Can You Invest in Stamps To Make Money?
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Stamp collection became a popular hobby for teens back in the 40s and 50s and has continued to have a small but strong following. However many folks don’t realize that it can also become an excellent opportunity to grow their money. A “philatelic investment” is specifically making financial returns through the collection of rare, expensive and appreciating stamps. Let’s cover what makes a stamp expensive and so coveted!
What is Philatelic Investment?
Philatelic Investment is what you call the activity of investing in collectible postage stamps and selling it when its value appraises. This kind of investment was popular during the 1970s, but the industry fell due to a speculative bubble, and the price of rare stamps took several years to recover. Thankfully, the sector retook a turn in recent years.
However, before you engage in philatelic investments, you should know that investing in rare stamps requires a high degree of expertise as it can be precarious, especially for beginners. As you can see, rare stamps are one of the most liquid of all tangible investments. But it is essential if you would take note that even if it takes up a small space, it requires careful storage. It would be best if you stored it with utmost care as the condition is one of the critical factors in determining the monetary value of a stamp.
Investing in stamps is complex. A British auctioneer once said: “Unless you know what you are doing – and this only comes with many years of experience – it is challenging to buy sensibly and at the right prices. When you buy on a retail basis, you have to overcome the profit margins the dealer has built into his selling price, plus VAT.
When you sell, you also have to overcome dealing charges, whether you sell to an auction house or a dealer. That would consume an awful lot of value. To overcome that mark-up and sell at a profit would require quite a few years of appreciation.”
What should you know before engaging in Philatelic Investment?
Before you engage in stamps or philatelic investment, what are the things that you know? Well, as a stamp investor, you must have good knowledge about the following items:
- Classifications of the stamp: is a specific stamp commemorative, definitive, or special? A commemorative stamp is made in honor of a famous person. On the other hand, a definitive stamp is printed in large quantities and released more than once. Lastly, a special stamp is for the holidays, priority mail, and express mail.
- Condition grading: grading the condition of the stamp will base on the following questions:
- Does it have an original gum?
- Is it re-gummed?
- Is it unhinged?
- Is it a thinned stamp?
- What is the condition of the perforation of the stamp?
- Authentication: rare stamps are often faked or copied because of its value- this is why you should know how to authenticate a stamp.
- Handling and Storage: because the value of a stamp will depend mostly on its condition, you should learn how to handle and store it properly.
- The Stamp Market: what is the current condition of the stamp industry? Is there sufficient demand for stamps?
Knowing the things listed above will be a big help. Still, aside from that, you may also want to get more knowledge from attending stamp clubs, auctions, philatelic shows, and having a good relationship with an expert dealer.
Three key factors to determine the value of a stamp
If you want to know the price or value of the stamp, here are the things that you should do:
First, you must determine the context of the stamp: this involves you finding out about the country of its origin, date of release, and other helpful notes that can determine the history of the stamp. Pay attention to the inscriptions and watermarks as there are the things that will give away all the needed information about the stamp.
Once you already get all the needed basic information about the stamp, it is time to assess its value bases on these three key factors:
The first step in evaluating the value of your stamp is assessing its centering. The stamp that has nearly equal margins are more appealing to the eyes of collectors. As a result, you will be able to sell it for more. Aside from that, the design must also be balances according to other parts of the stamp such as the margin and the vignette.
If you found some stamps that are not centered well, then it’s mostly because of the misalignment that happened during the perforation process due to printing. It would be helpful to take note that the stamps from 1857 are originally imperforates.
As mentioned countless times before, the condition of your stamp dramatically affects its value. Experts in collecting stamps know that when a perforation is missing, colors faded, and has paper flacks or other imperfections significantly affect the price of a stamp. Stamps are usually graded from Superb to Below Average.
Superb stamps are those that have the finest quality. The centering is near perfect, the color is still brilliant, and the gum is still perfectly attached. On the other hand, stamps will get a grade of “Fine” if they have no noticeable flaws, average centering, and light hinge marks. Lastly, the grade “Good” refers to the stamps that are noticeably uncentered, still fairly attractive but have minor defects, have thin areas, and heavy hinge marks.
It is essential to know that if a stamp incurred a grade that is less than “Good”, then senior collectors would consider it as not worth acquiring. They are only perfect for beginner collectors as “space fillers”.
3. Stamp gum
The stamp gum is what you call the glue attached to the back of the stamp. A stamp will have a high value if its gum is still perfectly attached and if the gum is still original, undamaged, or if still has the same state as when it left the post office.
To know the condition of the gum, you may refer to this list:
- Mint: The stamp gum is still full, undamaged, or still has the same condition as when it left the post office.
- Unused: Has a damaged stamp gum and has hinges
- Unused without gum: Stamps that lost its original gum
Investing in stamps is not as tedious as other investments. If you want to thrive in this area, however, make sure that you also have a passion for collecting.