Vintage Guitars as Investments

The Hollywood Vintage room, LA. Most of the guitars on this wall were priced in the range $8,000-$80,000 (Aug 2008)

The Hollywood Vintage room, LA. Most of the guitars on this wall were priced in the range $8,000-$80,000 (Aug 2008)

Why do people collect guitars? They are usually guitarists, of course, but not always. For some, the guitar is art: displayed on walls, or free-standing as scultpure. For others, it is an exercise in preservation, or museum curation. But increasingly, people are buying guitars primarily as a financial investments.

Vintage guitars made by the likes of Martin, Gibson and Fender, can make great investments, with the right guitars gaining in value more than many stocks and bonds. The guitar investment market is subject to very different forces than the stock market, and investment companies are reportedly turning to instruments as part of a balanced portfolio.

The most desired acoustic guitars are those produced before WWII, while electric guitars peaked in quality, collectability and value in the 1950s and 1960s. Owners of these instruments are often pleasantly surprised when they come to sell them.

When the electric guitar really caught on, in the 1960s and 1970s, manufacturers churned out masses of lower-end models, and some of these guitars are collectable in their own right. Their abundance means they will never command the prices of older, rarer guitars, but nonetheless they can make a great investment if picked up for the right price.

So it isn’t just the quality of the instrument that determines it’s future collectability; guitars that have been instrumental in defining popular culture go for the best money. Think of Jimi Hendrix, Eric Clapton or Buddy Holly: all famous for their Stratocasters. Or Jimmy Page, Peter Green and Slash: all famous for their Les Pauls. Guitars associated with a certain sound will always be desirable – as long as people know and love that sound. The skilled workmanship involved in making, say, a Gibson ES-175 Jazz guitar, was way above that of, a solid-body Fender Telecaster for example, but early sixties examples of each are in a similar price bracket.

Depending on the model and its condition, some guitars have appreciated 1000 percent. For example, only a few thousand Gibson Les Paul models were made in the 1950s, selling for several hundred dollars at the time. 1959 Les Paul standards in good condition have been known to fetch between $200,000 and $500,000.

Fender Stratocasters can also be great investments, if you know which particular years to look for. Fifties strats can go for tens or even hundreds of thousands of dollars. Guitars owned by celebrity musicians are worth even more; Eric Clapton’s favorite Stratocaster sold for about $1 million in 2004.

Of course we can’t all just go out and buy a fifties strat… in terms of making money, how do you know which instruments to invest in? Which one will be worth many times what it cost, in not too many years?

What guitars will bring the highest returns? Unusual and interesting models. Guitars with a reputation as great players. Guitars particularly associated with a highly inflential musician. Guitars with limited production runs. Guitars unlikely to be reissued. With the shortage of affordable 50s and 60s models, certain 70s and 80s guitars are gaining in price, with no sign of stopping DESPITE the current financial situation.

There is a lot of overpricing in the market, at the higher end. What they are offered at is not what they sell at. Auctions give a better indication of what something is worth. Fifties and early sixties Fenders and Gibsons are well worth investing in, if the price is right, although some models rise in value far more sharply than others. There is an investment guitar to suit almost any budget … something that you can enjoy playing and at least get your money back on, usually more.

Brand new guitars will typically take 25 years to even start increasing in value beyond their sale price, and as such are not really worth purchasing for investment purposes.

Make sure you know what you are buying. The guitar world is awash with fakes, some badly done, some done so well even an expert would struggle to tell the difference. Luckily this is most prevalent in really expensive guitars; a typical $1000 instrument probably won’t be worth faking. When a truly special instrument comes up, it is best to check it’s provenance: is there any documentation from the time it was bought? Has the (trusted) owner had it for years, with photographs documenting it’s playing history. And so on. If in doubt, only buy these special instruments from a reputable dealer.

One problem that occurs in cheaper instruments is to simply rebadge something. Since the 1950s, manufacturers have been copying each others designs, and just about every quality guitar ever made has been copied somewhere along the line. And people regularly take some identifying feature – usually a decal, from the original article, and apply it to the copy. Know what you are buying!

Another thing to look out for, and something vintage dealers have been accused of, is the reprehensible practise of replacing hardware for non-original equivalents. With a really expensive guitar, you should research what you are buying and request detailed images of pickups and associated electronics, before any decision is made. Luckily there are very many great books, websites and discussion forums, that deal specifically with such questions. Or you can get the images check by a vintage guitar appraiser.

Don’t overpay. As an investor, you are ultimately attempting to make a profit. Be patient. Get a ballpark figure from a book of vintage guitar values. Don’t rush out and buy the first example of a guitar you see. Watch for similar models in guitar stores and on ebay. Search the various forums. Don’t just see what they are listed at, watch what they actually sell for. Get to know what an example of that guitar is worth in various conditions. Many of the overpriced guitars in vintage guitar stores and on ebay are there at those prices because occasionally one will sell. But never to an informed buyer.

