Most stamp collectors collect for fun pure and simple. But there is no reason why a stamp collector cannot have fun and maximize his chance at making a little money when he goes to sell. Unlike photography or skiing, philately is one of the few hobbies where the participant's investment in his pastime not only is partially conserved but in many cases it can be increased. Going about collecting with a view towards appreciation does not mean that you are an investor. But such collecting is not for everyone. Some people choose what they wish to collect for completely aesthetic grounds and will not be persuaded otherwise. That is fine. But if you want to collect in a financially clever way, here are some things that you should know.
First, foreign new issues generally do no go up for at least twenty years after their issuance. There are exceptions to this rule, but for every one, there are a thousand sets that conform. This makes new issues a rather bad buy from a conversation of capital standpoint. Typically, new issues which are bought at an average of 20% over face value trade a few years later at only 20% of that price. So if you need or want these stamps, a little waiting and a little searching can save you a great deal.
U.S. mint stamps never go up (well almost never). Only fifteen or twenty of the 1200 stamps issued since 1955 trade at enough over face value now to be worth not using as postage. True, you can always use mint stamps to mail a letter but if you have a large quantity or odd values (and who does not with constantly changing postage rates), postage is traded at discounts of from 15%-30% off face value in the trade. If you need a single, or a plate block, or even a sheet for your collection, go to it, but just buy one. Do you really want to be making an interest-free loan to the USPS which will give you a negative yield when sold? With high interest rates, one does not have to be an economist to realize that the price of this folly is huge.
Another smart thing to do to increase your chances of profiting from stamp collecting is to avoid non-Scott listed stamps, "errors" promoted in conjuction with Omnibus series, and stamps from places you (or anyone else for that matter) have never heard of. Such stamps have until now shown high initial cost and low and difficult resale. It is possible that someday everyone will want the serrated tooth variety or some scarce limited edition souvenir sheet from some piece of nowhere, but until now such buying has not seemed to have produced many examples of economic gain.
Specially prepared First Day covers and presentation booklets of stamps with lots of pretty pictures and interesting and informative write-ups are nice to own. But always remember, any modern FDC is traded on the wholesale market for about the same price, whether you paid $5 for it or made your own for 29 cents.
There are quite a few other things you can do to help maximize your chances for gain. First, you should try to collect countries that are relatively wealthy and have a large and active body of collectors buying and selling stamps. A home market is very important and it is this reason that U.S., Japanese and European stamps have performed well over the years.
It is important that a buyer learn to evaluate quality if he is going to have a chance at a gain. Similar items can vary in price by a factor of ten or more with little apparent difference in quality to the untrained eye. Also, collectors should learn at least the basics of regummed, reperfing, and repairs (our pamphlets on these are a start) in order to be certain of what they are buying. It helps to buy your stamps from a reputable stamp dealer, just as quality goods are more generally sold at a fine store rather than a cheaper one, but this does not preclude the responsibility of the purchaser knowing about what he is buying.
Avoid paying high prices for varieties in very specialized areas. Remember, it takes two factors to create price and scarcity is only one of them. Someone else is going to have to want your missing fly wing variety, or you are in trouble.
Basically, study and searching are required to get good prices and good merchandise. But by observing the rules, you will avoid some of the most costly traps. Remember, though it is not guaranteed that your stamps will increase in value, with care and effort, you at least have a fighting chance.
First, foreign new issues generally do no go up for at least twenty years after their issuance. There are exceptions to this rule, but for every one, there are a thousand sets that conform. This makes new issues a rather bad buy from a conversation of capital standpoint. Typically, new issues which are bought at an average of 20% over face value trade a few years later at only 20% of that price. So if you need or want these stamps, a little waiting and a little searching can save you a great deal.
U.S. mint stamps never go up (well almost never). Only fifteen or twenty of the 1200 stamps issued since 1955 trade at enough over face value now to be worth not using as postage. True, you can always use mint stamps to mail a letter but if you have a large quantity or odd values (and who does not with constantly changing postage rates), postage is traded at discounts of from 15%-30% off face value in the trade. If you need a single, or a plate block, or even a sheet for your collection, go to it, but just buy one. Do you really want to be making an interest-free loan to the USPS which will give you a negative yield when sold? With high interest rates, one does not have to be an economist to realize that the price of this folly is huge.
Another smart thing to do to increase your chances of profiting from stamp collecting is to avoid non-Scott listed stamps, "errors" promoted in conjuction with Omnibus series, and stamps from places you (or anyone else for that matter) have never heard of. Such stamps have until now shown high initial cost and low and difficult resale. It is possible that someday everyone will want the serrated tooth variety or some scarce limited edition souvenir sheet from some piece of nowhere, but until now such buying has not seemed to have produced many examples of economic gain.
Specially prepared First Day covers and presentation booklets of stamps with lots of pretty pictures and interesting and informative write-ups are nice to own. But always remember, any modern FDC is traded on the wholesale market for about the same price, whether you paid $5 for it or made your own for 29 cents.
There are quite a few other things you can do to help maximize your chances for gain. First, you should try to collect countries that are relatively wealthy and have a large and active body of collectors buying and selling stamps. A home market is very important and it is this reason that U.S., Japanese and European stamps have performed well over the years.
It is important that a buyer learn to evaluate quality if he is going to have a chance at a gain. Similar items can vary in price by a factor of ten or more with little apparent difference in quality to the untrained eye. Also, collectors should learn at least the basics of regummed, reperfing, and repairs (our pamphlets on these are a start) in order to be certain of what they are buying. It helps to buy your stamps from a reputable stamp dealer, just as quality goods are more generally sold at a fine store rather than a cheaper one, but this does not preclude the responsibility of the purchaser knowing about what he is buying.
Avoid paying high prices for varieties in very specialized areas. Remember, it takes two factors to create price and scarcity is only one of them. Someone else is going to have to want your missing fly wing variety, or you are in trouble.
Basically, study and searching are required to get good prices and good merchandise. But by observing the rules, you will avoid some of the most costly traps. Remember, though it is not guaranteed that your stamps will increase in value, with care and effort, you at least have a fighting chance.