Why a classic car my be a smart investment

The classic car market is booming and it's all thanks to the historically low interest rates we're currently experiencing. Investors are getting very poor returns on more traditional schemes and have been looking for more creative ways to increase their capital.

Classic car prices have been steadily creeping up and this is because they are a finite resource - they literally don't make them like that anymore. Once something finite is in demand, the price goes up.

Today's classic car prices are high and may put off first-time investors but if you are smart, there is still an opportunity to make a little money as well as get the chance to drive a great automobile.

If you know your cars, you might be able to spot a 'future classic' - perhaps a model that the car maker didn't produce that many of. The advantage of this long-term approach is you get to drive the car, while you wait for it to be deemed a classic by collectors.

Another feature of classic cars is the first appearance of new technology. If you can keep on top of the latest developments and buy accordingly, you could find yourself owning a highly desirable car in 20 years. Toyota Prius, anyone?

A harder-to-find option is to buy a car related in some way to a celebrity or a TV show. Rod Stewart's Lamborghini recently sold for over £900,000, in part due to his name being attached. As long as the documentation is there, you can have a relatively mundane car end up worth a small fortune.

Possibilities for future classics include hot hatches from the 1980s; these can be picked up from around £3,000. For the more flush investor, an Aston Martin DB7 for around £30,000 is potentially going to get you a nice return in the long-term.

Investing in classic cars is never an exact science, but even if you get it horribly wrong, you'll still have the pleasure of owning and driving a great car. Surely it has to be worth a shot?