Can Collecting Be A Great Investment As Well As A Great Interest?

Hello all,
I used to collect stamps avidly up until my early teens, until I took my collection to a dealer, got told they were infected with rust, went home crest fallen, and then puberty hit… So needless to say, it has been awhile.
The reason I am posting is to ask a question about the viability of not only collecting stamps for enjoyment, but also to leave as a nest egg to a child in 25 years time? I was speaking to a stamp collector the other week, and he mentioned that when he went to a stamp fair, he noticed he was the youngest, and he's hitting on 50. He also said that not many young people are getting into the hobby, and that because of this, he was of the opinion that many good stamps are going begging because of reduced demand. He also said that over time, stamps will become rarer as they fall out of popular use, and countries start turning to "computer printed" stamps via the net.
I will admit to being intrigued by the idea of not only re-entering collecting, but if I could accumulate a decent collection for my child to use for a house deposit or the like, I would be keen on that! But therein lies the problem, should one only focus on already expensive sets, knowing that they will increase in value, (pretty dull method, guaranteed value) or, buy up estates and hunt for elusive "diamonds" in the dirt? (much more fun, but maybe less value?)
Stocks are out, I don't have the money to get a decent amount of good shares and the risk is pretty high, automotive collectibles are out, they are expensive and rust, coins are out, too easy to get stolen and perhaps not as many enthusiasts as stamps, and the thing I like about stamps is they are a thing of beauty, transportable, easily stored safely, and these days the online support, ie forums like this and online catalogues, is great.
I am mostly keen on getting back in it, but I want to accumulate something of eventual value to be sold for something important. The collector I spoke with suggested I avoid FDC's, and obscure collections like "dead countries" or other niche pursuits, he explained this as a poor investment as while the stamps may be rarer, because they are less sought after, their prices will reflect this. Complex stuff.
For instance, if I was to put $20 away each week for 25 years, I would get $26,000. Not bad, but in 25 years time, it will not even buy a caravan. However, if I spent $20 per week on stamps from estates and individual stamps to complete sets, I am of the opinion I would get a collection worth maybe twice that if I was moderately astute as a buyer.
Below are some links to the sort of "bundles" I would start off with, then find my way from there.
http://www.ebay.com.au/itm/33219244...RK:MEBIDX:IT
http://www.ebay.com.au/itm/23231103...RK:MEBIDX:IT
http://www.ebay.com.au/itm/33219426...RK:MEBIDX:IT
I can appreciate my questions might be confronting to some collectors, but I am curious about people's thoughts. Sorry for the long post…

Cheers, Gareth

Welcome to stamp community forum, Gareth!

In my opinion, If you are looking for an educational and fun pastime for yourself, then collect stamps.

If you are looking to pass wealth to your heirs, then invest in stocks and bonds.

Hello, welcome to the board. This is a legitimate question and I'm sure you'll get a lot of answers. The short answer is that stamps usually make a pretty poor financial investment. There are a lot of reasons for this, but it boils down to the fact that most stamps aren't going to be worth any more (in real terms) in 20 years than they are today; many will be worth less. There are some exceptions, mostly amongst the stamps that are already expensive, but for the most part stamps should be enjoyed as a diversion. If you buy nice stamps at good prices and keep them well, they'll retain some value, to be sure, but unless you're willing too do a whole lot of work selling the collection piecemeal, it's very unlikely you'll come out ahead or even break even when it comes time to sell.




That $26K invested in stocks or bonds would almost certainly far outperform almost any stamp collection over the next 25 years. Now, if you were to spend the entire $26K on a single rare item, then you might have a chance to outperform the stock market. Maybe. But that's the kind of market true stamp investors play in. Stamps that are selling for pennies and dollars today are not rare, and they'll never be rare. Barring a large (and unlikely) influx of stamp collectors to push demand up, those types of stamps will never increase much in value. There's nothing wrong with cheap and middling stamps, I've got thousands of them myself. Just don't expect to come out ahead when it's time to sell them.

There is no correct answer to your posting . I see in your posting about 15 different subjects and each one could take a full page to answer .

Thanks for the good advice guys, interesting reading. Sobering. I must say I am surprised by what TheArtfulHinger said, I recently followed some links to news articles about stamps out performing many traditional investments areas, but like you said, whats expensive now will always value well. Bookbndrbob may be right, perhaps save up and buy some blue chip stocks...
I read one article, which follows with what you guys are saying, however, in 25 years, will the stamps below still be worth so little?

