A Companion to Rare Coin Collecting - Are Rare Coins For You?
Are Rare Coins For You?
As with other investments, there are many anecdotes about
individuals earning enormous wealth from collecting coins.
Yet, even the more believable stories are about people who
spent twenty years or more patiently learning and developing
their numismatic skills. Unlike stocks or real estate, collecting
rare coins requires a deeper commitment to learning and dilligence
to augment personal knowledge. For successful collectors,
there is an emotional attachment to the art not found in traditional
avenues for personal finance. In short, as a serious long-term
investment strategy, collecting coins is not ideal for everyone.
There are three important prerequisites one should consider
before engaging any investment strategy. The first is: Do
I have long-term funds that can be committed for a number
of years? The second: Do I have the ability to meet ordinary
living expenses with other resources. The third: Am I confident
of my knowledge of my target investment?
Having the long-term funds to commit to your investment is
particularly important when you consider the nature of rare
coins. As with other investments, rare coins require a minimum
period of "holding" and, to reap the best investment
earnings, timing is essential. Rare coins have demonstrated
a pattern of growth spanning many years and, for those "hold"
their investments over extended periods, profits are the rule
rather than the exception. However, for those expect an immediate
profit, the results are often disappointing. Keep in mind
that some coins might suffer from overexposure and investors
who purchase at the peak of a particular cycle may experience
substantial losses if they sell into a softer market.
Meeting your ordinary living expenses is paramount over any
investment activity. Never expose yourself to possible losses
that could jeopardize your standard of living. Since rare
coin investing is a non-income producing asset, it should
never be viewed as a "savings account" to dip into
as the need arises. While certainly capable of providing strong
capital gains, rare coins serve mainly as an excellent vehicle
for capital preservation, as well as a hedge against inflation
and other forces which erode the value of more traditional
paper assets.
Knowledge can mean everything. At least where investing is
concerned, knowledge can be your best asset. Being able to
"see" a good deal is probably just as important
as "smelling" a bad one. Unfortunately, there are
always those individual who are eager to feed on the naive
and gullible. Nearly all of the horror stories surrounding
bad rare coin investments concern people who knew absolutely
nothing about what they were buying. Save yourself the grief
and learn the basics before you buy.
This text discusses some of the many books, magazines and
newsletters that are available on the subject. Reading them
will help sharpen your ability to "see" and "smell"
the opportunities you may find.
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to Next Chapter "What is a "Rare Coin"?"