Nice work if you can get it

Received wisdom is that the best way to make a small fortune is to start with a large one.  Although usually cited as an example of people frittering away their wealth but it also conceals the truth that it takes money to make money.

Consider the cars people buy; ten years ago a ford Focus ST or Mondeo Turbodiesel for about £19,000.  Prices for the Focus today are in the region of £4-5,000, the Mondeo could be had for £1,000 or less.  That, as you’ve probably worked out, is £14-18,000 lost in depreciation if you bought new and kept the car all that time.  Although depreciation is non-linear it works out as costing at least £1,400 on top of the other running costs.

Contrast that with the 2005 Ferrari 575 Superamerica that sold at auction last week for $517,000, which works out at about £345,000.  The list price for the same car when it was new was £191,000 (or £198,800 with the F1 gearbox).  Rather than losing money that is an increase of £14,700 a year on average.  It might not be a large fortune but it is better than nothing.

Of course, to make that money you need to be in the position to buy the Ferrari in the first place.  You also need to choose your car wisely, if you’d gone for an ordinary Ferrari 575 you’d have saved about £40,000 initially but that car would only be worth £90,000 today (only!).  It also makes me wonder if anyone leased a 575 Superamerica and what the monthly payments are like on a car that is going up in value.

Why don’t I get gifts like that?

On 12th February Sandown Park racecourse will host an auction of classic cars. The auction is being run by Barons, which is celebrating ten years of car auctions. This is the first auction of the year and a tempting selection of cars is going under the hammer. If you fancy a convertible you could have one of two Jaguar E-Types, a Jaguar XJS Cabriolet, Porsche 944S2 Cabriolet and a charming 1939 Rover P2 open tourer. One exceptionally rare convertible is the ex-factory, RHD 1981 V8 Triumph TR8, one of just 18 RHD models built in 1980/81. Very few genuine TR8s exist outside the USA, except for pre-production examples, and this particular car was originally supplied to the Quality Control and Reliability Department of British Leyland – there must be a cheap joke to be made at the expense of BL. The TR8 is estimated to fetch £10,000-£12,000. There are plenty of other interesting lots but particularly a highly original 1969 Cooper S, described - rather poignantly - by the vendor as “an unwanted gift” (estimate £6,000-£9,000).

For more details go to www.barons-auctions.com