Why Guns Are Not a Good Investment

by James & Miel on April 13, 2007 · 14 comments

As you probably know, Americans love guns. Since the dawn of our country firearms have played prominent roles in politics and society. Currently half of American households own a gun and many others advocate the rights of the individual to bear arms*. While firearms are a hugely controversial political and social issue, the focus of this posting is purely on the impact of firearms ownership for personal finance. From a strictly monetary standpoint, firearms are NOT a good pecuniary investment.

Guns are financial liabilities. By this, I mean two things. First, guns often depreciate in value after they are bought. Second, owning a gun often obligates one to purchase a number of other things as well. For example, if you own a firearm, you might need to pay for:

1) Higher insurance premiums
2) Costs for ammunition and accessories
3) Costs for security
4) Fees or expenditures for target shooting

Some of these expenditures can be quite hefty. For example, a large gun safe can cost several hundred dollars. The cost of even a modest amount of ammunition can run upwards of $50 or more.

Generally speaking, if you are interested in building wealth, you should be putting your money into investments that will improve your financial bottom line, NOT buying guns or other depreciating assets.

Best,

James

*Click here for more from wikipedia.



{ 14 comments… read them below or add one }

1 Craig May 16, 2010 at 7:55 pm

Dear James and Miel,
That was one of the weakest pieces of writing that I have ever experienced.
In your next attempt try some research, like checking some firearm prices from 10 years ago.
Mabey attending a gun show might help to educate you about gun values past and present.
Thanks; Craig

2 James May 17, 2010 at 12:29 am

Hi Craig,

This is James here. If you want to buy a gun, do it as a expression of freedom or for your own self defense. Don’t do it for investing purposes. In addition to the above there frankly isn’t enough data on the investment performance of firearms ownership relative to stocks, bonds, precious metals, real estate, etc etc to make a really informed decision.

Best,

James

3 Erik May 28, 2010 at 4:52 pm

LOL I just found this article from 2007. Hilarious comedy and proven as absolute fiction!!! Every theory the author claims has been resoundingly disproven by economics in just two years. If you track back 10 years, it gets even worse for the author’s ideas. Since 2007 stocks and real estate have taken a dive, yet ammunition and firearms are at an all time high. Bulk ammunition can also be a solid investment. The author does not mention this.

The author tries to cloud the investment potential by saying an owner must buy ammunition, range time, and targets. This is false. If the gun is being used for an investment, you do not have to shoot it. You can shoot it, but the ammunition spent was on recreation. The logic he stated is akin to buying gold, spending some on recreation, and then saying it is worth less money.

Deprecation on a new or unused gun is false. In fact, older collectable firearms NIB are worth many times their original price even accounting for inflation. Used guns can be just as solid of an investment. I am not sure which homeowner’s insurance company quoted the author, but insurance premiums are not necessarily affected by firearms.

A safe may cost hundreds of dollars if you choose to go that route, but so will an investment broker, stock trade fees, and the lower yields one will see compared with more traditional investments. No investment is free.

However just like any other investment field, firearms and ammunition will require the investor to learn enough about the market trends and values to make an informed decision. Some guns will just hold value. Some will appreciate. It is just like playing stocks, except they rarely if ever lose money.

If confuse personal politics and personal economics, this may not be a good investment for you. If you can use google and see the always consistently increasing prices of firearms, and you like making money doing nothing, this may be a solid edition to your portfolio.

Edit: The comment, ‘there isn’t enough data on the investment performance of firearms’ made me laugh too. 600 years or so of the rising value of firearms is not enough data? That is a remarkably conservative investment strategy.

No offence to the author, but write about what you know. This comedy made my weekend!

4 scott October 18, 2010 at 11:44 pm

No kidding, James. You sound like some of the if’s that write comments on gun blogs about guns they have never held, much less fired in a controlled situation. I have owned and have sold guns for a local gun retailer since the mid-sixties. A new Remington 700 BDL or Winchcester Model 70 with a Redfield, Weaver, or Leupold scope went for $139 and a box of ammo- REM or WW went for $2.29. The same today is TEN TIMES that amount. Try the math there, mr. financial wizard. Ball ammo was ONE PENNY a round then. Try fify cents or more now — in bulk.
You must be a tree hugging, weeping liberal, about to see what is going to happen to all the waaa-waaaa’s you meet at Starbucks for your $6 latte-mocha-JOKA every morning to discuss how the educated elite have been so terribly abused and mistreated by all the hardworking conservatives in the country. IT MUST BE BUSH’s FAULT.
BTW, all this is really just MHO!
Glad to help,
Yer Hick from the Sticks, Scott

5 David H Kuehn November 5, 2010 at 11:21 am

Do not agree. As a true investment you would not need to buy ammo and other stated Items.

