Is it a good idea in general to buy electric guitars as investments?
That’s the short answer, and generally speaking I think it’s a good idea to purchase guitars that you like and want to play. While it’s true that some brands of guitars — Fender, Gibson, Martin, Rickenbacker for example — will appreciate over time, quite often it’s a long time and of course not every model. Yes, people are now paying some silly prices for 70’s Fenders, which were not even very good guitars to begin with. And we’re also talking about waiting almost 40 years for the guitar to be worth something. Just the idea that something is old does not make it of increased value.
Even if you got a really cool guitar cheap, the rate of appreciation is generally very slow. Maybe you got a great R9 Les Paul in mint condition, but it’s not a house: You can’t sit on it for 3-4 years and flip it. While it’s certainly possible that it holds its value well, it does not mean it’s going to go up. If you want a guitar that really holds its value, buy a Rickenbacker. They have a great combination of quality, history and scarcity. Hardly the all-around rock guitar, but if you’re obsessed with resale, you’ll get a good chunk of your money back. Used guitars that really take a beating? Almost any import guitar not from Japan (sometimes Korea) and valued-priced USA guitars like PRS S2 and various ~$1000 Gibson’s. They are not bad guitars, but they are appliances, not works of art.
Manufacturers also make it difficult for investors by making increasingly good new guitars. The idea that only old stuff is good, is just not true. In fact a lot of old instruments are highly variable in quality. The hard to define “mojo” of an old guitar is often psychosomatic, and players love the concept of old stuff, and will make themselves believe that it is special. If you spend $2000 on a 1970’s Fender with a 1/4″ thick polyester finish and a 3-bolt neck are no getting a “vintage” guitar? In name only.
Manufacturers also make it difficult for investors by making way too many versions of the same guitar. When somebody gives us a Les Paul or Strat to sell (especially Les Paul) we spend a chunk of time trying to figure out what it’s really worth. Gibson makes so many darn versions of the Les Paul (Traditional, Traditional Plus, Tribute, Studio, Awesome Maximus…) it’s truly hard to figure out what the guitar is worth. Go on Reverb.com and there will be around 300 Les Paul’s from $800 to $5000. Strats are not much better: I’m mean really, how many versions of a “Clapton” Strat can you make? Quite a few, it turns out. All this just confuses the market and makes it hard to assign value.
Lastly, then you have dealers that frequently skirt MAP pricing rules for new guitars. So what you say? Selling a guitar blatantly below MAP depresses the price of a used guitar by deflating its new value. No matter how you feel about MAP, strong MAP enforcement helps the value of used guitars. Companies that protect their brand value (Bose, Mesa for example) enjoy higher perceived value and better resale. Companies that let retailers run amok pay for it in the long run.
As a G&L dealer, I often hear the comment, “Great guitars but I wish the resale value was better.” I’ve come to realization that G&L’s fare no better or worse than most Gibson’s and Fenders. It just that Gibson and Fender owners think their guitars are worth more. In the end, the relationship between street price and used prices are not appreciably different (But the Gibson owner is disappointed and the G&L owner says, “Ok thanks for selling if or me.”). I just sold a left handed mid-2000’s ASAT Classic in nice condition for $849. The guitar probably went new for a little over $1000. Took about 10 days to sell. That’s a boatload better than I’ll do trying to sell a 3-year old Les Paul that had an original list of $3600.
Play what you like, have fun, and if you love the guitar, keep it. If you don’t like the guitar, sell it an move on. Guitars are a passion, a hobby, and for some a profession. For a precious few, they are an investment.