"His used 1902 five shilling King Edward VII, currently valued by Stanley Gibbons at £175, achieved a price of just £6; a stamp commemorating King George VI's silver wedding in 1948, priced at £40 in the catalogue, sold for just £9; while a mint set of King Edward VI stamps from 1951 went for £22 compared with £100 in the catalogue." https://www.theguardian.com/money/2...lately-clubs

Its o.k floortrader, I'm not asking for right or wrong, opinion is fine..

cheers, Gareth

I don't think they are worth "little" - they're going for a market rate, which is typically 10-20% of Gibbons's price for most reasonable, but not scarce, issues. But they're highly unlikely to zoom upwards. The exception may be an external event that affects the stamp market, such as the arrival of Chinese collectors purchasing Chinese stamps over the past thirty years. But then you can be in the world of the bubble!

If you want a good investment, buy vintage Dennison hinges. Packages of these originally sold for "49 cent" and they are now selling well at $25.00 per pack. Demand will continue to rise, supply will continue to drop. (No one can apparently make quality hinges for various reasons.)

I participate in stamp collecting for the enjoyment. When I make purchases I calculate my 'enjoyment factor', not the investment potential. If I glean my intrinsic value from my purchases, then any amount that it might return is all profit.

In many ways it is like buying artwork. I would buy what appeals to me, what I enjoy every time I see it. This generally implies an emotional attachment. I think that investments are better without any emotional attachments; they are simply a financial tool.
Don

I think this would only be true if you were still able to buy them for 49 cents. Not sure if anyone buys them for $25 now and being able to make a profit. At a certain point, it will just be cheaper or the same cost as buying mounts

Respectfully disagree, many collectors will never switch over to mounts since mounts swell an album to many times it original size (due to mount thickness). As such, hinges will always be popular.

Good quality Dennison will continue to appreciate and I have little doubt that they will at least double (to $50 a pack) within a short period of time.

This is one of my best buys a few years back


Don

I agree with DON/51studebaker ,stamp collecting should be looked at as "enjoyment factor" . For me it was "my quiet time ,a time to relax and be still".

On another point -nobody can and nobody ever will predict the direction this hobby will take .

I know about two ways to make money with stamps. 1-Buy expensive and rare items and hope they appreciate or 2-buy collections from people who don't have the time or knowledge to sell them, break them down stamp by stamp and use your expertise to sell them one by one for their market value. Option one is quite risky since most stamps don't appreciate that much if at all. Pick the right stamps and it could work but it takes serious money to buy investment quality stamps. This is a rich person's hobby. Option 2 clearly works but requires a lot of time and expertise. I have started on option 2. I'm not doing it as an investment though. It's really a hobby and a way to pick up an occasional rarity. Still I'd like it to be profitable if possible. Two years in - invested a few thousand - and from a profit viewpoint it's been very hit and miss. this isn't going to build a nest egg. Frankly I'm just about breaking even. Fortunately for me I'm doing it more for fun than for profit.

Gareth, one thing to consider in buying stamps as a possible bequest was touched on in your original post: the aging of the hobby. I would not take it for granted that there will be a large market for stamps of any sort in another generation, or if there is that the demand will outstrip supply even for premium items. Collect to enjoy, and possibly to recoup a portion of your outlay, but not as an investment.

I don't want to rain on anyone's parade but.. anyone who thinks they have a good chance to buy stamps for years, then recoup a large profit, is headed for major disappointment. Coins, maybe. Stamps, no.

Collect as most of us do, for enjoyment, education and fellowship. That's the real profit you will get from this hobby.

I agree 100% with Stamps1962. Furthermore, every year there are fewer buyers and more sellers - the demographics are terrible. And, the markups you pay as a non-professional are a killer. With traditional investing I can buy 100k$ worth of stocks at Fidelity for $4.95. With stamps a dealer has to make a 100% markup to stay in business - sometimes a lot more.

Collect for fun.

Another piece of bad advise the original poster received was "avoid obscure collections like "dead countries" -- really !!

Like floortrader I'll say there's no correct answer to this question More than anything it is about timing, and the price you buy and price you sell...

Like most I would say don't invest with stamps, go with stocks (as they are much easier for investment purposes. But don't buy yet, wait for the markets to crash first).

-k-