Investing Vs Collecting Stamps

Seal619 suggested I start a new thread with the above topic. This was not my plan when I responded to stampvirgins thread on new acquisitions but am always happen to engage other collectors in talking about a common interest or hobby. I'll start off by saying that in general one should collect what they love. Good collections are generally the product not only of financial investment but investment in time, interest and education. Unless you like what you collect, you might invest the money, but not the time or interest and you will not educate yourself. We see all the time collections put together by stamp managers with the owner essentially providing the money but little else. To me, that is not a true collector. A true collector can figure out his own portfolio in stamps.He might need an agent to bid for him at auction, but the impetus and direction for the collection comes from the owner, not the agent or manager. And while it is possible, and maybe in the past was probable that a good collection would have investment potential as well, I think except for the highest grade or rarest items, one cannot count on appreciation or maybe even return of the original investment anymore. So I think that putting some serious bucks into your collection is needed if you want to yield a profit, but that profit is not guaranteed. However, if you have enjoyed the hobby and the pleasure of owning and putting together your collection then the investment in time, money, etc. was probably worth it no matter what monetary return you get. That to me is the essence of collecting: pride of ownership, the education one needs and gets from collecting, and the thrill of the hunt and chase. I have spent a few pennies going after the earlier classics unused as opposed to used or some of the rarer shades and varities of the classics and I may only get a fraction of what I put up monetarily when it comes time to divest. But I can truly say it has been a pleasure taking the trip. Boards and forums like this, the VSC, frajola, etc. enhance that ride. It is interesting and fun for me to hear what others collect and what turns them on about their hobby. Hobbies to me are primarily stories. How an item was found, what its signficnce is, how the collection was formed etc. Forums stimulate such interaction which I think is good. Stampvirgin indicates that he has already earmarked his collection for a young son. I would only caution that it is sometimes difficult to transfer your passion to someone else, even a child. Collect for yourself, not him. You may find that despite your best effort, his love for you and even recognizing that your collection is important to you, nonetheless that is not a guarantee that he or she will share that same interest. Ultimately, people have to find out for themselves what interests them. If the fire is not being lit, I would suggest not burdening them with divesting of your holdings: do it yourself while you are alive and if you wish give them the proceeds in cash.

WALL OF TEXT CRITICAL HITS YOU FOR 1000 DAMAGE... YOU DIE.


Paragraph breaks man... paragraph breaks.

I've said it before: investing and collecting needn't be mutually exclusive activities.

If you've invested in new issues straight from the Post Office, from just about anywhere, over the last 20 years or so, you've probably done your dough. If you collected new issues straight from the Post Office, from just about anywhere, over the last 20 years or so, you've probably still done your dough, but had the pleasure of the collecting in the meantime.

If you've invested in cheap stamps from wherever took your fancy for the last 50 years or so, you've probably done you dough. If you collected cheap stamps from wherever took your fancy for the last 50 years or so, you've probably still done your dough, but had the pleasure of the collecting in the meantime.

But if you've collected wisely, built a focused collection, picked up the rarities as and when you can, and added depth of knowledge to your subject, over maybe 20 years, you'll have both a collection and an investment. And if you were wise or lucky in your choice of country to focus on, you'll have a very nice investment as well as a collection to be proud of.

Where can I have so much fun for less than a thousand a year ???

Funcitypapa

This a short article that I posted some time ago. At that time it drew some widely varied comments about purest collectors vs. investment collectors.

Investing in your stamps

Sitting here, I have been mulling over the current financial issues that have been driving the world stock markets and investment strategies and the relationship with stamp collecting. As I see things, and I think most will agree, there are two basic forms of collecting and a hybridized middle ground. The largest group is the hobby collector; the hobby collector's motivation is the art and beauty of the stamps obtained and their relationship in history. Perhaps the smallest group is the investment collector; the investment collectors are looking for the long-term financial gain coupled with a secure place to shelter wealth. Obviously, the hybridized group is setting in the middle and wanting the best of both worlds. In the next few short paragraphs I would like to share my and solicit your thoughts on the financial impact we will all be facing as stamp collectors.

As a collector and dealer, I am witnessing trends in the sales of stamps. For the hobbyist I foresee a two-sided coin. In the current trend, I see the sales value of less then prime quality stamps falling. As an example of this look at ebay sales. Two to three years ago you would have been very hard pressed to find a space filler Scott US#72 for less than $150.00 now you can find them in the $75.00 to $90.00 range. This drastic devaluation is not necessarily a bad thing for the hobby collector as value is not their primary motive for buying a stamp. Also, if the hobby collector continues to add to their collection at a steady pace, and is held long enough, the value will eventually come back through dollar averaging.

Now looking at the investment collector I can see nothing but good times ahead. Over the last few years the prime collectable stamps have enjoyed a slow but steady increase in market value. I see it this growth rate as just the normal market turn over of collections and doing business. What I see happening within the next few years or less, governments will not be able to artificially keep interest rates down and inflation is going to kick in. My prediction is at that point due to investor collectors flipping stamps you will see the market value of prime collectible stamps out pace inflation by 8% to 10%.

These are just my thoughts and all comments are welcome.

