What Are Trading Cards and Should You Invest in Them?

While many investors rush to buy stocks and real estate, alternative assets can provide compelling opportunities to diversify your portfolio. The popularity of trading card games and fan nostalgia has helped some trading cards reach mind-boggling valuations. Some people have realized the value of their collections and sold some of their cards for significant cash, while others are buying trading cards with the sole purpose of selling them at a higher price. Does the trading card market present an opportunity for investors? Here’s what you need to know. 

What Are Trading Cards?

Trading cards are the resources you use in a trading card game to outduel your opponent. Each player gets to have a certain number of cards in their deck. Some trading card games have printed thousands of unique cards, giving each player plenty of customization. Players collect cards for aesthetics or nostalgia or for trading on the competitive scene. Some players do a little bit of both.

While most players opened up a pack of cards and played with them as is, you will see more players put sleeves on their cards. Trading card sleeves protect cards from scratches, dents and other damage. Sleeves became more popular as people saw the rising value of older trading cards. Magic, Pokemon and Yu-Gi-Oh! all came out in the 1990s and captivated an entire generation. As people in that generation got older and had disposable income, some of that money went toward rare cards from back in the day. Seeing some trading cards sell for over $100,000 apiece helped speculators get in on the action.

While trading cards from the 1990s have attracted more interest in the industry, sports cards aren’t new. Those trading cards were popular before the 1990s, and rookie cards of Hall of Famers have always attracted many buyers. People who watched their favorite players and suddenly had the money to do it were not afraid to bid up the price of their favorite players’ trading cards. Trading cards enjoyed a rising popularity in the 1990s and early 2000s that was renewed and strengthened during the pandemic. 

Can Trading Cards Be a Good Investment?

A trading card can be a good investment, but it depends on the company and the cards you buy. Investors have to consider the rarity, edition and condition of the card. For instance, a mint first Edition Blue-Eyes White Dragon from the 2002 Legend of Blue Eyes White Dragon set can sell for over $1,000. However, a Blue-Eyes White Dragon printed this year will not command the same value. 

The game must also retain its popularity over several decades for the cards to maintain high valuations. As older cards in good condition become more difficult to find, the few remaining sellers can charge higher prices for these cards. Some investors buy rare cards and plan to hold onto them for several years before flipping them. Other investors anticipate which cards will become rare in the future. Some trading card investors buy rookie cards of athletes who they believe will make it into the Hall of Fame. Investing in these types of cards is akin to investing in the athlete’s future performance. A better sporting career should make the rookie card more valuable in the long run.

How to Invest in Trading Cards

Investors have several ways to buy trading cards. Here are some of the ways to get started.

Individual Purchases

Buying individual cards from reputable dealers can help you save money on opening packs. The issue with opening packs is that the odds are usually stacked against you, and it is usually cheaper to buy individual cards. You can buy packs to see if you get lucky and land a good card. Some people keep the packs sealed and hope the packs themselves will rise in value. If the pack obtains valuable cards, such as a rookie card of a future Hall of Famer, the pack can rise in value. Most investors lean toward buying individual cards instead of taking a gamble on a pack.

Trading Card Shows

Trading card shows give you the opportunity to meet many trading card sellers and potentially get event-exclusive cards. Since event-exclusive cards are limited and scarce by design, some of these cards can command high valuations right from the start. These events will also connect you with other trading card enthusiasts. You may find other investors at the event, but you are destined to get into many conversations about trading cards.

Investment Funds or Syndicates

Some investment funds and syndicates have taken notice of the rising value of trading cards. These funds pool investors’ money to buy valuable trading cards and create diversified portfolios. These funds and syndicates allow you to receive a return on trading cards without knowing the market, researching opportunities or doing any work. Some trading cards are expensive enough to pay for entire mortgages, so it makes sense that investment funds and syndicates are involved.

Auction Houses

Auction houses sell several collectibles, including trading cards. Depending on the auction house, you can find rare cards and get them at lower prices.

Online Marketplaces

Some online marketplaces specialize in trading cards. These marketplaces give customers an idea of how individual cards have historically performed. You can analyze previous sales on sites like eBay to see what the market believes the card is worth.

Fractional Ownership Platforms

Some fractional ownership platforms give you partial ownership over a trading card. While this may not sound like the best approach for a $5 trading card, some trading cards cost thousands of dollars. Getting fractional ownership for those types of cards lets you receive a return on your investment without putting thousands of dollars into one asset. This approach makes it easier to diversify your investments.

Types of Trading Cards to Invest In

Trading card enthusiasts can choose from several types of cards. Here are some of the trading cards to consider.

1. Sports Trading Cards

Sports trading cards of popular athletes can command high prices, especially if the athlete builds an excellent career. Sports cards from major sports leagues like the MLB, NBA, NFL and MLS can maintain high valuations because of the large fandoms around those sports. Getting the cards signed and seeking cards from limited-edition sets can increase your returns.

1. Pokémon Cards

Pokémon has a large fanbase, and millions of people line up to buy each new game. The card game has always been popular but experienced booming demand during the pandemic. First editions and high-rarity cards can command higher prices. Cards featuring fan-favorite characters and Pokémon can also gain value in the future.

1. Magic: The Gathering Cards

Magic: The Gathering is one of the earlier trading card games that emerged from the 1990s boom. The card has millions of fans who seek rare cards. The game’s earlier cards that had limited print runs can appreciate over time. Investors should monitor trends and keep an eye out for highly sought-after cards. Some cards derive their value from being collectible, while others are valuable based on their impact on the meta.

1. Yu-Gi-Oh! Cards

The fast-paced Yu-Gi-Oh! trading card game got its start in the late 1990s and has maintained a strong following ever since. Investors look at each card’s rarity, condition, edition, rarity and booster pack appearance to assess value. Some cards are popular because of the shows, while other cards have high prices because of their competitive impact. While competitive cards can command high prices, those cards can lose value if Konami decides to run reprints. Reprints of competitive cards make older copies less valuable, especially if those reprints become more frequent. However, iconic cards from its debut packs tend to hold onto their value.

1. Comic Book Trading Cards

Marvel and DC are some of the iconic franchises that have gotten into the trading card industry.  Buying comic book trading cards can yield high returns. While rarity, card condition and limited edition sets still play a role, investors should also look for cards that capture key scenes and moments from important comic books.

Things to Keep in Mind for Successful Trading Card Investing

If you invest in trading cards, you have to keep up to date with the industry. Iconic cards can gain value over time, but some competitive cards lose value as reprints become more common. Investors also have to follow the fandom and see if new players are joining the game or if there is a drop in overall interest. The performance of mobile games, trading card sales and other segments related to the company can tip you off on the trading card game’s future.

Investors also have to monitor the condition of each trading card and know which types of cards are the most valuable. Pokémon has printed many Charizard cards over the years, but only a small number of those cards are valuable enough to buy a house.

Ready to Get into Trading Cards?

People have enjoyed trading card games for decades. Some people play the games actively, while others collect cards and hold onto them. Investors looking for another way to diversify their portfolios beyond stocks and real estate can get in on the action. Investors can choose from several types of trading cards and focus on the ones that appeal to their interests. You might end up enjoying the trading card game as well if you don’t already.

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