Other than protection, guns and ammo can provide investment diversification and capital gains for retirees. Here, we tell you more about how to invest in guns and ammo, whether in physical assets or stocks.
In this article:
- Disclaimer About Guns and Ammo Stocks
- Understanding the Gun and Ammunition Market
- Benefits of Investing in Guns and Ammo
- Considerations for Investing in Weapons
- Downsides and Issues Related to Having Guns, Ammo, and Weapons as Investments
- Gun Stocks You Can Consider Investing In
- Tips When Investing in Guns and Ammo
Guns and Ammo Stocks: Options for Investors Hunting for Weapon Assets and Stocks
Disclaimer About Guns and Ammo Stocks
The discussion here is in no way, shape, or form a stock or asset recommendation, but instead functions as a discussion on possible information you may not have thought about when you planned your retirement strategy.
Preparing for retirement should follow a certain order, with proper planning as the first step. By researching and knowing as much information as possible, you can shoot for the stars while setting your sights on realistic investment goals.
Investors should talk to a retirement or investment adviser if they want a personalized answer. No two investors have the same retirement goal, risk profile, and retirement strategy.
Understanding the Gun and Ammunition Market
Anyone interested in investing in guns and ammo stocks for retirement benefits from learning more about how the market works. What causes the demand for these products to spike and become viable investments?
People buy guns for a variety of reasons, such as personal defense, hunting, shooting, or collecting. If you’re looking to purchase physical assets or invest in gun and ammo stocks, these are some of the areas you can look into.
Guns, especially collectible ones, can provide a relatively liquid asset in case you need fast cash. A gun can even be sold for more than twice its worth, especially if it has a history or was previously owned by someone interesting.
Aside from guns, other assets you can look into investing in include gun accessories, like magazines and ammo.
These investment options can make retirement planning a bit more convenient, providing a physical asset that retirees can convert to cash in case their retirement funds may not last.
In 2017, the gun market made great rounds by generating $1.91 billion that year alone.
Culturally speaking, guns have a big impact on us as a society, and our constitution has protected the right to bear arms. That puts investors in a vast market, no matter the age, income bracket, political leanings, gender, and other factors.
That wide market reach can mean not just diversification but also liquidity.
Benefits of Investing in Guns and Ammo
1. Good Store of Value
Like most collectibles, guns, ammo, and other weapons serve as a good store of value. Some weapons may conceal a secret, which can jack up the prices in multiples.
One example is the sawed-off shotgun of the infamous bank-robbing couple Bonnie Parker and Clyde Barrow. The Western Field Browning Model 30 shotgun was expected to be auctioned off for more than $75,000.
This isn’t the first big-ticket item from the pair. In 2012, Parker’s .38-caliber Detective Special and Barrow’s 1911 Colt .45-caliber automatic sold for a combined total of $504,000.
Normally, any kind of shooting weapon, especially firearms and shooting sports items, can see a gain of 3% to 5% every year. This growth is a product of both functionality, base materials, and market perception.
2. Offers Diversified Investments
Other than being an asset with a similar or even slightly higher yield from a savings account, investing in guns offers a variety of other asset options, including:
- Any magazine publications dedicated to guns, especially old ones that are no longer in circulation
- Parts, like a trigger or a barrel, that can be added as a modification to any existing guns
- Ammunitions, such as those used by law enforcement and also for hunting and shooting sports
3. Growing Demand
Prices of guns and ammo stocks have risen due to the growing demand for weapons. Investors are also beginning to consider guns and ammo as good investments due to how well their value holds up.
Considerations for Investing in Weapons
Before you start buying weapons, it’s essential to research ahead of time to avoid costly mistakes. Some basic things to follow when buying guns include:
- Prioritizing older guns that are still in mint condition
- Checking if the gun is still in its original packaging
- Ensuring it’s made by well-known manufacturers
- Having documents like affidavits or records showing historical significance or even a history of ownership
Do note that while the growth in value for these items can go up to 5% a year, it takes more than a few months or even years before you see a significant increase. This is why having an older gun may be a good start, as its value has already increased.
Downsides and Issues Related to Having Guns, Ammo, and Weapons as Investments
1. External Factors, Like Government Policies and Public Sentiment, Impact the Industry
Legal issues and public sentiment have great sway over the industry, both for physical goods as well as investment vehicles like stocks.
We’re not just talking about a federal constitutional amendment, but also state regulations like stricter gun control laws.
Interestingly, stricter gun control may lead to higher demand and an artificial lower supply, which can be a good situation for investors who already have some guns and ammunitions stockpiled.
