Aside from stocks, bonds, and funds, you can further diversify your portfolio through alternative investments such as coins. More than being a hobby or passion, collecting coins can give you profit in the long run. Furthermore, it provides you the pleasure of owning an item that has the potential of increasing in value overtime—value that can exceed your capital, which you can use for a new venture or to grow your nest egg further.
If you’re thinking of collecting coins for investment, here are five things you need to keep in mind.
1. You should enjoy it.
Before you think about potential returns, collecting coins should be an enjoyable activity for you, because this is how you will learn the ins and outs of this industry.
So, how can you exactly determine if collecting coins is a hobby that you can turn into passion and eventually into profit? Start with your house and search for any old coins that you or your family may have kept through the years. Consider it like a treasure hunt. Do you enjoy looking at the coins you found? Do you find it interesting to study their details? Did you feel the thrill of finding a coin, especially if it’s a unique one? If so, collecting coins can be for you.
2. Understand the risks.
Just like any investment, collecting coins have risks. You may or may not earn considerably from it, but it all depends on your timing and strategy and knowledge of how the coin market works.
Typically, you need to grow your coin collection before you can use it for financial gains, and this may take years. If you’re thinking of collecting coins for immediate profit, you may want to rethink that move. Meanwhile, if you want to leave an inheritance to your family, collecting coins may make more sense for you.
3. Do your homework.
You need to do your research. Learn the language of coin collecting and stay abreast on the latest in the industry. You can do so through reading books, magazines, news, and online sources such as blogs, and participating in online communities, forums or discussion groups.
Understand what affects the value of a coin. Typically, the worth of a coin is based on what metals it is made of, rarity, uniqueness, where and when it was made, and grade.
Always be on your guard when buying coins and doing business with dealers and graders. If you’re checking a coin out, find which firm graded it and if whether or not it works independently from the dealer. Ask for the serial number so you can check the grade online for yourself. If you’re in doubt, seek a second opinion from another grader.
Know the return policy and buy-back policy of a particular dealer. Do they accept returns and give refunds if you realize that you’re not satisfied with your purchase? How long is the return period? Do they buy coins back after a particular amount of time has passed? If so, will they charge a commission fee?
Most importantly, always do a background check on the dealer and grader. Do they have a good reputation? Are their clients mostly satisfied? How long have they been in business?
5. Take care of your coins.
If you want to make the most of your coin collection, you need to take proper care of it. Keep your coins in safe containers and store them in a secure, dark, and dry place. You can lock your coins in a secure part of your home, or you can keep them in safety deposit boxes in banks.
Meanwhile, you also need to know how to handle coins properly. Only hold them on the edges and avoid touching the other parts to preserve its value.
Collecting coins is a fulfilling hobby that can also diversify your portfolio in the long run. If you want to make the most out of this passion and turn it into profit, just enjoy the process and keep these five tips in mind.