How would you put together a diversified coin investment portfolio?

I am not a CPA or tax professional, but I didn't think you could use coins for IRAs/401(k)/Keogh plans with the exception of some of the modern American bullion coins. Either way, I think "investing" in numismatics is a train wreck waiting to happen. The market is thinly capitalized, gains are taxed at a higher tax rate than normal capital gains (28% vs. 15% or 20% based on income), and there are many fees and commissions involved in selling often. Buy coins because you like them and want to have them as a hobby. Note that I am NOT advocating ignoring the financial end, but merely stating that there are far better investments out there if your sole goal is to make money.

 

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Personally, I don't collect coins for future profits. I just enjoy what I collect tremendously. If the coins I collect happen to give me premiums then at least I know if I ever need $$$ and my personal savings will not suffice then I could sell. But I prefer not to. There are some people that only want to make a quick buck or two which is just fine. I, on the other hand, prefer to enjoy what I collect and let my kids (who are very informed on what the values of coins are) make a profit if they want. JMHO.

 

I have a bad boating habit and plan to retire in 10 years. I'm hoping to break even on my collection by selling it during retirement to help fund my bad boating habit. Now boats, there's a good investment to consider!

 

Considering if you hold them for a year you have to pay 28% capital gains tax, plus you need to overcome at least the 10% or more typical dealer mark up, and the 3 decline in the value of the dollar due to inflation, you need about a 41% increase to truly break even.

Some have suggested that a year is too short and to hold for 10 years or more but usually you still won't break even. Over 10 years they would have to go up over 30% just to keep up with inflation, and then you still have that 28% capital gains payment. Hold for 20 year and they have to go up over 75% just to keep up with inflation.

Definition:

Boat, a hole in the water you pour money into.

 

Shhh. Don't tell my wife that definition! BOAT also stands for "Break Out Another Thousand"

Be nice if my modest collection appreciates but I'm not counting on it.

 

Two best days of boat ownership: the day you buy it and the day you sell it! I bought a boat on Memorial day in 2012 and on that Saturday I found out I had orders to Korea!

 

Not exactly, because the tax is a percentage of the profit, not the full sale price of the coin. Still, point taken.

Been a while since I heard that one. Hilarious, and spot on.

 

Zombie bucks and john deere tractors are starting to look good

 

Like Maxfli noted, the 28% capital gains tax would be on the profit, not the revenue. All you would need to beat is inflation, the same as for any investment, and the seller fees or dealer margin. Still not an insignificant hurdle by any means, but not insurmountable.

 

the choice of coins is interesting, and puzzling to me. i have tried to buy limited editions of silver or gold coins--so i have a lot of canadian coins, perth mint, new zealand, and other coins not from the united states. modern coins in the u.s. have no limit on mintages. what do others think of this approach?? i still buy ASE and the classic morgan, peace dollars, and $10 Indians. Can someone explain why gold is still tanking? the spot price is low but that is not reflected in prices paid on ebay, etc. why are people buying coins that have a melt value hundreds of dollars less than the spot price, but they are paying the stiff asking price. does not make sense to me. please educate me.

 

I could wax poetic about why gold does what it does for 20 or more pages and give a two-hour lecture, but it would very quickly run afoul of CT rules about political commentary. In short, I believe the "taking physical delivery" portion of the gold market is dominated by those of a particular political philosophy, and the FAR larger paper contracts part of the market, the true 800 lb. gorillas in the room, are not as ideological or as emotionally attached to the physical metal and only care about trading contracts. They'll just as soon trade frozen orange juice concentrate or pork bellies as gold. More than that? I'd wade into troubled CT waters. The two market segments usually don't care about the same issues. In other words, one is playing defense against the financial end of the world, and the other one is laughing at the first one.

 

it is refreshing to receive a reply that answers the question with clever prose that protects him but still conveys the required info. i appreciate your response.

 

Well honestly, I don't always do that so well. Must be a burst of oxygen to the brain.

 

I would take a loss on any coin, for the sake that when my kids get it. they make money.

 

inspiration strikes when we least expect it. it takes us from the present to elsewhere where we are free to think and write as you did.

 

that is what i am doing--collecting for 20 years down the road, if i make it. my wife's genetics will make her the recipient of the investments i have made for over 20 years. i will leave instructions on the value of the coins i have bought.

 

Warning: now I'm going to get flippant.

The single best thing about being a metals bug would be occasionally getting interviewed by Kitco's rather fetching video correspondent, Daniela Cambone. I find her oddly compelling for reasons I feel inadequate to explain.

 

I have 100% confidence that 1 year from now any coin I purchase for my collection will generate more revenue than a round of golf, fishing trip, etc purchased in the same time period.

 

Thats fine and dandy. My point for me is that I will enjoy my coin collecting whether I make a profit or loss. I just know that over the years the coins I have collected have appreciated very well. But I am not interested in selling any time soon. My kids are grown and have their own hobbies. When I leave this world both of my kids will get what they get from my coin collection. But what about those that don't have kids? What happens to those folks? What about those whose kids are so spoiled rotten that they wouldn't care less if you worked 20 years of longer just to see all your hard work wasted? Would you still feel the same.? My point is that all situations are different. I was explaining my own.

 

I thank the deity often that my son loves coins as much as I do. His tastes surely are different from those of my collecting contemporaries, but he has no "collecting that stuff is dumb" bigotries.