Investing in rare coins

Hey guys. Recently ive had sort of an internal conflict between the collector in me and the investor in me. Even though i am only 15 i think it is important to invest money wisely. The obvious way for a coin collector to invest is in precious metals such as silver or gold eagles. I was planning on placing a large silver order of somme eagles, grizzlys, and maple leaves from providentmetals.com but then i started thinking, well im more of a coin collector and numismatist,not a precious metals guy so maybe i should spend my money on actual collectible coins. But theres always the middle man of the two wich is investing IN collectible coins. Now my only question is, what coins do i buy? I have no clue as to what coins increase in value over time. Im starting an ms franklin set but i dont think franklins really go up in value much. I was thinking maybe some nice morgans like some 1878 8 tail feathers. My budget unfortunatley also restricts me to around 200 dollars at most. So any tips from you guys are greatly appreciated. Thanks in advance! -Ryan

 

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Ryan,

I'd take your $200 and buy some stocks. There aren't too many coins in that price range that are going to appreciate dramatically to the point where investment is a good idea.

 

Thats what i thought people would say. Oh well. Maybe ill just stick to coins as a non investment hobby. And i have neary a clue about stocks. Idk what, when, how, or who to buy from and sell.

 

50% my money's in coins.

20% is in cash

30% is in stocks... Taking a bath here.

 

If you are looking for stocks, open an account with a brokerage like schwab, tdameritrade, etrade, vangaurd etc. Honestly, most the money I have invested for retirement is in a low cost S&P 500 tracking fund. For schwabs fund the ticker is SWPPX.

If it's spending money then buy coins you like, but my test for coin purchases is if they were worthless tomorrow would I still be happy with the purchase. I hope to make money when I eventually sell, but if not I will not be upset.

 

What about buying Kennedy Silver 90% year date 1964 on High Grade...Accented Hair .. I think this one will increase the value..This one will fit as being a coin collector and investor. So far this is the one fitted on your budget.. You can buy it on line sometimes under $ 200.. Good luck..:thumb:

 

Well, at 15 years old you can't open an account with a brokerage firm just yet, though I will agree, for investing stocks will out-perform any coin or bullion every time. But, since you like coins, invest in your hobby and buy something you want. You'll have the rest of your life to gamble on investments.
Guy

 

I'd just like to say that I'm glad that some useful information was given to the young man. By far the most frustrating thing in life is when you ask a reasonable question and then get told "It's not possible."

I agree with what's been said - with a small budget, rare coin investing isn't going to yield significant benefits compared to other fields. However, that doesn't mean avoid it. My thoughts:

*Buy 3, keep 1. Sell the other two to get your money back. This way, everything you keep is free.

*Buy what you enjoy. If you look at it from an enjoyment standpoint, you won't worry so much about how much it's worth. Plus, if money is your only motivator in this...that's an entirely different approach.

*Read a lot. Figure out what people are buying now, what they have bought in the past, and start trying to figure out where the market will go. I'm not saying you'll be able to do it...but that's the speculative part of it that may be a fun challenge.

*Never underestimate the power of having available funds. Say you come across a huge deal that you know would make you money - but you spent all your money on a coin the day before. Having cash available makes things like roll-searching possible and lets you take advantage of good opportunities when they arrive.

*Learn how to properly grade coins, especially the higher-grade ones. This is something I remember from the Coin Collector's Survival Manual - seeing something that is priced significantly lower than what it's worth.

*Learn how to cherry-pick.

*Always be polite and professional, even when people are acting like absolute jerks. That absolute jerk may remember you for some weird reason and bring you a coin that'll make you money.

*Finally, learn how to say no to people and things (like fast food.) This is probably the hardest. If you don't think it's a good deal for you, or it's an attractive coin, or a good price - say no. This also applies to your time.

Hope this helps a bit.

 

Good advice from Matt. As far as I am concerned the money spent on coins is not part of an investment portfolio, it should be the money you have left over after paying yourself(investments) and bills. Just my opinion.

