A question often asked by new collectors is, "Is it a good investment?" The "it" can be coins, banknotes, stamps, Ming vases, Picasso paintings, beer mats, or even cheques. It is a question that the new collector should consider carefully.
Firstly, nothing on this site is sold as a financial investment. We sell cheques, banknotes and banking memorabilia on the basis of their historical context. Collecting these items should be regarded as a leisure activity and should be pursued for the pleasure of that activity. There can be no reasonable expectation that these items will necessarily increase in value. You can be reasonably certain that the values will change over time -
Glossy Brochures. Some organisations do offer collectables on an investment basis. They often produce some very professsional glossy brochure that suggest the benefits of their products (usually coins or stamps) as an investment. Colour graphs that illustrate average price increases for selected items are often prominently featured. These graphs are factual and accurate. They often point out that certain items went up in value by 50% or 70% or whatever in the last 12 months. They imply, though are careful not to expressly state, that if you "invest" in these items you could enjoy a similar profit level over a similar future period.
You should be aware that the examples they quote, though absolutely true, are also very carefully selected. They choose to quote the very best performance of the very best item over a specially selected period of time. Most importantly, they are also produced with the benefit of hindsight.They are nothing more that the equivalent of saying how much you could have won if you had backed the winning horse in a race which ran yesterday.
Three Possibilities. Ask yourself this. How likely is it that an item that increased in value by 50% in the past year will increase in value by 50% in the next year? Or, will the price plateau at the new higher level? Will it decrease? Will it increase? All three are a possibility but an increase value is just one of these three possibilities and it may not be the most likely.
One Question. One basic question should always be asked. If the items in question are such a good investment why are they selling them? Surely it would be good business for these organisations to retain these "choice items" and reap the profits themselves. The truth is that they will make more money by selling them on to you and let you take the risk that the value will plateau, increase or decrease.
Basic Weakness. A basic weakness in the investment strategy is that you have no guaranteed future sales. If there is a general economic downturn at some future point then two things commonly happen. Firstly, people stop or slow down their buying of collectables. Hobby and leisure activities are the first thing that people cut back on when money gets tight and budgets get strained. People pay the mortgage, the gas bill and the car servicing before they buy collectables. Secondly, some collectors because they need money will try to sell part or the whole of their collections.
Taken together, these two influences, means that they will be a DECREASE IN DEMAND at the same time there is an INCREASE IN SUPPLY. The usual result is that prices decrease. For the investor this means that just the time you need the money will also be the time that prices will be at their lowest.
Prices Rise -
When to Buy. The trick is to buy when prices are historically low and then sell when the next high point is reached. This is much more difficult to achieve than it is to describe. It means you have to buy material when it is unfashionable and unwanted. You must buy when other collectors are not buying; making acquisitions when others are making disposals. You then have to sell when items are very popular and everybody else is buying them. This is a difficult and sometimes lonely road to walk. It requires courage and perhaps a different motivation.
It helps if you both respect and have some knowledge of the history of the items you are collecting. Then the investment opinions of others matters little and the potential for price increase is not a major factor in your buying decisions. You buy the item because of what it actually is -
Being a collector does not mean that you buy your material regardless of price. You still make an assessment of value based on your knowledge of the significance of the piece and taking into account its rarity, condition and level of demand. You most certainly do actively seek out a good buy. It is just that a good buy is not defined by expectations of future prices increase. It is defined by the development of a collection that will give you pleasure. If you can enjoy your collection for a decade and then sell to recover your money, with a nominal increase to cover inflation, then you will have done well. You will have had ten years of pleasure that will have cost you nothing. How many hobbies offer that? (Note: the above is good enough to learn by rote and repeat to doubting spouses). You will also have money to pursue you next collecting adventure.
Collecting. Collecting is about the aquisition of knowledge and expertise just as much as the possession of selected pieces. It is your knowledge and the awareness of the items that makes them a collection and not the prices you paid for them. Many collectors choose to share their knowledge with like minded others and then collecting also becomes about the acquisition of friendships -
Conclusion. Investment in collectables is a poor and misplaced notion. This site absolutely does not do it. We sell cheques, banknotes and related items for collectors to research and enjoy. We find good homes for banking related material that deserves to be looked after by those who have the knowledge to appreciate it.