Is Rally good for diversifing your portfolio?

• Rally offers investment in collectibles such as cars, comic books, and sports memorabilia.
• Shares in collectibles are tradable during scheduled trading windows after 90 days.
• Low-priced share issues allow for diversification into multiple collectible assets.

Are you looking to diversify your portfolio? Experts agree that every investor should have at least 5% of their assets tied up in collectibles. The savvy investor has options for parking their money into expensive wine collections and even classic baseball cards.

Rally offers you a platform where you can invest in collectibles without needing to be an expert in the collectible market. Instead, the company seeks out the best collectible deals, making them available to the average investor. This post unpacks everything you need to know about this unique investment platform.

What is Rally?

Rally is a firm dedicated to bringing investors the opportunity to park their capital in collectibles. They offer a unique model where they securitize each collectible, splitting it into “shares” which can be traded on the market.

Rally values each share based on the total number of shares in the float against the collectible market value. For example, Rally is currently offering an investment opportunity into a rare megalodon jaw. First, the firm values the jaw at a “market cap” of $600,000. Then, the company offers “shares” into the value of the jaw, with a limited number of shares available for each item.

Therefore, in our example, there would be a total float of 30,000 shares into the megalodon jaw, priced at $20 each. Rally states in its terms that the buyer must hold the shares for at least 3-months before they can sell them on the open market.

Who is it designed for?

Rally is a good fit for investors that want to diversify their stock or bond portfolios and reduce traditional stock market volatility. Collectibles offer investors stable growth that does not correlate with the stock market.

Collectible values generally always go up, provided the collectible itself is rare and unique enough to sustain demand in the market. By taking a long-term investment horizon with these assets, it’s possible to achieve significant returns on your initial capital.

For instance, Rally offers an investment opportunity into a signed Mickey Mantle jersey from 1960. The item currently has a value or “market cap” of $850,000. Can you imagine what it was selling for in the 80s or 90s compared with today? We bet it was significantly lower, and we also bet it will be considerably higher in 2050.

With investments into the right collectibles, you stand to make a solid return. Rally offers you the ability to find the right items and partially invest in them at a risk level you can afford. For example, shelling out $850k for the Mickey Mantle jersey is next to impossible for the average investor, but a $20 “share” of the investment gives you exposure to growth in the asset in the future.

Who would not be a good fit for Rally?

If you’re an investor that needs access to liquid capital in your portfolio, don’t choose Rally as a way to expand your portfolio.

While collectibles generally always increase in value, it takes a long time to achieve their real worth, sometimes decades. There’s also the issue of market liquidity, as demand can wane depending on economic conditions.

If you need an investment you can tap for immediate cash flow, collectibles probably aren’t the right choice for you. Instead, you should be concentrating on building a portfolio of income-producing assets in stocks, commodities, and other more liquid markets.

How does it work?

With Rally, you’re taking a share of the collectible, not the whole enchilada. As a result, the average investor can start adding to their stock portfolio, IRA investments, or pension plan immediately. In addition, Rally gives you a chance to diversify your investment strategy.

Investable assets

Rally has a range of investable assets in its portfolio. You can choose your risk level, starting with as little as a dollar. Broaden your investment portfolio by taking multiple positions in several assets to diversify your strategy.

Rally’s investing strategy

Rally makes it easy for the average investor to start with a small investment in collectibles. If you have a Robinhood or Acorns account with a couple of thousand dollars in it, you may be putting your entire portfolio at risk of a market shock. Taking 5% to 10% of that capital and investing it into collectibles offers you a hedge against a market crash.

The average investor with $10,000 in the market can’t afford to buy a Mickey Mantle jersey for $850K. However, you can afford to take a share of the jersey value at $20. Rally makes investing in high-yield collectibles accessible and affordable.

Performance

Rally has a team of professionals sourcing its investments. The team understands how to assess risk and performance in collectibles, and they always ensure they purchase top-quality assets for the platform’s users.

How much does it cost?

Rally makes investing in expensive collectibles affordable. New investors can take up as much risk as they like with the company's “share-based” investment system. A single share can vary from $5 to $20, depending on the market cap and demand for the item.

Investors can start with an investment as low as $1 into a 1957 Topps Mickey Mantle rookie card or an $11 share into a pair of signed 1988 Air Jordan sneakers. Whether you choose one share or ten, you get the choice to assume your level of risk and your asset.

How to sign up

Visit the official website and sign up to register your account. After verification, you can start investing in top-performing collectibles right away.

Pros and cons

Alternatives

Rally competes with other companies offering similar investor services in the collectible investments space, such as Otis and Collectable for sports collectibles.

Companies like Vinovest, specializing in fine wines and other crowdfunding sites offering investments into art and precious metals, are examples of firms competing for market share with Rally.

Verdict

Rally provides the average investor an opportunity to invest in the wide-ranging collectible market. The company buys collectibles from sports cards to cars to books and even historical artifacts and documents into a special vehicle for each item, which then issues equity shares.

Investment in collectibles can support portfolio diversification in uncorrelated assets. However, collectibles can be illiquid, with limited trading opportunities and low trading volumes. If you have an existing portfolio of stocks, bonds, and ETFs, Rally provides an opportunity to add alternative assets to your portfolio. Although Rally’s structured and organized trading process provides some level of liquidity, for those who rely on their investments for ongoing liquidity, Rally may not be the best option for your portfolio.