Advantages and Disadvantages of Trading Stamps

Advantages

\"stampStamps are not highly  correlated with other forms of investment and may therefore represent a valuable diversification within a wider portfolio.

Stamps are highly portable stores of wealth and are easily transported over national borders.

An ageing population in western countries means that investors approaching retirement may resume childhood hobbies.

There are millions of enthusiastic stamp collectors around the world creating a global marketplace.

There is a finite supply of classic stamps.

Stamps are not a financial asset and so may perform better than cash in times of high inflation.

As a tangible asset, a stamp cannot go out of business like a company quoted on the stock market.

Stamps are a relatively confidential investment. Unless bought at a public auction, ownership is private and there is no public register as there is for many investments inequities.

The investor is able to hold and admire his investment, and enjoy its  asthetic aspects.

Many stamps have an interesting historical background.

 Disadvantages

Investing successfully in stamps requires a high degree of specialised knowledge. This takes time to acquire and there are many pitfalls for the inexperienced investor. Some of the risks and disadvantages are:

The return is not guaranteed.

The cost of buying is high compared to most other forms of investment.

The cost of selling is also relatively high.

Stamps may need to be expertised, for a fee, to ensure that they are what they appear to be.

As tangible items, stamps may need to be insured and are at risk of physical damage or deterioration.

The future market for the sale of philatelic items is uncertain. The demand for philatelic items comes principally from collectors, not investors, and the majority of collectors are aged over 50 in western countries. There are relatively few younger collectors in Europe and North America that would be expected to be the buyers of the future, although anecdotal evidence suggest that may not be the case in India, China and other developing countries.

In the longer term, the future existence of postage stamps may be in doubt as people use electronic communications more and more and send fewer letters. If stamps are no longer sold for postage they may cease to be collected and if they are not collected, the vital collector demand that underpins the investment market may disappear.

Stamps have little intrinsic value, they do not have the raw material value of a gold coin, they do not represent a share in a business like equities, and they usually lack the enduring visual appeal of a great work of art.

Stamp investment is relatively unregulated compared with, for instance, investments in a  mutual fund and investors may have little protection if things go wrong.

The size of the philatelic market is small compared to the value of the stock market and vulnerable to aggressive buying by speculators which may distort prices. This happened in the 1970s when a speculative bubble was followed by a collapse in prices.

Stamps do not generate any interest or dividends.

It may be impossible to determine the current market value of your stamps without selling them.

Stamps packaged as \”investment portfolios\” may be charged at prices higher than their normal market value.

Stamps may be relatively illiquid as finding a buyer may take time.

There is very little reliable and independent historical information about the performance of stamps as investments.

A long term view is necessary. A quick purchase and sale is unlikely to be profitable.

When more traditional investments are doing well, interest in alternative investments like stamps may quickly wane.

Special instructions will need to be given to spouses or executors in the event of the owner\’s incapacity or death as they may be unfamiliar with philatelic items.

Stamps may take time to be sold unlike cash, equities or mutual funds which can usually be realised with minimal delay.(Source-Wikipedia)

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6 Responses to Advantages and Disadvantages of Trading Stamps

  1. Dr Pradeep jain says:

    Really very nice article not only for begieners but also for old collectors.Time to time such guidelines are necessary to guide a collector to turn their hobby into an investor.

  2. prakash bubkiya says:

    REALY GOOD INVESTMENT BEING A LAY MAN ,ALWAYS PURCHASE FROM POST OFFICE /PHILATELY BEAURO AT PAR ,
    & GRASUALY SLOW /FAST RATES INCREASE IN MKT ,
    INITIALY OPEN AN A/C IN POST OFFICE & GET MATERIAL AS PER INVESTMENT /COLLECTION ,
    TAKE DECISION ATONCE ,
    PHILAMIRROR IS REQUESTED TO INSPIRE FOR PHILASENSEX
    SIGHT FOR MKT DEMAND & VALUE OF MATERIAL .

  3. SUNIL KUMAR GARG says:

    The biggest point to consider about Indian Stamps in investment
    Philately might be the fact that India Post is printing
    commemorative stamps in a considerably small number.
    That should help those buying Indian mint stamps today.

    Otherwise the i-want-it-now, very-2 short term attitude
    of new generation does not suit philately.

  4. Anonymous says:

    I have lot of stamps both mint and cancelled which I want to sell and recover my money hopefully with some profit as reward for holding this stuff for so much time.
    As might be clear from above, I certainly am no lover of stamps or hobbyist of any kind, but just started replicating others in hope of making some easy money. Apparently an investor would never admire or enjoy aesthetic aspects of his investments. He would just dream of the money he would be making out of it and be very happy. Otherwise why I would be discussing of investments and advantages and disadvantages out of such an innocent hobby.
    Philamirror thanks for such beautiful article. Perhaps you can help in guiding on how to sell stamps.
    Thanks in advance.

  5. cjbambam says:

    nice.good information tnx to internet

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