If you're getting ready to jump into the fine hobby of coin collecting, you're joining a $10 billion per year industry. Needless to say, how much you spend is all up to you, but there's no doubt that there are guidelines to follow and pitfalls to avoid so you don't lose money or have unrealistic expectations. To make sure this is a hobby you enjoy, and hopefully make money from, here are four rules to follow if you decide to pursue coin collecting.
Do the Research First
This is a guiding principal for most numismatics: you must know what you're investing in before you make the purchase. You can research and educate yourself if several ways, but getting a book or two is a great place to start.
The Whitman Guide to Coin Collecting is a popular book with newbies as it explores how to get started with coin collecting, how to determine a coin's value, and how to care for your coins. It also covers topics that will teach you principles on spotting a counterfeit or a coin that's been altered--something that's usually done to make it look like it's in better condition than it really is.
Don't Automatically Jump on the Best Deal
You've heard the adage "if it sounds too good to be true, it probably is." When it comes to coin collecting, this adage can save you a lot of heartache.
At some point, you'll spend time at flea markets as well as browsing online stores and auction sites looking for the best deal. There are situations when good deals can be spotted and taken advantage of. For instance, you may come across a widow selling her husband's collection, knowing that it's valuable but unable to invest any time appraising the coins and selling to the highest bidder. But there are other people who could be trying to sell a counterfeit at a great price.
Hopefully, your handy book has taught you how to spot counterfeits in person. But when buying online, it can be a little trickier. One tip is to avoid sellers who keep their profiles private, don't offer a certificate of authenticity when warranted, display very few pictures, and are hesitant to answer your questions. Most experts recommend simply using your instincts to avoid buying a counterfeit.You may also want to opt for a coin appraisal yourself.
Don't Expect to Get Rich Overnight
Coin collecting may be perceived as an investment tool, but it's mostly known as a hobby. So if you're looking for something that will pay off in just a few years or will make enough to pay for your kid's college, you may be disappointed. Now, if you're patient, and you want a hobby that can help pay for your great-grandkid's college education 100 years down the road, that's another story.
Coins do tend to hold their value better than other collectibles. But a lot of it depends on what kind of coins they are, how well they're cared for, how long you're willing to hold onto them, and what's happening with the market. If you're truly looking to build wealth, you'll need to consider investing in old, rare coins as well as precious metals. Oh, and make sure you stock up on patience.
Don't Rush to Complete Your Set
If you're working on collecting a set of coins such as wheat pennies, silver eagles, or buffalo nickels, you'll inevitably have gaps in your set. Don't buy a problem coin just to fill that gap. Over time, you'll probably regret your decision, wishing that you had waited for a better quality coin to appear.
Examples of problem coins include those that have been cleaned, wiped, visibly polished, or artificially toned. Other coins may have green or orange spots, milk spots, a mottled surface, or damage along the rims. The main issue with jumping on these problem coins just to complete your set is that they are much more difficult to sell down the road. And if you are able to sell them, you'll likely take a loss. Just be patient and wait for the best coin to come along that you can comfortably afford.