With the global financial markets in turmoil, it is time once again to consider whether investing in collectibles such as rare stamps and autographs would provide a lucrative opportunity for people to lower their overall financial risk while also increasing the likelihood of substantial future capital gains. Why invest in rare stamps?
1) Rare stamps have been shown to increase in value
The greatest attraction to investing in rare stamps is their potential to increase in value, providing a lucrative return on the investment in the medium term. Historically, rare stamps have increased in value sometimes by as much as 10% on an annual basis, according to data compiled by Stanley Gibbons. Here are a few examples.
The Australia 1930 2d. golden scarlet Tete-beche (pair) (SG# 99ac) purchased for GBP 30,000 in 1998 would be worth GBP 120,000 today - an increase of GBP 90,000 or 300% in the space of ten years.
Similarly, if you bought the Ceylon Rs. 1,000 1925 Purple/Red in unused condition (SG # 323) in 1998 for GBP 14,000, this stamp would have been worth GBP 23,000 in 2008. That represents an increase of 64.3% over ten years.
2) Guaranteed return on investment in rare stamps
Stamps, like any other investment, are valued based on the principles of supply and demand and may diminish in value.
However, a few opportunities provide for a guaranteed return on investment for serious investors in rare stamps. What this means is that your principal is guaranteed to grow by at least 4% per year during the period of investment, and you will always be assured of a return on your investment. Compare this with the interest your money will earn in a savings account yielding 3% at most.
Of course, this is the minimum return an investor can expect by investing in certain portfolios of rare stamps. The expectation is that the value of the stamps themselves will increase over time, allowing the investor to sell the item with significant capital gains.
3) Investments are collateralized with rare stamps
In many countries, money deposited in banks is safe only as long as the bank remains solvent or the deposits are insured by the government (such as the Federal Deposit Insurance Corporation in the United States) in case the institution goes bankrupt. Recent events in Europe and North America have shown that even the largest of financial institutions may become insolvent.
Similarly, investments in stocks are susceptible to the health of the company. Not too long ago, no one would have imagined that global insurance giant American Insurance Group (AIG) would go bankrupt. But that is precisely what happened, resulting in the value of AIG shares falling 96.64% in one year as of October 12, 2007.
Investing in stamps means that your investment is collateralized by the stamp/s that you invest. In other words, you take ownership of the items you invest in, providing financial security and, perhaps, pride of ownership.
4) There is a growing global demand for stamps
The value of stamps are supported by demand from a large, worldwide collector base. More and more people from around the world, including from emerging economies such as China and India are active purchasers of stamps.
5) There is a limited/diminishing supply of stamps
Rare stamps are limited in supply, and are diminishing in number with the passage of time. This suggests that stamps are a good retainer of value which have significant and unlimited upside potential in terms of value.
6) Rare stamps are relatively affordable
Few people would be able to afford an original painting by Van Gogh, Picasso or Rembrandt. While some extremely rare stamps command phenomenally high prices, there are still very affordable rare stamps that have tremendous potential to increase in value, making them ideal to be a part of a well-diversified investment portfolio.
7) A long historical record of stamp prices is available
Stamps have been collected by people around the world for more than 150 years, and several catalogues have tracked the change in their values over this long period of time. This data, documenting price changes of stamps over time, are widely available and accessible to anyone wishing to purchase or invest in rare stamps.
For advice on how to make capital gains by investing in rare stamps and the best available opportunities, please email