussed about passion assets. This refers to assets that are collectibles such as paintings and antiques. Passion assets are both consumption and investment assets.
That is, you can enjoy them as collectibles and later sell the assets to generate gains. In this article, we discuss the risks associated with such assets, especially the pain of parting with them.
When we own a collectible, we typically focus more on what we have to give up when we sell the asset than the gains we can generate by selling it. This explains why we want a higher price when we sell an asset we own than when we buy the same asset we do not own. Behavioural psychologists refer to this as the endowment effect.
Think of it as the pain premium. At the extreme, you may be unwilling to part with an asset even if the offer price is good. Unless you sell these assets, they are just personal collectibles, not passion assets. So, the primary risk is that you may never realise gains on such assets during your lifetime.
Fortunately, time is a beneficial factor. The longer you own an asset, the more willing you may be to part with it. You may be unwilling to sell your first collectible you acquired, say, 20 years ago and your recent acquisition. But you may be less reluctant to part with the ones you acquired, say, ten years ago.
Sometimes, you may be willing to sell from your old collection when you acquire a similar asset with better provenance. Typically, a large collection of passion assets is sold when the legal heirs clear the estate of a collector.
To ensure that your legal heirs eventually get good value for your passion assets, you must document each asset’s provenance whenever possible. This refers to dating the age of the asset, the date of acquisition, its price and the source of acquisition (a dealer or a private collector).
Remember, narrative adds value to an asset. A 100-year rosewood barley-twist desk may fetch a significantly higher price if it were sourced from a colonial-era palace or from a well-known personality than from an unknown private home.
Finally, you must ensure your assets are well-preserved. Direct sunlight can harm rare and vintage paintings. Managing these risks can enhance the value of your passion assets.
(The author offers training programmes for individuals to manage their personal investments)
Published on July 27, 2026