Coins, Paper Money, Or Stamps?

Coins and stamps are tangible reminders of years gone by. Yet, while coin collecting is flourishing as a hobby, stamp collecting has gone by the wayside. Many families who inherit stamp collections are more interested in getting the collection appraised than continuing the tradition. You can't collect something if you don't know what it is.

Stamp collecting dates back to 1840, when the first stamp was issued in England. One of the earliest indications of stamp collecting is an advertisement from an English newspaper in which a young woman sought used stamps as a way to wallpaper her room. Soon, post offices discovered stamp collectors as good sources of revenue. From there, an unprecedented surge began.

There are no rules about stamp collecting. Some people collect stamps from a certain country while others focus on a motif, such as flowers, ships or buildings. Stamp collecting is a wonderful hobby because the collectors vary from those who have next to nothing to millionaires.

Unfortunately, stamp collecting has simply lost its appeal to younger people.

Coin collecting, on the other hand, is at its peak popularity. Rare or modern coins offer history that collectors can hold in their hand, and every period during the past 2,500 years is reflected in coinage.

Stamps disappear and become part of the ground. A coin can be dug up and, while new varieties of stamps are not really being discovered, new types of coins from all over the world are still being found.

While improperly stored coins can degrade and lessen in value, paper money can be damaged by handling, sunlight, or water. All are subject to flood, fire, or other natural catastrophe.

A stock certificate with 35% of it burned away is just as good as a mint one in terms of its value on the exchange. In fact, as long as ownership can be proven, it often doesn't even matter if the physical certificate exists.

You can insure against these problems, and go to great lengths to assure proper storage conditions, but all of this costs money and adds to the cost of the investment, often for many years before there is going to be any return at all.

Today, coin collecting is one of the world's most popular hobbies. Amateur collectors enjoy coins for their beauty, rarity and the stories behind them. Added to this is the excitement of searching for and finding specific coins and the challenge of identifying unfamiliar items.

Why is coin collecting thriving and stamp collecting dying? Coins are still being used and are still fascinating. It is an investment as well as a hobby. Coins continue to go up in value while many stamps are at the peak value they will ever receive. Furthermore, many are going down in value.

It's amusing that people who collect coins, paper money, or stamps, always want some sort of "return", at least somewhere in the back of their minds. These same people think nothing of buying a car for $20,000 and selling it three years later for $5,000.

Enjoy your hobby, and consider whatever you invest in it to be pleasure money, the same way you would count money you spent going to ball games, or dining out, or buying new clothes. Then, whatever you or your heirs get out of your collection is pure profit, whether it is more or less than what you originally paid.

After all, if you spend $20 a week going to the movies, you don't expect to get anything for your $1,000 a year collection of ticket stubs, do you?

As far as investment in paper money in general, I would not consider it. If someone is buying notes and thinks how much will I be able to get when I sell it again, this person has the wrong hobby. Enjoy collecting for the pleasure and for the beauty of the notes as well as for the fun of it.

I believe there is room in both the collecting of coins and paper money for both collectors and investors.

The important thing to remember in investing in coins or banknotes is rarity and desirability.

So I believe there can be a case made that both collecting and investing in banknotes and coins are valid, and valuable activities.