2021 Exit Strategy

[GeoPoto]

If all your money is in cards (which is what it sounds like), my advice would be to liquidate 90% of your card holdings as soon as practicable and put the proceeds in some combination of CDs and/or bonds maturing within the next 15 years. With the residual 10% of your card holdings, do whatever makes you happy.

[Exhibitman]

High yield savings accounts are good right now too. The best ones are paying better than the current rate of inflation, at least until the next reset.

[oldjudge]

Hi Phil! I'm sorry to hear about your troubles. I think you have gotten some good advice so far. My only other suggestions would be to make sure you also discuss this with your family. Also, if you can set up at card shows I would think that you have mobility. Is there any type of part time work that you can do from home to supplement your cash flow? That might buy you more time for liquidating the cards in an orderly manner. Good luck!

[Kco]

Not knowing your financial needs on a month to month basis or your rough collection value, It's semi hard to answer the question of what you should do. Is your collection worth $1 million and you need $40k to live on? In that case, I'd sell a few pieces here and there to fund it. I do agree, the modern stuff would be the first stuff I'd sell off. Quality vintage has and should hold up over the medium and longer term. As for the STAR Rookie, they were hyped up and pumped up massively in 2022 artificially in my opinion. I'd take the money there.

[bcbgcbrcb]

As far as the disability situation, you guys are 100% correct. I realized the same early this year so hired a law firm down here in FL to represent me this fourth time around in applying. They advised me right away of the long-term process involved, likely around 3 years, so it will definitely be a long haul but I hope to get approved one day. At least that shortens my wait time to another 2-3 years to collect some kind of monthly income as opposed to 7 years with Social Secirity.

[timber63401]

Originally Posted by bcbgcbrcb

Thanks again for all of the input, guys. If I refrain from reinvesting any more money from sales back into cards, I need about $1,500/mth for basic living expenses (cost of living down here is much more reasonable than NJ, that’s why we came down here in 2015). So, if I sell about 5% of what I have each year for the next 7 years until SSI age, that gets me about the bare bones minimum to live on and still have around 65% of the collection to do as I wish with as I go along or hold long-term for the future. My plan would then be to hold on to the pre-war and 1950’s GOAT rookie cards to make up as much of that 65% as possible. Seems like this would be a much better direction to go.

As far as the disability situation, you guys are 100% correct. I realized the same early this year so hired a law firm down here in FL to represent me this fourth time around in applying. They advised me right away of the long-term process involved, likely around 3 years, so it will definitely be a long haul but I hope to get approved one day. At least that shortens my wait time to another 2-3 years to collect some kind of monthly income as opposed to 7 years with Social Secirity.

Id sell $2000 worth a month if you need $1500 bare minimum. Stuff comes up. Good luck on whatever you decide. Its a tough decision no matter how you look at it.

[Peter_Spaeth]

Originally Posted by bcbgcbrcb

Thanks again for all of the input, guys. If I refrain from reinvesting any more money from sales back into cards, I need about $1,500/mth for basic living expenses (cost of living down here is much more reasonable than NJ, that’s why we came down here in 2015). So, if I sell about 5% of what I have each year for the next 7 years until SSI age, that gets me about the bare bones minimum to live on and still have around 65% of the collection to do as I wish with as I go along or hold long-term for the future. My plan would then be to hold on to the pre-war and 1950’s GOAT rookie cards to make up as much of that 65% as possible. Seems like this would be a much better direction to go.

As far as the disability situation, you guys are 100% correct. I realized the same early this year so hired a law firm down here in FL to represent me this fourth time around in applying. They advised me right away of the long-term process involved, likely around 3 years, so it will definitely be a long haul but I hope to get approved one day. At least that shortens my wait time to another 2-3 years to collect some kind of monthly income as opposed to 7 years with Social Secirity.

By only selling 5 percent of your collection a year, you are assuming the ones you don't sell retain their value (or go up). This is where you got burned before. If as you have suggested the cards are your only or principal asset that will provide needed future income for a number of years, IMO it's much better to put them into a better investment vehicle that will provide a more reliable return. Nobody rational would have an investment portfolio consisting of only or mainly cards. PS just my personal opinion.

[raulus]

Originally Posted by Peter_Spaeth

Nobody rational would have an investment portfolio consisting of only or mainly cards.

100% agree with this statement. Although based on responses to other threads, plenty of our fellow collectors might pursue this asset allocation strategy.

Confession: having ~25% of my own personal assets in cardboard scares me a bit sometimes, although most of that concentration is due to the recent runup in prices over the last few years. Otherwise I would be closer to a much more reasonable 5-10%. Add to it the fact that the cardboard collection is fun money and not "gotta have it to survive", and it feels a little less dire.

At the same time, if what I understand is correct about the OP, then the horse is already out of the barn in terms of holding most or all of his personal assets in the form of cardboard. Now we're just talking about what to do about it given the current lay of the land, and over what time to get it done, particularly given a general plan to divest of the cardboard in the coming weeks/months/years. Bottom line is we're really just rearranging the deck chairs a little by trying to evaluate ordering of sales and whether to sell tomorrow or spread it out a little.

If I were in your shoes, particularly given your relatively short horizon, I wouldn't try to move too quickly to shift everything over. Certainly if you get nice prices that work for you on your stuff, then by all means, sell baby sell. But I wouldn't feel huge pressure to SELL NOW just for the sake of selling so that I can diversify my investments for the next X years.