 

A few general points to the OP:

1) Investing in coins is really oversold. Unless you can buy as cheap as dealers can, you have to hold a coin on average 10 years in my estimate to break even. Collect coins for pleasure and somewhat store of value. I am just warning you that the difference between what you pay and what you sell is very steep in coins.

2) Its admirable that you wish to invest at age 15. True investments should be more liquid, stable items than coins though. This is why real estate, stocks, bonds, and the like are the traditional investments. If you buy a stock at $25, and it goes up to $30, you profit almost all that amount. If you buy a coin at $25, and the book price goes to $30, you maybe can sell it for $15. The book value needs to go up to $50 for you to break even selling to a dealer. These are generalities but make the point. This is why many people say to never invest in coins. Bullion investing has smaller markups, but still much higher than stocks or bonds.

3) At 15 the most important resource for you is education. Concentrate on learning all you can, that truly will be your best long term investment at this point. If you like coins buy some books and read them cover to cover. Buy a grading book and practice on cents and nickels improving your grading skills.

Just friendly advice from someone who started younger than you and wishes he would have done the same.

Chris

 

I'd go with the Morgans, but not "nice" ones at your $200 limit. You can get common, worn ones for melt these days. So you'd have your "investment" in silver in the form of 100 yr old coins.

 

I think mutual fund is safer, I had over $100k in stocks 10 years ago, now it's all gone. If I put all of in commemorative coins around that time i would probably lose more than half. Others are right, it's very difficult to make money from coins with limited budget. Maybe you can consider error coins like Wisconsin extra leaf or 1982 no P dime, or something like that, it's relatively cheap not very common, and most people doesn't care about them, maybe one day it might be worth something....

 

Sage advice!!

I could advance numerous reasons, and site many examples as to why I would have provided similar advice, but simply stated, I AGREE!!

My exception to this advice is that if you can purchase ~Fine grade (having full rims both sides) raw coins for slightly more than melt value ($30-$35, date dependent), you will have a better "investment".

My research has indicated that these coins have consistently been a prudent investment for the "low budget" collector. :thumb:

 

Personally, I prefer high-grade early Jefferson nickels. But then, that's just me.

 

At your age and monetary restraint, i would put it into knowledge and reference material. ANA seminars, grading guides, reference books that have info not always on the net, etc. It may seem like it is wasted money as you have no coins to show for it, but every strong ability must be built from a solid foundation. The knowledge will repay itself many times over the years and the coins you avoid, and those you score on.

 

Coin collecting vs. investing

I agree with most of the advice above. If you love coins, forget about the investment end of it at your age. If you do want to "invest", open a Roth IRA and put the money in a no-load, stock mutual fund after you get your first job. At your age, this money will grow considerably over the years.

If you buy coins that you like, they will always have value to you. If they do turn a profit, it will probably be unexpected (I bought several gold coins years ago when gold was in the low 300's, never expecting them to appreciate much). But remember, coins and precious metal prices can fall just as easily as they can appreciate.

 

What about banknotes papers ?

my money"s in:

30% is in realstate
20% is in banknotes
20% is in coins ( old roman coins)
10% is in stocks
10% is in handcrafts
10% is in cash

 

There aren't too many stocks in that price range that are going to appreciate dramatically, either.

 

I'll take the contrarian approach here. I asked the manager of one of the area's biggest coin dealers in the late 90s about coins and investments and he recommended CDs that coins were the worst investments. I did not follow his advice and bought bullion which has gone up 4-5X!

There is a local sharp kid who has parlayed a small amount of money into 50K through coins, he recently brought in a Fugio cent that he had picked up cheap. I would say only buy when you get a really, really good deal, do a lot of research, find out who the highest buyers are and the lowest sellers. It is one area where kids can make real money if they know what they are doing. Forget the Wall Street casino!

 

He said coins were a worse investment. You didn't buy coins you bought bullion, not the same thing. And yes bullion did give a 9% per annum rate of return over that period, but I believe most of that increase has been in the past three or four years. Over the first 16 years or so the return probably wasn't that good at all. That's not an investment, that's luck. How good would the investment have been if the economy hadn't tanked? We'll never know, but possibly not that good.