Are Collectible Coins A Good Investment? 3 Things To Consider

Posted on: 14 March 2017


Coin collecting can be a fascinating hobby. Collectible coins are often of historic interest, and in the process of researching collectible coins from around the world, you can learn quite a bit about the time period in which the coins were made and the culture that they come from. But is coin collecting a profitable hobby as well as an intellectually stimulating hobby? It can be, but there are some important things that you need to know before you begin to make collectible coins part of your investment portfolio.

Don't Expect a Fast Payoff

There are investments that will allow you to quickly make a profit, but coins are not usually one of those investments. One study showed that investment gold coins returned an average 13.4% return, which is a very respectable profit, but that was over a period of 30 years. Other studies have showed similar gains over a period of 60 years.

Historically, coins are one investment that you can count on to increase in value, but not quickly. Don't make the mistake of putting all the money you have to invest into coins – spare some for investments that can be quickly liquidated for a profit if necessary. However, coins do make an excellent long-term investment, and they can also be a valuable legacy to be passed down to heirs.

Realize That Rare Doesn't Always Mean Valuable

Just because a coin is considered rare, that doesn't necessarily mean that the coin in question is especially valuable. Of course, a coin sold on the rare coin market is going to be more rare than the ordinary coins that you get back in change from the store and will be relatively more valuable than those coins. But that doesn't mean that the coin is very valuable.

When it comes to coins, value lies not just in how rare the coin is, but also in how sought-after the coin is by collectors. A low-mintage coin that was widely hoarded by collectors at the time it was issued may be less valuable than a similar low-mintage coin that wasn't hoarded by collectors when it was issued. Why? Because coins that were snatched up by collectors early on are easier to find in good condition than coins that didn't become collectible until later on. That's why it's important to know the history of the coins you're buying.

Understand How Coins are Graded

The scale on which coins are graded can be confusing to a beginner, and confusion can lead to mistakes in buying coins for an investment. It's important to understand what collectors and coin graders are talking about when they say that a coin is in good condition or very fine condition.

Coins are graded on a scale of 1 to 70, but they're also described using adjectives that correspond to their numeric grade. For example, the "poor" coin also has a grade of 1, and the "perfect uncirculated" coin (a flawless coin) has a grade of MS-70. You should also keep in mind that coins are divided into categories of circulated and uncirculated – the numeric grades for uncirculated coins are preceded by the abbreviation MS, for Mint State.

You should know that when a coin is advertised as being in "fair" or "good" condition, that means that it is a very worn coin, and may have lost a lot of its value. In other contexts, "fair" and "good" are neutral or positive ratings – you would probably be safe buying a used book listed in fair or good condition, for example – but when it comes to coins, those are actually very low grades. Understanding the meanings of these grading terms can help you make good decisions when buying coins for investment purposes.

Don't forget to have fun with your coin collection. Collecting rare coins, like world coins for sale, is about more than just stockpiling for investment returns. There is a satisfaction in the work it takes to build an impressive collection over time. Make sure that you take the time to enjoy it.