As others have noted, I would also consider the tax implications. If selling everything tomorrow means you get to pay a fat tax bill, and selling over time means you get to avoid most of that tax by keeping your income in a lower tax bracket and avoiding all those sweet tax enhancers (including at the state and local level for those of us lucky enough to live in high tax jurisdictions), then I would give some serious consideration to minimizing my tax bill, at least within reason, and within the contours of your financial needs and situation. But maybe I'm just projecting because if I were to sell today, then about 40% of my proceeds would go to taxes, which would put a serious dent in any budget.

[notfast]

Originally Posted by bcbgcbrcb

Thanks again for all of the input, guys. If I refrain from reinvesting any more money from sales back into cards, I need about $1,500/mth for basic living expenses (cost of living down here is much more reasonable than NJ, that’s why we came down here in 2015). So, if I sell about 5% of what I have each year for the next 7 years until SSI age, that gets me about the bare bones minimum to live on and still have around 65% of the collection to do as I wish with as I go along or hold long-term for the future. My plan would then be to hold on to the pre-war and 1950’s GOAT rookie cards to make up as much of that 65% as possible. Seems like this would be a much better direction to go.

As far as the disability situation, you guys are 100% correct. I realized the same early this year so hired a law firm down here in FL to represent me this fourth time around in applying. They advised me right away of the long-term process involved, likely around 3 years, so it will definitely be a long haul but I hope to get approved one day. At least that shortens my wait time to another 2-3 years to collect some kind of monthly income as opposed to 7 years with Social Secirity.

I’m going to come off as a huge dick but that’s OK.

Seems like you have roughly $400,000ish in cards based on the $1500/month 5% sell rate math.

If this is the case and you do not have any other way to survive financially for 7 years, you are not good managing your finances. Like at all.

Sell everything. Find a professional and get your future set up properly.

This is almost hard to believe because you’re saying you heavily invested in stuff that is now worth 25% of what you paid.

Either way, reinvesting in cards should not be an option.

[rhettyeakley]

Originally Posted by notfast

If this is the case and you do not have any other way to survive financially for 7 years, you are not good managing your finances. Like at all.

Not sure this type of response is necessary.

Phil came here for advice and has gotten some solid advice up to this point, not sure why you feel the need to mean about it. You knew you going to come off as a dick but went there anyways!?! Weird.

[Kco]

I see a lot of people on here saying cards/memorabilia are not an asset class/good asset class to have a chunky amount of assets invested in. I'd agree and disagree. High quality, High desirability items will whether downturns FAR better than run of the mill low grade items.

I have a portion of my collection I'd classify as "purely enjoyment" (think 10-15%). Thats where i collect players or teams I love and don't care all that much about the value change.

The other 85-90% is in high grade premium Vintage autographs/Memorabilia. It so happens that I also enjoy collecting those items, but I make no mistake that those are also investment vehicles. The good news there is most of those items are at or above value wise what I paid over the years, some substantially so. Think High Grade autos on Ruth, Mantle, Jackie Robinson, Clemente etc etc.

There are certainly blue chip areas of collecting to hold investments in, looking back at the last few financial downturns (including 2022), those items have remained very resilient, where as things like stocks, index funds, bitcoin etc have actually gone down further percentage wise and are still lower value today than anything memorabilia I bought and held in the same window.

[the-illini]

Originally Posted by notfast

I’m going to come off as a huge dick but that’s OK.

No, it’s really not ok.

[Peter_Spaeth]

Phil's situation as he describes it is one in which he cannot take risks. That changes the analysis completely in my view. If you can afford the downside risk, sure there are collectibles that are potentially great investments. And they are fine to own in a diverse portfolio. I hope I own some myself. But someone with no reserves on which to live should not be in collectibles exclusively or even to any significant extent and maybe not at all. The name of the game for Phil should be safety.

[Yoda]

Phil, so sorry to hear about your situation. If I was you I would sell off all your 50's RC and amass some capital that would produce income in a safe investment, money market, CDs etc. Your other cards you could sell at your leisure when the opportunity strikes. Good luck.

[Mark17]

Originally Posted by Peter_Spaeth

Phil's situation as he describes it is one in which he cannot take risks. That changes the analysis completely in my view. If you can afford the downside risk, sure there are collectibles that are potentially great investments. And they are fine to own in a diverse portfolio. I hope I own some myself. But someone with no reserves on which to live should not be in collectibles exclusively or even to any significant extent and maybe not at all. The name of the game for Phil should be safety.

It seems one of the early sentences in the original post has been forgotten: "A little background, I sold off my Negro League baseball memorabilia collection along with a smaller comic book collection back in 2021 at the peak of the market, of course, realizing strong prices for most all of those items."

So, apparently the OP built a collection, sold it at or near the very top of the market, and now is looking at having to give back some of those profits. My point is, considering all, he's probably still in pretty decent shape overall. So that's a good thing.

If the OP did an analysis of how much money is needed over the next 7 or 10 year timeframe, factoring in some anticipated inflation, then looked at how much his current collection could realize if sold tomorrow (and put into T-bills or CDs,) it would seem that would be the sensible, and non-exciting, thing to do.

I've found building a 1962 Post Cereal baseball set has been a lot of fun, and it's very budget-friendly. Once in awhile I'll pick up a T-202 common. So the OP could still participate in the hobby as a collector, just not as a serious investor.