Buying stamps for investment - think twice before you commit yourself!
I was just looking at a stamp magazine which suggested that stamps could be a great alternative investment. In other words, if you've got £200,000, you might want to think about investing it in top quality stamps. (I apologise to anyone who lives elsewhere, but I'm going to do the calculations in pounds sterling: the figures are the same if you do it in dollars or euros.)
Unless you have a lot of surplus cash and don't mind a bit of a gamble, I'm not sure this is a good idea. Let's do the basic sums. Most of the expensive stamps have to be bought at auction. If you bid £1,000 for a stamp, you will have to pay £1,000 plus commission (usually 20 per cent) plus tax on the commission (at 20 per cent). In other words you will probably be paying £1240.
If you want to make a profit, you will have to sell the same stamp for £1630. You will then receive £1630 less 20 per cent sellers' commission, less the tax. In Britain this would mean that you receive just over £1240.
In other words, prices have to go by 60 per cent for you to break even. This is not impossible, but it's not an investment for the unwary. Unless you understand the stamp market, you can lose a lot of money.
Of course, if you know a lot of buyers you might be able to avoid the auction fees on the sale. And if you know enough big stamp collectors, you might be able to buy from them directly and avoid the buyers' commission that auctions charge. But this is strictly for insiders. After all, when you buy through an auctioneer you have some sort of guarantee of quality. If the auction catalogue says it's a fine condition penny black, you can complain if it turns out to be a fake or to be repaired.
So I wouldn't use stamps as a major investment vehicle, but if you're canny you might be able to turn a modest profit out of them. Oh, incidentally, the picture shows a five pound orange stamp. They tend to appear on the front of a lot of auction catalogues.
see also -hints and tips on collecting
how to sell the world's most expensive stamp
Unless you have a lot of surplus cash and don't mind a bit of a gamble, I'm not sure this is a good idea. Let's do the basic sums. Most of the expensive stamps have to be bought at auction. If you bid £1,000 for a stamp, you will have to pay £1,000 plus commission (usually 20 per cent) plus tax on the commission (at 20 per cent). In other words you will probably be paying £1240.
If you want to make a profit, you will have to sell the same stamp for £1630. You will then receive £1630 less 20 per cent sellers' commission, less the tax. In Britain this would mean that you receive just over £1240.
In other words, prices have to go by 60 per cent for you to break even. This is not impossible, but it's not an investment for the unwary. Unless you understand the stamp market, you can lose a lot of money.
Of course, if you know a lot of buyers you might be able to avoid the auction fees on the sale. And if you know enough big stamp collectors, you might be able to buy from them directly and avoid the buyers' commission that auctions charge. But this is strictly for insiders. After all, when you buy through an auctioneer you have some sort of guarantee of quality. If the auction catalogue says it's a fine condition penny black, you can complain if it turns out to be a fake or to be repaired.
So I wouldn't use stamps as a major investment vehicle, but if you're canny you might be able to turn a modest profit out of them. Oh, incidentally, the picture shows a five pound orange stamp. They tend to appear on the front of a lot of auction catalogues.
see also -hints and tips on collecting
how to sell the world's most expensive stamp