A 4-wheeled investment vehicle

By SmartMoney

Dick Messer's passion for automobiles was often misunderstood, especially at home.

When, back in 1978, he bought a Siata 208S Spider for $15,000, for example, his father didn't talk to him for five years.

"At dinner, he would literally turn to my sister and say, 'Tell Richard to pass me the salt,'" Messer says. "You can't believe the friction I got from my family for spending so much on a car."

Today, that car is worth $700,000. Together with the 20 or so other cars in Messer's garage, which he estimates have cost him roughly $100,000 to purchase over the years, his collection is worth around $2 million.

"My sister is jealous now," he says. "She's looking at my car collection and saying, 'There's your retirement -- you've got nothing to worry about.'"

The collection isn't for sale, but Messer's expertise -- he is now the director of the Petersen Automotive Museum in Los Angeles -- is sought by car enthusiasts and investors alike. "I get a lot of calls from wealth managers who've started to add collector vehicles to the portfolios of their wealthy clients," Messer says.

That's not a surprise, given the jump in value collectible cars have seen over the past few years. Muscle cars -- high-performance American cars from the late 1960s and early 1970s -- for example, have surged in popularity thanks to the growing number of baby boomers who have always dreamed of driving the cars once owned by their fathers and now have the money to buy them.

"Just a couple of years ago, you could buy a 1969 Z-28 Camaro in really nice condition for $40,000; now that same car is probably $60,000," says John DiPietro, the road-test editor for auto Web site Edmunds.com.

At this year's Pebble Beach Concours d'Elegance car show, held annually on the Monterey Peninsula of California, some rare collectibles were auctioned off at nearly double the prices they fetched just several years ago. Auction house Christie's sold a 1936 Auburn Speedster for $423,500, which two years ago had been sold for $250,000.

"That's a big jump," says Rupert Banner, the head of the international car department for the Christie's. "The market today is certainly seeing some spectacular growth."

Earlier this year, auction house RM Auctions sold a 1962 Ferrari Testa Rossa raced by Phil Hill at Le Mans that year for $9.3 million. The seller had purchased the car five years earlier for $6.5 million.

To be sure, car collecting can be a fun hobby if you have a passion for vintage wheels, but you shouldn't by any means consider it part of your retirement-saving strategy or even bank on making a profit. That said, assembling the right car portfolio -- collectible cars made at least 25 years ago in limited production and good condition -- could add to your enjoyment and maybe even your net worth. Here's what you need to know.

Market research

As with investing, make sure you know what you're buying. Start your research with a local car club, then attend a car show or auction and talk to the owners and industry insiders.

"Attending an auction is like going to school," says Terry Lobzun, a spokesman for RM Auctions. Learn as much about the car you're interested in, and don't forget to ask about maintenance and insurance.

But if you're there to invest and have little passion for cars, be careful: Car buffs aren't particularly enamored with speculators. "There's the impression that it'll drive up the prices of the vehicles for those who truly love them," says Jack Nerad, a market analyst with Kelley Blue Book. "It's a turnoff for those who are in the hobby for the right reasons."

Start with an entry-level car

The superrich spend millions on rare cars, but you can start a collection with as little as $25,000.

"A 1965 or 1966 Mustang is a great starter car," Lobzun says. You could get a good-quality car for $25,000 or $30,000, replacement parts are plentiful, maintenance is cheap, and you can find a Mustang club to join in pretty much every city.

Granted, these cars aren't really rare and won't make you a windfall. But if you maintain them well, they should retain their value or even increase somewhat, Lobzun says.

Add a blue chip

Some collectible cars have become household names that, like blue-chip stocks, are more likely to retain value when the market softens. And with the recent run-up in prices, a correction is likely, Messer says.

"Everything cycles," he notes. "The market now is bubbling on the upside, particularly in muscle cars and classic sports cars, and there's going to be a downside. It's economic truth."

Continued: You need a strategy

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