The public outcry also affects both the stock market as well as the direct gun market. Again, this short-term loss can lead to a buying opportunity where guns and gun stocks are priced lower but, as always, do your research before pulling the trigger on buying.
2. Investment Optimization
Another thing to look at is retirement investment optimization, which means how efficient your investment is compared to other investment vehicles.
For example, your Traditional IRA can’t “receive” or allow guns and ammunition.
However, if you have a Self-Directed IRA (SDIRA), you can receive tax benefits, like having your historically valuable pistol receive tax breaks. This is because an SDIRA allows the investing of a collectible.
3. Asset Degradation
Lastly, a typical problem of those who invest in physical goods face is degradation. Any fire, theft, flooding, or improper storing can cause you to lose thousands of dollars.
On the other hand, the industry also offers paper investments for these assets. Specifically, these are stocks, bonds, mutual funds, and other investment vehicles.
These investments are held by a custodian who takes care of safeguarding the investments.
Gun Stocks You Can Consider Investing In
1. Sturm Ruger & Company Inc (RGR)
One of the most well-known guns and weapon manufacturers, Sturm Ruger & Company Inc. (RGR), can be relatively seen as a blue-chip stock in the industry. It offers a diversified product line of guns, knives, and other weapons paraphernalia.
2. Smith and Wesson / American Outdoors Brand Corp. (AOBC)
Another well-known company is Smith and Wesson, now under the company American Outdoors Brand Corp. (AOBC). Known for their firearms, ammunition, and restraints, Smith & Wesson focuses on guns, from the smaller pistols to the large firearms like shotguns and submachine guns.
3. Mutual Funds and ETFs That Invest in the Industry
For those who prefer a more diversified and hands-off approach, quite a lot of mutual funds and ETFs invest in the guns and ammo sector. Simply ask the fund manager, or usually just the investment agent, how much weight the gun stocks have in the portfolio.
4. Olin Corporation (OLN)
While Olin’s revenue isn’t entirely based on firearms, most of its revenue comes from guns and ammo from their Winchester rifles. Outside of firearms, they also manufacture chemicals like sodium hydroxide and chlorine.
Tips When Investing in Guns and Ammo
1. Insure Your Collection
Gun theft is real, and losses from them add up quickly. Get yourself gun theft insurance to give yourself peace of mind.
2. Connoisseurship Yields More
There are two kinds of gun investors out there:
- Connoisseurs tend to focus on a single category of guns. This can be a good way to build as high a value of a collection as possible.
- Treasure hunters scour through yard sales, gun shows, and other places to look for the best gems. While there’s a chance of scoring a valuable weapon for cheap, it’s still rare.
A cohesive collection is worth much more than having a bunch of different guns, and more so if you collected rare guns or those with significant historical value. If you want to get started on investing in guns and ammo, here are some gun types whose value holds as long as their preserved in good condition:
- Winchester rifles
- Colt pistols
- Parker shotguns
Meanwhile, stay away from modern rifles, like an AK-47. Since they can be found in many places, it’s not something you can consider a collectible.
3. Take Your Time
Patience saves you money and helps you properly assess if that rifle you’re eyeing is a good deal. Do your research and know what the market prices are so you don’t get ripped off.
When you do manage to get what looks to be a good deal, inspect the item carefully to make sure you buy what you want. In the realm of guns and ammo, the devil is in the details.
4. Buy from Reliable Sources
With the ban on firearms sale in many places like eBay, many private marketplaces have mushroomed in its place. Ensure that you’re buying from a legitimate seller and know exactly what you’re buying.
Another great way to pick up legal weapons is during gun shows and live auctions. You’ll have the time to know more about the guns before buying them for your collection.
5. Take Care of Your Weapons
How you take care of your guns depends on what kinds of guns you’re eyeing:
- Functional gun collectors can consider getting a gun safe or some other way to keep them away from unintended use.
- For antique guns, you may need the help of a specialist to restore them and learn the best way to store your collection.
- Make a record of the gun’s serial number, important information, and its price. This can help when you need to make an insurance claim for it.
- Regardless of what gun you have, be sure to give it a good clean. If you’re getting a used gun, disassemble it or take it to a gunsmith unloaded.
Guns and ammo can give you not just security and peace of mind but can also be an asset. Whether as an heirloom, tangible asset, or for personal use, guns and ammo are practical objects that make them viable investments.
Do you have investments in guns and ammo? If not, are you planning to invest in the sector? What are some issues you’ve experienced or are causing you to think twice about investing? Let us know in the comments section below!
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Editor’s Note: This post was originally published on September 30, 2019, and has been updated for quality and relevancy.