Protect your asset. The great thing about a guitar over a share certificate is it’s tactile nature. You can touch it, use it as an ornament, or best of all play it. But don’t drop it! Vintage instruments are often fragile, keep it in a secure place without strong sunlight (this can fade the finish). And don’t play it wearing a belt. Metal buckles and buttons tend to scratch and dent the backs of guitars (known collectively as buckle rash).

Don’t undersell. Eventually, to realize your investment, you will need to sell an investment guitar. There are several places to sell, each with problems, and advantages. Classified advertisements are often free, and website adverts can also include images. Have a look at Vintage Guitar Classifieds. Auction sites, such as ebay, are an excellent way to sell, especially if you want a quick sale, and don’t mind paying for the privilege. Ebay has a feedback system and some levels of cover, in the event of things going wrong. Be sure to set a reserve if you start bidding much lower than your expected sale price. the last place to sell is through a vintage guitar store. They may offer to buy directly from you (always at below the market value) or offer to sell the item for you, on consignment. They will take their percentage, but if selling a really valuable guitar, this may be the only way to find the right buyer. As always, only deal with reputable stores.

Remember ALL markets go up as well as down. People that paid a premium for the most expensive guitars in the mid to late 2000s will not make a profit on those investments for some time (and maybe not at all in some cases). As with ALL investments, never invest what you can not afford to lose.

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7 thoughts on “Vintage Guitars as Investments

  1. Can less-expensive guitars ever serve as investment instruments? Or is investing in guitars limited to ’58 Les Paul Standards and the like?

  2. Absolutely they can. The very high end vintage guitars can fetch good money, but they are very difficult to sell for those prices. Prices are dropping on these now in many cases. It would be hard to make any real money on buying and selling ’58 Les Pauls. Too many great guitars are out of reach for the vast majority now. But there are a lot of guitars in the $500- $1500 price range that are only now getting the attention they deserve – and prices are rising as people snap them up whilst they still can.

  3. Corruption- like the journalists that hype shares only to raise the value by selling their own. Or Or countless other examples – the vintage guitar market is BENT. Values are inflated by individuals who publish books, and the crazy guitar dealers who got their fingers burnt overpaying on all those 50s strats. And then all the fools who pay the prices justify their scam. It’s a lump of wood for christs sake. Once it becomes too valuable to ever take out and play you know you’ve lost the point. And now Gibson only seem to make guitars for people to collect. How many limited editions do we need? Seriously guys. Play the damn things.

  4. I am coming at this from a guitar dealer and investors point of view. Fuknut (great name dude 🙁 ) is right in a way, but not completely. Yes, once a guitar is no longer a player because it is worth too much, it is probably past the time to buy. It might nominally go up in value, but if there is nobody to buy it…. All those investors who bought 58 Les Pauls in the last 10 years will struggle to get their money back for quite a while to come. but people who bought them 20 years ago will be laughing.

    SERIOUS Investing is LONG TERM – that is if you want to make a stack

    Whatever you buy you need to keep for the long term. Some of the guitars we begrudge paying $1000 for now will be worth $10000 in 20 years, and some will still be worth $1000. I would suggest any investor has a balanced portfolio – and if it is to include guitars, they too would perhaps be safer buying 10 $1000 guitars of different types rather than one $10000 guitar. They will be easier to sell, more fun to play, and cover more bases should certain guitars rise in value more than others. And i’d certainly avoid the current day limited editions by the likes of Gibson. I’d suggest they sell more limited editions than regular guitars!

    But then there is INVESTING LITE as I call it – semi-serious investing – aim to buy, have a great player and sell on for a small profit in anything from 0-5 years time. This is VERY easy to do. You won’t get to leave work, but you’ll have some very nice gear, that’s easyish to sell. The key thing here is to buy cheap.

    There are some terrific vintage guitar deals to be had, and looking through the vintage guitar prices online and in books there are plenty of bargains still out there.

  5. I’d like to know how much some of those guitars in the Hollywood vintage wall actually sell for today (if they do). They were always expensive, but with the state of the vintage guitar market just now, have they been forced to drop prices, maybe just a little?

  6. Great article. I agree there are a lot of dealers that really over-hype guitar values, but there are some better dealers too. Best to avoid shops in areas with very high rents (Sunset Boulevarde, LA, Denmark St UK) and stick to stores in smaller towns with great reputations.

  7. Vintage guitar collecting is a big joke. Many who bought into the hype are now desperately trying to keep the myth alive that these instruments should be worth astronomical numbers.

    The reality is that the top tier “investments” are probably fake. Unless you bought it firsthand from original source I very much doubt the authenticity. I worked for a vintage memorabilia shop and I can assure you that a great many of the items in the marketplace are fake.

    The reality is that the market completely collapsed. My local vintage guitar show was canceled because no one is buying. With the time the market will right itself. Once people are ready to accept they overpaid and accept a loss the market will remain stagnant.

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