Since 1978 many collectors/dealers have been saying, "New issues from the PO, done your money".

Fact from Aust' PO employees; Since 1990 till now SALES of Philatelic items have been dramatically declining so much so that many large district Post Offices carry stock for Standing Orders only.

Many Dealers do not have substantial stock of some items from the last 20 years. Eventually, these currently 'ignored items' will be highly sort after by the next generation of collectors (Grandchild's era).

The beauty of this Hobby is simply the fact that for a $20 Stamp I can get enjoyment many times over as where I can barely get a good meal for that which I only get to enjoy for 1 hour. Every collector has their own set of so called rules on what they purchase, mine being is I put a great emphasis on centering, but I don't aggressively collect pre 1900 US which make things easier.

Nonetheless I still pay attention to the price per item I dole out as like some I do hope for a return on my purchase someday (I'm hesitant to call it an investment). No matter how thing turn out financially with my purchases the bottom line is that no one can take away the endless hours of enjoyment I've taken from this hobby and that in itself is priceless. One can do this for an investment but you really need to have deep pockets as I believe as time goes by certain pieces will always be sought after, but I think those pieces decrease in numbers as time goes by.

Collecting for fun and enjoyment - you know your probably losing money


Collecting for investment purposes - your rich anyways and disappointed that your losing money

Interesting points are made in these discussion entries, however, I think that there is another aspect that a collector must be cognizant of if even partially collecting as an investment (and I can only comment concerning the United States), and that is tax reporting ramifications.
The IRS has stringent income reporting rules for what constitutes a hobby versus investment which implies a business endeavor. For example, you cannot take a loss on a hobby. So if 20 years ago you purchased 10 sets of the Zeppelins expecting to supplement your income in later years, but sell them for less than what you paid, you cannot claim a loss on your taxes if you cannot prove this was for investment purposes.
My wife and I have a business name and business license. We must be very careful in keeping accurate records as to our business activities versus hobby activities. We have had audits from the IRS (came through them unscathed!), but they are not fun!

the purpose of the original posting was as an extension of stampvirgins posting of recent acquisitions and raising the generic question as to the relative advisability of purchasing relatively high mintage, poorly centered stamps, even if NH, for any other purpose than filling a hole in an album as opposed to thinking on a monetary basis that because the stamp was purchased at a low percentage of catalog, that this was a good business decision. For common Scott #'s, I don't think it is.

The enjoyment I get out of my hobby cannot be measured in monetary terms.
I have no spare money for stamps, when I sell I can buy. Or I can exchange. Or I can simply enjoy a forum like this one.

If I had started out with the intention of making money I would not be here now writing this.

Some get enjoyment from playing golf, going to the races, watching other sporting events, going to the pub etc etc.

So the enjoyment I get out of my Hobby/Pastime cannot be measured. It's priceless.

Londonbus1.....not worth a dime !

Edited to say that I have just noticed the forum which, once again ,I failed to notice.
I was talking in general terms, not about US material. What a donker !

Londonbus....I was also ...we are on the same page !!

Funcitypapa,

Glad you started this thread...
I first want to say that I collect for me... when my son is old enough, he will be interested, becuase I am interested and will spend time with him doing stamping. That's how most kids get interested in stamps.
But, I catalog and have an inventory of every US and Indo-China stamp I have, with pricing, including cost and CV and other things. who I bought it from, when I bought it, what grade I gave it, etc..
So when I get a stamp in the mail, it take me about 30 to 45 minutes to process it. I take every stamp I get, no matter the cost, and dip them, measure perfs, scan them, look at them in high magnification and read about them some more. I get immense enjoyment out of my hobby.

for investing, I leave that up to Charles Schwab...

For the past 25 years I've made a point to tell new young collectors always save your weekly spending allowance or Pub money to buy a scarce, always in demand stamp. Eventually one ends up with quality items that are far easier to sell compared with 200 albums full of common items.

I impress upon them that their best and biggest Investment first will be home(s) ownership before stamps, we have sadly seen foolish people without any real investing knowledge do it the other way round, spending a life time on rent - money never recoverable.

"Since 1978 many collectors/dealers have been saying, "New issues from the PO, done your money".

Fact from Aust' PO employees; Since 1990 till now SALES of Philatelic items have been dramatically declining so much so that many large district Post Offices carry stock for Standing Orders only.

Many Dealers do not have substantial stock of some items from the last 20 years. Eventually, these currently 'ignored items' will be highly sort after by the next generation of collectors (Grandchild's era). "

I wonder. The ever shrinking pool of collectors means that even MORE such stamps will be available with even less interested parties as today's collectors die off.

For the sake of those with money tied up in the flood of modern issues, I certainly hope that, in 20 years' time, there is demand for this stuff. I doubt there will be, though. Philatelic history suggests that, once a country thoroughly blots its copybook, it takes a very long time for collectors to forgive and forget. Who has made money out of El Salvador or Nicaragua, post-Seebeck? How many disillusioned US investors are there out there, finding that their carefully hoarded sheets of commemoratives are only good for discount postage?

It's all a matter of supply and demand. No matter how limited the supply, if the demand isn't there, the stamps are still collectible of course, but not a shortcut to wealth.