Advantages & Disadvantages of Investing in Video Games
Video games can be a great investment case in the long run.
However, they also greatly change in prices and investing in video games also has some additional downsides.
Hence, before investing in video games, make sure to have a look at the pros and cons of investing in video games in this article so you may be able to avoid the most common mistakes in this regard and may be better able to decide for yourself whether retro video games might be a good investment case for you or not.
Advantages of Investing in Video Games
- Experts can make significant amounts of money with video games
- The video game market is not perfect
- Some retro video games may make you a fortune in the long run
- Video games can diversify your investment portfolio
- Video games may be an underrated investment
- Video games can be an investment and a hobby at the same time
- Buying video games may help you become a real expert in this industry
- You can connect to other gamers
- Video game investing has become increasingly popular
- You can scale your video game portfolio rather quickly
- Numerous sources to buy affordable video games
- You can brag about your video games in front of your friends
Experts can make significant amounts of money with video games
One advantage of investing in video games is that in case you are willing to put in the time and become a real expert in your field, you will know much more than your competition and may be able to buy many video games at a fairly low price and sell them at much higher prices so you may be able to make a nice profit fairly quickly.
The video game market is not perfect
Compared to people investing in the stock market or buying gold, people investing in video games have the advantage that the market of video games does not work with perfect information, meaning buyers and sellers still have different opinions regarding what a video game may be worth.
Consequently, you may be able to make many great bargains and may be able to buy retro video game assets at rather low prices so you may be able to build your inventory fairly quickly without having to spend a fortune on your video game collection.
Some retro video games may make you a fortune in the long run
If you hold on to traditional video games and store them in a proper manner, you may also be able to make a real fortune from those kinds of investments since some classical video games may appreciate in value by a factor of 100 or even more if you are patient enough to hold on to them for many decades.
Video games can diversify your investment portfolio
Buying retro video games may also make sense to diversify your investment portfolio.
Instead of just holding classic assets, you may also want to invest in an asset class that may give you a certain kind of hedge during times other asset prices collapse.
Video games may be an underrated investment
Another upside to buying retro video games is that they are still a rather underrated asset class and this gives you the opportunity to operate in a market with rather low competition from which you may be able to benefit by buying video games at rather low prices.
Video games can be an investment and a hobby at the same time
While video games may be a solid investment, they may be much more than that.
In fact, you can collect and play with video games at the same time (at least if you do not buy sealed ones) and your video game collection can there also be quite a lot of fun for you.
Buying video games may help you become a real expert in this industry
Before investing in video games, you also need lots of knowledge if you want to succeed in the long run.
While this means putting in some work, you can still benefit from those experiences since you will become a real expert in this industry sooner or later and can use this knowledge to make profitable investment decisions and may also be able to consult third parties.
You can connect to other gamers
Since the video game industry is huge, you may also get to know many exciting people during your video game collection journey and may also be able to meet many like-minded people so you may be able to expand your circle of friends quite a lot.
Video game investing has become increasingly popular
While it is still a rather small nice, an increasing number of people consider investing in video games instead of buying classic cars or investing in comic books.
Hence, you no longer have to feel strange when investing your money in this kind of asset class and the video game investment market will likely also grow in the future.
You can scale your video game portfolio rather quickly
Another benefit of investing in retro video games is that you can scale your investment portfolio rather quickly.
In fact, there are countless opportunities when you can buy all sorts of video games online and there is almost no limit regarding how much money you can invest in those things.
Numerous sources to buy affordable video games
While you can just buy video games online, you can also get them on flea markets and from many other sources and this often allows you to buy those video games under market value and to make a really good deal on them in the long run.
You can brag about your video games in front of your friends
By buying video games, you may not only do good for your finances but may also be able to brag about them among your friends and may therefore be able to get a really high social standing among your peers.
Now that you know the reasons for investing in video games, we also have to talk about the drawbacks of video game investing so you get a more realistic picture of reality and can better decide for yourself whether you still want to invest your money in video games or rather prefer other asset classes.
