Looking for opinions

I'm not expecting to make $100,000 buying and selling coins. What I'm doing is collecting coins as a hobby. But also looking to collect some stuff I can fall back on. That's all this is about. I'm only spending little bits of money at a time. I'm not pouring my 401k into this.

 

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Commendable, small investment and enjoyment...CRH!

 

Here's the downside on "investing" in coins with an eye to a specific date to use the "invested" funds. The coin market is prone to longish down periods punctuated by brief but spectacular up periods. Any time the money tied up in coins needs to be liquidated at any fixed date, the chances are it will be a down market. Those who profit in coins have the freedom to liquidate when the market turns "hot", even if there is no event the funds will next be used for. Maybe you've heard that "time" is your friend, but "timing" is your enemy. Never find yourself with coins you "need to liquidate soon". That gets very expensive.

 

When I say "fall back on" I mean sell if I need to. Regardless where the market is. That doesn't matter. I'm just trying to collect something of value and have fun doing so. That's all

 

If you want a Morgan by all means get it. If it is just for investment think of it this way, it took over 100 years for that Morgan to get to 40-60 and a lot of that was just the change in Silver price. Investment level coins are more in the 20k+ coins and even those aren't always winners for every seller.

If investment is the only motivation you are much better off saving or finding stocks with good returns

 

In that case just get what you like and makes you happy. There is a value to the joy a collection brings. Nice looking coins will be able to be sold if needed

 

That's fine, collecting as a HOBBY is great.

That's OK too as long as you realize that you will quite likely NOT get back as much as you have put into them. But you will get something.

It's just that if you are hoping to use the proceeds to fund your daughters college, there are better ways to do so. Maybe not as much fun, but better. (If I had bought common mid-grade MS Morgan dollars back when I stared collecting 45 years ago, they would have to be selling for $75 today just for me to just break even after inflation. So I could sell them today for a seeming profit in dollars, but an actual loss in terms of real purchasing power. In other words the money I got for them would buy less today than the money I spent on them would have back then. And a lot less if I paid the 28% capital gains tax I would owe on my supposed profit.)

 

As far as your question of bullion vs. numismatic, I have no idea. Equally qualified people can argue both sides of that one all day and all night. It's really just a matter of personal opinion and preference. And you're hearing plenty of caution, which is good. Just for one thing, as beginners we all made mistakes. But everyone has to start somewhere. Buy coins you like - yes - and to go a little farther....If you are looking to collect coins with a chance at longterm profit in mind, or at least minimizing your losses, you need knowledge. Your budget isn't big, it doesn't need to be to enjoy this hobby. But problem-free coins with above average eye appeal, scarcer items, coins with big price jumps in the next grade, etc. likely have a better shot of at least holding their value or rising in value and seem like smarter buys then generic, common items. Plus they are more fun to own. And they will likely sell better someday. Also watch out for that itch to buy something that can make a fellow go home with sub-par or overpriced stuff. As far as being able to pick stuff up cheaply enough to quickly turn a significant profit.....keep your eyes open for those opportunities, but they don't happen often for most of us. Happy Collecting!

 

@OnEWB, congrats on your Panda win! Good ROI, even if overall it wasn't a lot of money.

I respect what you're trying to do; however, I agree with many of the others. There are better investments than coins. Especially at the lower end of the market.

Now, the key is this: How can you enjoy the hobby with the funds you have to spend AND at the same time, put some money aside for your daughters education? That to me is the problem, now how to solve it.

From what I've learned from your first post, you like making deals. Why not take some of the profit from your coin deal making and set it aside in some kind of account for your Daughter. Take your example, cost =$17, Profit = $23. Take $5 of the profit, set it aside in an account for your daughter (many choices you can make), take $5 and set it aside for a nice Morgan and take the $30 left over and try to make another deal!

This way, you put some money aside for your daughter, put some money aside for yourself and you can use the rest to buy other coins you can flip. I know it's not the ideal solution for your daughters education, but IMO, it's better than buying a $40-60 dollar coin and hope in 15 years, it's worth much more than time value of money.

Just food for thought.

 

Someone may have already said something like this, but this is my take on coin collecting as an investment.

Basically I see money I spend on coins as "fun" money that I planned to blow just because I have some money left over in my budget I don't plan on saving. I could spend this on a lot of things, like alcohol, junk food, going to sporting events, etc. Instead of spending my money on these sources of fun, I decide to spend some of my money on some coins that I like. In this sense, coins are a good investment of my discretionary income because I still have something to show for it a week, a month, and a year later. All the other things I listed don't do a whole lot for you after you buy and consume them. This way, I'm able to recoup some of my "fun" money I spent on the coins if I want to.

In short, spending money on coins is a better investment than beer and chicken wings. That said, I would be very reluctant about putting a significant amount (>1% in my book) of my investments in coins because that can be a risky endeavor.

Also keep in mind that your age plays a part in this somewhat. I'm young enough that if I totally bomb on a coin purchase and if I really want to break even on it I can always indignantly sit on it for 20+ years until the market improves. Older collectors don't have the luxury of being able to sit on a crummy purchase as long.

But as long as you enjoy collecting, that's primarily what matters!!

 

Thirty yrs. ago I was buying the very pretty, shiny common coins hoping that they would go up in value. Most didn't. Some are even worth less now then when I bought them. Now I try to save up to buy a more expensive rare or key date coin. Assembling complete set's is also fun and a challenge. We all learn from our mistake's then, move on. I would be ecstatic if one of my treasured coins increased in value but, if it doesn't, it's still a treasure to me.

 

you might try small world gold coins. but you do pay a small premium being to small. just a thought.

 

There may actually be something to the world coin idea. Numerous issues have prices that don't come close to reflecting their rarity and with the internet interest has picked up in that area. Whether or not it will pick up significantly in our life time is the question, but if it did.......

 

The best investment you can make is to familiarize yourself with worthwhile varieties. For example, both volumes of the Cherrypicker guide. If you look through a lot of pocket change and older coins in coin shops and are endowed with the knowledge of how to spot these varieties, the books will pay for themselves rather quickly.
I don't look through my change much, but after I bought this guide, I looked through a jar of change I had been emptying my pockets into for some time. Found two 1972 DDO cents, sold one for $40 and the other for $72, along with a bunch of minimal value varieties. That more than paid for the books right there.
If you don't mind branching out to foreign coins, there are many modern (1950's-present) coins with very small mintage that can be had in mint state for very little money, I'm talking like $5 or even less in some cases. These would be a solid long term investment with little money at risk.