The benefits of investing in coins

I have been doing some school work on the benefits of different investment strategies and 401k withdrawal rules. I would really appreciate any ideas on coins here.

I have heard of people making a profit by finding, selling or even collecting coins. I would just love to hear how that works or any aspects there of.

 

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First, welcome to CoinTalk, coins as an investment strategy has it's very own special issues. There are many coin dealers that derive their livelihood for buying and selling coins. A number of top tier dealers are members here at CoinTalk. A person comitted to the time and effort it will take can succeed, but it take an enormus amount of work. You can use the search function and look for past threads on this subject as well.

To use coins as an investment requires a lot of knowledge and study. The best advice I can give is to start studying, the more you learn the more you will see you need to know more.

Those of us that are collectors, collect for the enjoyment our collections bring us. Yes, I have sold coins for more than I paid for them, but if you consider inflation and the span of years between the buy and sell I lost my shirt.

Again, welcome to CoinTalk

 

There have been several threads in the past posted here on coin investing, so if you do a search you should be able to pull up some more in depth discussions. But the short answer is, with some exceptions, buy the highest quality most rare/key dates you can afford - those are usually the ones that go up in value higher and faster than most other coins. Key dates are the lowest minted date of a series. For example, since I deal in only pennies, that would be 1877 and 1909-S for Indian cents, and 1909-S vdb and 1914-D for Lincoln cents. Hope this helps.

 

Coins are a terrible investment. Primarily because of buy/sell spreads and other transaction costs.

If you really, really want to invest in them, pick out a precious metal you like and seek out coins that you can find for as close to spot as possible (think gold Krugerrand or Canadian Maple Leaves).

 

Marlinark, I believe coins are a great investment.

Just as long as you invest in the right ones..

A few I'd recommend are:

1885 cc morgan ms64 and up
1937-d 3 legged buffalo au and up
1908 no motto st gaudens


Those are it for now.. Always make sure to buy at or below the bid and hold for as long as you can. There's always somebody willing to pay more if the coin is nice and you paid right on it. Ebay!

 

http://www.cointalk.com/t66063/

 

It is a lot like the stock market, except the gains and losses are generally a lot less extreme. Your best bet is to educate yourself, and continue to do so. I had a dry spell a few years ago when I really lost touch with my hobby (cars, beer, and girls). When I finally began focusing on numismatics again, I could not believe the catching up I had to do.

 

Speaking as a collector , mostly silver , its a lot of fun & you learn a lot & meet some cool folks .

 

How much did you lose, that you now always view investment + coins = Disastrous?
How many people have lost millions investing in stocks?
I have been collecting coins for longer than 2 months, and I view them as a possible investment.. but maybe my Opinion also doesn't matter, because I haven't done it for decades and lost a small fortune yet

 

Good advice. The only other ways to really make money are to (1) become a dealer so that you have the opportunity to put the bid/ask spread in your favor, (2) become expert enough and wealthy enough to buy very high quality and truly scarce coins that tend to appreciate over time, or (3) just be lucky enough to find valuable coins in pocket change [but luck is a bad investment strategy].

 

If you are a law abiding honest taxpayer, coins are not that great of an investment. Even if you make a better return on your money than stocks/bonds, coins are generally taxed at the 28% collectibles gains rate and not at the 15% long term capital gains rate. So right there a substanial portion of your gains are taken from you. You have to do significantly better in coins that you would have done it stocks to make up the tax difference.

Of course, tax laws are constantly changing and will very likely change again before 1/1/2010 so it's makes tax planning somewhat challenging.

 

Investing in coins is like investing in most anything..."don't buy it unless you understand it".

The best advice I can offer is to collect coins for the love of coins. Over time, as you learn what you're doing, the value of your collections will increase. However, the rare coin market is fickle and at times illiquid. I wouldn't recommend having a retirement strategy solely dependent on coins.

Scott Travers has some interesting books on Rare Coin investment. You can find them on Amazon.com.

 

I would guess the original poster just wanted an outside link to his 401K website (sorry, just the skeptic in me).

 

One thing I generally dislike pure investors bombing their money into coins is simply because they mostly don't appreciate what coins are.

Do they really care the difference of coins within the same grade? No, to them it's all numerical value of what's in a catalog. To them, they are all worth the same value. Coins are subjective to grade and eye appeal and hence that's what make pricing so complex and interesting.

From the recent posts in cointalk, it sickens me of how investors claim prices are totally out of whack. Hello there, all coins are different and regardless of how some third parties try to grade them, they are just not the same.

In short, if you want to invest in coins, learn what collectors want, not just bomb your money and cry foul. This is not a stock market where everything is generic - no it's not the same at all.

 

Yeah! I've heard of people making a profit by finding coins, too! I wonder how that works?

 

Some people make money buying and selling coins like some people make money buying and selling houses, cars, or refrigerators. Those people are in a businesses. Many collectors aren't into coin collecting to make money. For us, it is a hobby and we mainly do it for fun. Of course, part of the fun, is to find a great coin for a great price.

 

I don't know. That's pretty extreme. Anybody who was buying any gold coins in 2000 is guaranteed a huge profit right now, 9 years later, from bullion value alone. I would have to guess that more than 1% of collectors bought gold coins in 2000 or earlier.

With numismatic value, there are peaks and valleys and then more peaks and valleys that can extend over long periods of time.

I still believe they should be collected for the enjoyment of it and if there's a profit when sold, than it's an added bonus.

 

I recall back in the early '90's when coin certification was really taking off, there was talk of a sight-unseen numistmatic market(exchange based) for buying/selling coins. This was supposed to be the beginnings of getting coins into people's investment portfolios along with the GE stock and Treasury bonds. I don't recall the details as to why this didn't take off, but some of the graybeards on this board should know...