Disadvantages of Investing in Video Games
- You have to store video games somewhere
- Your video games may get stolen
- Video games experience great swings in value
- You may just buy the wrong video games
- Only experts are able to make real money in the long run
- Video games may not be fully liquid assets
- Video games can break
- Your loved ones may not support your decision of investing in video games
- Most people out there may lose money in the long run
- Video games may greatly suffer during times of economic downturns
- Video games do not pay any dividends
- Video games are not a safe haven
You have to store video games somewhere
One downside to investing in video games is that they are physical products and while you just have your stocks in a digital account, you have to store video games somewhere and your video game collection may take away lots of space from you in the long run.
Moreover, in case your home burns down, you will lose your precious video games while your money in the bank will not be affected at all.
Your video games may get stolen
Also in case you are unlucky, your video games may just get stolen by burglars and you may lose a fortune overnight.
Video games experience great swings in value
You should also know that depending on the mood of people and how much disposable income they have at a given point in time, video games may greatly change in value and if you are unlucky, you may buy them at record highs and may have to sell them at much lower prices in the future.
You may just buy the wrong video games
Another problem with video game investing is that you may also just buy the wrong types of video games.
In fact, only very few video games will deliver really great yields while most of them will not be worth much in the long run and figuring out those treasures can be a real challenge.
Only experts are able to make real money in the long run
As with many other investments, you also have to invest lots of time to become a real expert in the video game industry if you want to invest your money wisely and you could do lots of good things with this time which may yield you more profit in the long run.
Video games may not be fully liquid assets
While you can sell stocks and bonds at any given time within seconds, this is often not true for video games since video games are just not fully liquid assets and it may take you weeks or even months to get a fair price for your video games and transaction costs may also be much higher compared to other asset classes.
Video games can break
If you are not careful and do not store your video games properly, they may just break sooner or later and in case this happens, the value of your video game will go to zero from one moment to the other.
Your loved ones may not support your decision of investing in video games
While video game investing becomes increasingly popular, it is still a niche and you should not expect your family and friends to be thrilled about your decision of investing in video games.
Instead, they will often rather worry about losing their money and you may have to justify quite a lot in the long run.
Most people out there may lose money in the long run
You should also know that while a small minority of people get lucky and rich with video game investing, most people just lose money in the long run and you should not expect to be an exception to this rule.
Video games may greatly suffer during times of economic downturns
Another disadvantage of investing in video games is that they also often lose lots of value during times of economic downturns when people often have to hold on to their money to pay for the most important stuff and may not want to invest in video games at all and in case you have to sell during those difficult times, you may just lose lots of money on your investment.
Video games do not pay any dividends
Since video games do not pay any dividends, you will also not have a solid cash flow compared to many other classic investments like real estate or stocks and may have a harder time building passive income.
Video games are not a safe haven
Due to large swings in value, you should also not consider video games a safe haven.
Instead, they are a rather speculative investment and you should think twice before investing too much money in this asset class.
Top 10 Investing In Video Games Pros & Cons – Summary List
|Investing in Video Games Pros||Investing in Video Games Cons|
|You can still make great bargains buying video games||Video games greatly change in value|
|The video game market is not perfect||Only real experts are able to beat the market in the long run|
|Experts may be able to make really good deals||Video game investing takes lots of time|
|Video games are tangible assets||Most people investing in video games lose money|
|Some video games may greatly appreciate in value||Video games can break|
|Video game investing may serve as an inflation hedge||You may lose a fortune in case your home burns down|
|Investing in video games can be fun||You have to store video games in a proper manner|
|You may be able to find great video game communities||Your loved ones may not understand your decision|
|Buying video games may help you diversify your portfolio||Video games may greatly lose value during downturns|
|Video game investing has become increasingly popular||Video game investing may be hyped right now|
Should You Invest In Video Games?
Even though investing small amounts of money in video games may make sense to diversify your investment portfolio, you should never invest a significant fraction of your wealth in this asset class since it would just be far too risky and you might lose a fortune in the long run.
In the end, it is on you to evaluate the advantages and disadvantages of investing in video games carefully and make your own judgement regarding whether this investment makes sense for you or not.
About the author
My name is Andreas and my mission is to educate people of all ages about our environmental problems and how everyone can make a contribution to mitigate these issues.
As I went to university and got my Master’s degree in Economics, I did plenty of research in the field of Development Economics.
After finishing university, I traveled around the world. From this time on, I wanted to make a contribution to ensure a livable future for the next generations in every part of our beautiful planet.
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