Last Updated: 31 Aug 2010


My partner is passionate about classic cars and no longer content just to read about them. He wants to spend up to £50,000 on one. I think it's madness, but he argues that the market is picking up again and he can make money buying old Ferraris at auction. What do you think?

The market in classic cars (models from the 1970s or earlier) is slowly recovering after a crash during the last recession. Their investment potential was so noisily revved up in the late '80s that even the most conservative businessman talked of how, if you bought one, you were bound to make a huge profit - even if you borrowed the funds to do so. Some people did, but quite a few punters lost money.

Alternative investments such as classic cars are for specialists or enthusiasts who can afford the pleasure (although not always profit) of ownership.

It can be an expensive hobby - more exotic models can each cost £2,000 or more a year to maintain and insure.

If your partner takes the time to study the market thoroughly and gets an independent valuation before he buys a classic car, he may make money out of his hobby. Profit from the sale of any car, whether classic or just an old heap, is free of capital gains tax. But remember he must make a profit to get a tax break, and if he makes a loss on the sale of a car, that is not tax deductible.

Your partner has correctly identified classic Ferraris as potential 'value' investments. Certain models are selling for just 35% of the peak prices reached in the late '80s. The 246 GTB Dino, which at its peak changed hands for £100,000, now trades for £30,000 to £35,000. Estimates are not always realised at auction, however. At one recent sale, a red 1973 Ferrari Dino 246GT Coupe, estimated at £30,000 to £35,000, found no buyer at all.


I have just remarried and my new wife dislikes my family furniture. I am selling some of it but want to store a dozen of the best pieces just in case we buy a place in the country. Furniture storage in London is ridiculously expensive. Can you suggest an alternative?

I suspect your wife may not want to live with memories of your previous marriage whether in town or in the country. But you could store it outside London. Yorkshire-based Bootham Removals comes to the capital twice a week to collect furniture from leading auctioneers for storage, for example.

Its weekly charge for each container is £9.10, inclusive of insurance and VAT. For storage of three months or longer, they charge £7.80. Transportation will cost about £250 for three containers, which seems reasonable given the savings that can be made on the storage.

Otherwise, lend your furniture to friends, particularly young people short of stuff who will enjoy using it until you want it back.


I am 60 this year and I have a personal pension. I can take £80,000 in a tax-free lump sum and the remaining £240,000 will buy an annuity of £10,800 a year - rather less than I expected and barely enough to maintain my present standard of living. Should I delay buying the annuity for a couple of years and go for income draw-down in the meantime? How would you invest the lump sum?

The amount of income you can draw is between 35% and 100% of a single person's pension. Annuity rates shadow the yield on gilts. If inflation and government borrowings remain low, gilt yields should not improve much, if at all. If you draw income from your pension fund, you may risk eroding the capital, leaving you less to spend when you buy an annuity than you would have now.

By switching your fund into growth shares and getting by on the income you draw over the next five to 10 years, you could grow a greater capital sum from which to buy your annuity. However, if you switch into equity funds, there is a higher risk of capital loss in the short term. If you can tolerate that risk, go for draw-down and invest the £80,000 lump sum in income securities and growth blue-chip shares. But for peace of mind, buy your annuity on retirement and invest the £80,000 in growth shares on a five to 10-year view.


As we are allowed to invest up to £1,500 a year tax-free in shares in the firm for which we work, and it can 'give' us a further £6,000 worth each year as a perk or performance payment, would you take up the full allocation or just stick to the company's money-purchase pension scheme?

Ask yourself if you want to increase your financial dependence on your employer by banking not only on continued employment and a better salary, but also on the prospect that the company's shares will go up. Take the risk only if you think the reward justifies it.

If your company is tomorrow's Microsoft, I should log on and buy shares - and invest in your pension. But if your employer's shares appeal more to dogs than they do to bulls, perhaps you are better off just investing in your pension.

Do not let 'freebies' or tax breaks drive your investment decisions.

Be objective about the prospects of the business. If you buy shares, you will not be liable to income or capital gains tax, provided you hold them for three years.

Opinions expressed are the personal views of Stella Shamoon. Neither she nor Management Today accept legal responsibility, nor will any correspondence be entered into. Address your problems to Management Today at 174 Hammersmith Road, London W67JP, or e-mail: Stella Shamoon writes on private investment for The Times.

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