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With the Rocky Mountain Horse Expo coming to Denver March 11th-13th, this may be an appropriate time to discuss the pros and cons of purchasing a horse as an investment. Much like other investment opportunities, many experienced equestrians hope to earn a decent return on their investment after providing the equine acquisition with training and show experience. It’s the timeless concept of buy low, sell high.
However, the purchase price is just the beginning. You must also consider other costs such as boarding fees, lessons and training, showing, insurance, equipment, veterinary bills and transportation expenses. The average price for boarding a horse can be up to $1000 per month while traveling to shows may be up to $2,000 (for one horse) once you include lodging, food and gas. If you keep a horse on your own property, there are expenses related to that as well such as the barn, its maintenance and insurance.
While there can be money made by selling the horse if it becomes a seasoned show winner, the high maintenance costs can quickly and easily negate any potential profit.
Yet despite the expense of maintenance and the potentially illiquid market, horses are big business in Colorado. According to the American Horse Council, Colorado’s horse industry produces goods and services valued at $956 million. There are roughly 256,000 horses in our state, over 70 percent of which are involved in showing and recreation. Approximately 102,400 Colorado residents are involved in the industry as horse owners, service providers, employees, and volunteers while another 21,300 are employed in the horse industry.
The national industry has a $1.6 billion impact on the Colorado economy when the multiplier effect of spending by industry suppliers and employees is taken into account. Accounting for off-site spending of spectators would result in an even higher figure.
A good friend of mine who also owns horses says if you focus on the journey rather than the destination, then you will be content with what could be at best a “break even” proposition. It’s also important to remember that the emotional ties owners may develop with their horse may complicate the idea of selling the horse when its value increases.
An investment in a passion or hobby may not yield financial returns but the emotional benefits can make it worthwhile. However – practically speaking – traditional investment avenues can help provide years of enjoyment for both rider and horse.
Shelley Ford is a Financial Advisor with the Global Wealth Management Division of Morgan Stanley in Denver. She can be reached at Shelley.Ford@morganstanley.com or 303-572-4839.
The information contained in this article is not a solicitation to purchase or sell investments. Any information presented is general in nature and not intended to provide individually tailored investment advice. The strategies and/or investments referenced may not be suitable for all investors as the appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. Morgan Stanley Wealth Management LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors do not provide tax or legal advice. Investors should consult their tax advisor for matters involving taxation and tax planning and their attorney for matters involving trust and estate planning and other legal matters. Investing involves risks and there is always the potential of losing money when you invest. The views expressed herein are those of the author and may not necessarily reflect the views of Morgan Stanley Wealth Management, or its affiliates.