Revive the Lost Art: Exploring the Profit Potential of Stamp Collections
Perhaps you learned about philately, the term for stamp collecting, through a parent or grandparent who was a stamp collector. The vibrant squares from many locales, including Hawaii and Madagascar, were bought and sold for their collector value as stamps gained distinct prices. In recent years, stamp collecting has lost some of its appeal. Today, investors and baby boomers make up the majority of philatelists. Although retirees may have more time to dedicate to their passion, they might be hesitant to purchase the priciest, most luxurious stamps that draw investors.
Is Stamp Collection a Lost Proposition Today?
For a variety of factors, including the fact that many stamps’ values are dropping, people may be becoming less interested in stamp collecting.
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The devaluation of stamps has been facilitated by the emergence of more effective research tools like the Internet, which have increased transparency in the buying and selling of stamps. That’s partly because stamp collectors realized that many stamps weren’t as uncommon as they first believed.
Stamp valuation depends on several variables. They consist of the stamp’s design, any edges or perforations, the initial value, the nation of origin, and the stamp’s background or history. Because they were removed from circulation and are now more scarce, printing faults on stamps may make them more valuable. If older stamps are used and affixed to an envelope with a unique cancellation, their value may increase. Usually, the lighter the cancellation mark, the better for a worn stamp.
What are the Long-Term Returns?
Some people may perceive the low cost of collector stamps as a buying opportunity for future gains. The majority of stamp collectors, however, do so out of a passion for history and the art of storytelling.
British collector stamps generated returns of 7.0% nominally and 2.9% in real terms from 1900 to 2008, according to a study published in the Journal of Financial Economics. These returns are often lower than returns on equities but greater than average returns on bonds. It more closely resembles the gains made by the arts. Stamps that are rarer and more expensive typically provide investors with bigger rewards.
Stamps can be a great way to diversify an investment portfolio, but they shouldn’t be used as a substitute for more conventional investments like stocks or real estate if you want to achieve your financial objectives.
Stamps are quite illiquid, making it difficult to quickly convert them into cash. This is because, depending on the demand for a specific stamp, you might have to wait months or years before finding a buyer. The additional responsibility of carefully preserving these stamps as they must be stored with great care to prevent losing value.
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A one-of-a-kind postage stamp called “The British Guiana One-Cent Black on Magenta” only weighs 40 milligrams but is worth almost $8.5 million.
Investing in Stamps
Investment stamps can help diversify a portfolio. This is because they frequently are untouched by the elements that affect the value of other assets. For instance, neither the stock market nor a real estate boom affect their value.
You can purchase individual stamps or a portfolio of stamps, such as five to seven rare stamps, which you preserve for a certain amount of time, say five to ten years. If the stamp’s value hasn’t increased by the time the term is up, the selling business will return your money. On the other hand, the seller keeps a portion of the profit if the value has increased. This kind of investment, which is regarded as capital-protected, can go up as well as down.
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Look for stamps with undamaged, original glue or gum, unused stamps with gum, used stamps without gum, unusual stamps, and stamps in excellent, fine, or good condition when purchasing stamps as investments.
Conclusion
If investing in stamps is something you’re interested in, find a reliable dealer and keep an eye out for any trends that can affect a stamp’s value. Philately clubs may also have mentors who are investors. Remember the foundations of how a stamp’s image and perforation, among other factors, determine its market value.
Be warned that although these assets tend to increase in value consistently and have very low volatility, their value can fluctuate according to demand trends.