Also taking just one brand; let’s say Smith&Wesson. Every one I have ever owned and resold always brought a higher value. With todays poor leadership of Pres. Bam Bam, the dollar is sliding fast. Firearms I believe would be wiser than stocks, certificates, and bonds. As far as security, hmmmm.

yancyd

6 jake November 29, 2010 at 10:14 pm

The truth is guns are an excellent investment. An ar-15 now costs you about 6-700 $ but as soon as they mention the word ban they jump up over $1000 ! I dislike anybody that comments on firearms and has no real knowledge of them , just fears them as everybody else does.

7 adam April 2, 2011 at 9:28 am

I love how this article starts with horrible grammer “As probably know, …”
You lost your credibility there buddy…lmao

8 Dinks April 2, 2011 at 11:38 am

Good catch. And it’s “grammar”, not “grammer” ;)

9 Samuele September 7, 2011 at 5:59 pm

Good evening gentlemen,
I’m writing You from Milan, Italy…
(Un)fortunately here in my beautiful and not-always-straight country firearms are much differently managed than in the U.S. but even here, if You dare to search and find any gun magazine You could read that firearms are a true investment nowadays.
Consider that if You want to buy a gun in an armory here You need a gun permit which (in the best case) can be delivered to You by the police in 6-8 months !!!
A policeman told me “Remember, the gun permit is a privilege, not a right !!!”

Please update me about the investment situation concerning firearms in the U.S., I think it is an interesting argument!

Samuele

10 Walker Smoot September 21, 2011 at 4:32 am

Firearms may not be a good investment. Firearms will, however, hold the value better than many durable good purchases. Take a look around your house right now. Look at your couch, television, refrigerator, computer, and the table that it’s sitting on,They all cost money.
In 10 years they will be almost valueless. You may get some chump change selling these items at a garage sale. Your car retains quite bit more value than the previously mentioned goods. Unless you collect classic cars, they also depreciate considerably. In 10 years, how much will your car be worth? (Especially if you purchased it for utilitarian reasons)
Let’s take a look at firearms. Let’s say you purchased a brand new Ruger in 1990, 21 years ago, for $300 bucks. That same Ruger more than likely may be selling brand new for around the same price you purchased it for 21 years ago or it may cost more. With a few exceptions, guns do not generally get CHEAPER over time. Of course you have to adjust for inflation, but the idea here is not about turning a profit, but the retention of value. Some gun brands retain value more than others. A cheap “Saturday night special ” will not retain the value of a brand like Glock, or HK over time, so brand and quality matters when purchasing guns, and keeping it in great condition.

you purchased it for 21 years ago.

11 Geezle October 8, 2011 at 8:04 pm

QUOTE: Good catch. And it’s “grammar”, not “grammer” ;) UNQUOTE

Moreover, the comma goes inside the quote mark: “grammar,” not “grammar”, ;)

12 Josh October 12, 2011 at 7:25 am

I got a nice chucke from this article. Talk about shooting from the hip! Hey Jim, do some research before writing something. That is writing basics. Writing based on opinion is one thing, but your comments don’t hold water. I;ll give you an example: I purchased a Henry .22 in 2004 from Wmart and paid 165.00. Now you will be lucky to pay 300.00 for the same rifle. Not only can I get my money back but make money on it. I don’t have alot of time here but have you ever heard of a term called “civil unrest”? If the SHTF and you have to protect your family, I have a safe full of guns and ammo. If you come to me to want to buy one I’ll name my price and you WILL pay it. Or, grab a big frying pan Jim.

13 Robert February 23, 2012 at 3:45 pm

This was very interesting. I did a search for “best investment guns” and the first sixty five articles were all about guns as good investments, and then I saw this one. I was interested to see what the negative(s) might be. I agree with others; common guns and amuunition have well outpaced inflation, rare guns have done very well. I wish I had bought $1,000,000 worth of AR 15′s 10 years ago !

14 James October 10, 2012 at 11:18 am

The author is a registered Republican and is military qualified on the M4 and M9.

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