Taking money out of retirement funds to purchase cards

[HistoricNewspapers]

Originally Posted by G1911

This is a biased sampling predisposed to baseball cards, of course, and many have large investments into them that stand to gain from further growth that is promoted, but I’m a little surprised to see so many that think going all in on like this is a smart decision. It is going all in; if one is to the point that they are emptying 401K’s and IRA’s to pay for cards, they are not diversifying their portfolio. That’s an extreme step.

High end cards have skyrocketed since the opening of 2020. It’s fallen from the peak, but prices remain very high. Gambling your retirement that it will continue inexorably forward and continue to make huge percentage leaps is a very risky gamble. Retirement accounts are set up for very favorable taxation and stability, losing those tax benefits and taking the early withdrawal fees to invest in mass produced collectibles that are not set up for favorable taxation (if I sold a Mantle I’d owe close to 50% of my profit in taxes alone) is a titanic gamble. You don’t have to have your cards perform better than the stock market to profit from this, you have to beat it by a LOT.

One can gain a lot from large risk. Draining your retirement accounts to participate in the current collectibles fad is a large one. Whether it’s cards, crypto, beanie babies or GME, it can pay off big time. If I had bought into 52 Mantles and sold them now, or had bought more crypto in 2009, or drained my 401K to join the apes on WallStreetBets when they started the train on GME, I’d have made more than my index invested retirement accounts. There are also many such events where I would have gone broke if I followed the hype. Stocks may go up or down, but the market grows over time. If the market doesn’t grow over time, the US dollar collapses and your collectibles collapse too. Retirement accounts are set up favorably to enable responsibility and security for old age. I have a hard time seeing that risking a secure retirement in favor of going all the way in on baseball cards after a huge rush and pump is intelligent financial advice. Again, emptying retirement accounts to do it is very different from diversifying or putting some of one’s cash or income into it as a supplemental investment.

Good points.

If we took every baseball card and its prices in 1991 and tracked their value compared to now there may be just as many losers as winners.

Then you have to look at condition. People were buying vintage cards at NM to Mint prices back then when in reality 90% of those cards would be graded at 4-7.

For example, in the early 1990's, Eddie Murray RC's were going for $40-$50 and 90% of those were most likely in the 4-7 grade range.

So it really isn't fair to say that a PSA 10 Eddie Murray goes for 15K now and look how much money you would have made.

How many $40 Eddie Murray rookies were bought in 1991 that would now be $15 cards in their raw state, or $35 in PSA 5 condition(then when you minus grading fees, still $15-$20)? I would say the vast majority.

So in totality, the Murray RC, if viewed as a stock by looking at EVERY card, even if you include the handful of $15,000 PSA 10's that sold, that Eddie Murray RC stock may very well still be even or have gone down since then. $40 in 1991....and still a $40 stock in 2022 with no dividends ever paid.

That isn't even counting all the sets like 1990 Leaf that were $150-$300 sets in 1991-ish and are worth about $50 now.

Then you have the trash from the junk wax era that ALL lost big value.

Pre-war has done very well though compared to 1991. I would say it is up across the board in that segment.