Are Rare Coins Considered A Good Investment?

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American silver dollar and magnifying glass on box with coins

You’ve probably heard people saying it’s better to invest in rare coins than any other form of investment out there. Actually, it has more truth to it than you expect. Also, history is proof that gold and other precious metals are not a reflection of one’s economy, unlike market stocks.

Investing in rare coins might sound simple, but it’s more difficult than you think. Also, it takes time and wisdom to become successful in this field. So, what’s the key ingredient to success? It lies within the process of buying and selling rare coins.

First, you’d want to make sure to buy rare coins only from a reputable source. Then, keep it and wait for the right time when you can sell it at a higher price. This is the period when the demand interest in the collector’s market expands and opens up the possibility for you to earn a vast fortune.

Still can’t decide right now? You might want to consider it after learning more information about it, and a few reasons why rare coins are still a good investment.

What Are The Types Of Rare Coin Investments?

According to many investors, those that dominate the market are rare coins that have already been removed from circulation for several decades. But the truth is, the actual coin market works differently. In fact, these coins are only a small part of what people use for transactions.

Also, it’s not a guarantee that only the oldest coins have the highest value, especially when it comes to the concentration of precious metals in a single coin. For example, a 100-year-old coin with a significant presence of gold might be more expensive than a 500-year-old coin with less gold.

Here are the two common types of rare coin investment:

  • Numismatic Coins: 

Also known as old coins, numismatic coins are a great way to start investing and collecting rare coins. However, the market for old coins is not easy to evaluate, because it includes a wide selection of coins. So, if you’re planning to enter rare coin investments, you might want to take a look at the other class.

  • Bullion Coins:

Unlike numismatic coins, bullion coin investments are more dominant for many keen and sharp investors. These are valued based on the mixture of precious metals, particularly gold, in a single coin. It means that bullion coins are measured close to the value of gold compared to other indices in the coin market.

On top of that, the understanding of the coin market originates from using bullion coins. This is because precious metals like gold are among the most secure forms of investment. These are even safer and offer greater asset protection than stocks and bonds.

These two types of rare coin investments are both important t o many investors. But if you want a rare coin with a higher growth ratio, you might want to consider investing in bullion instead of numismatic.

Why Are Rare Coins Considered A Good Investment?

Coin collecting. Close-up view of coins holding in blisters in coin album. Numismatics

Now that you know the different types of rare coin investments, you might want to learn the reasons why investing in rare coins is still the best option in the market:

  • Rare Coin Investments Diversifies Your Portfolio

If you’re entering the world of investments, you’ve probably heard the term portfolio diversification. It’s among the essential rules of investing. It follows the principle behind the saying that it’s not good to place all your eggs in one basket because you may end up losing all of them at once.

When you’re trying to invest, it would be best to have diversified financial products. It means you need to have different investments in different sectors and industries. For example, you may allocate part of your funds to real estate, rare coins, precious metals, stock, and mutual funds.

With regards to portfolio diversification, rare coins would be the best option. These offer not only the positive growth of your investment but also the protection of your hard-earned funds,  accordingly, preserving your wealth.

Furthermore, it’s worth noting that the value of rare coins rarely depreciates. So, if you’re looking for investments that will diversify your portfolio, look for those that are safe and would protect your money.

  • Rare Coins Has Stable Investment Record

Rare coins are among the most stable forms of investment. According to experts, there are only a few parts in history where the value of rare coins unexpectedly shifts. And as mentioned before, the value of rare coins rarely depreciates.

The stability of rare coins may be attributed to the large base of collectors. According to experts, there are around 30 million numismatists today, and every year, many people are considering joining the group. Because of this, the demand for rare coins has been steady and consistent so far.

On top of that, experts have not yet seen alarming factors that may destabilize the coin market. This is because most rare coin investors physically keep and protect their investments.

  • The Value Of Rare Coins Is Constantly Increasing

One of the most important reasons many people invest in rare coins is their ability to appreciate than depreciate. It’s among the well-known advantages investors consider when they opt to invest in rare coins. This is because they are focused on preserving their wealth and capital as much as possible. Moreover, the coin collector’s market shows stability and a constant increase in value.

Indeed, investing in rare coins is not 101% perfect. It also has risks like other forms of investments. But the great thing about investing in rare coins is its ability to reduce these risks. Also, if you search for the price history of rare coins, you’ll see how the value of rare coins moves. According to experts, the average increase of rare coin value ranges from 10 to 20 percent every year.

Like other commodities and forms of investments, the ability of rare coins to increase their value every year is based on the relationship between demand and existing supply. As mentioned above, rare coins have consistent market demands. And because it has less supply, the prices are bound to increase.

It’s fortunate for many investors that the supply of rare coins continues to decrease. Here are some factors that may contribute to the decreasing supply of rare coins:

  • Donating rare coins to various local institutions, such as museums and other large public and private collections
  • Improper handling of coins, resulting in a loss of quality
  • Natural catastrophes like floods

Here are some reasons why demand keeps on increasing, despite the potential deflation of investment:

  • Consistent growth of the population
  • Constant movement of inflation
  • Greater means of prosperity
  • Leisure-friendly

If you check the historical records of the curve between the supply and demand of rare coins, you’ll see how the demand was able to show a consistent uptrend, even when there are cases of decline.

  • Rare Coins Have Advantages Over Tax

If you’re planning to invest in rare coins, you’ll surely enjoy their advantages over taxation laws. Rare coins are exempt from sales taxes. So, even if the prices of rare coins massively increase, they won’t be taxed.

In addition, rare coin investment is the total opposite of other investments, specifically real estate and mutual funds. When you invest in properties, you’ll be required to pay annual taxes even if these are not yet sold to the market. The same goes when investing in mutual funds.

Additionally, the taxes regarding your mutual funds may increase when the price of your funds increases as well.

If you’re looking for a way to invest without losing your money and paying any taxes, you’d want to consider investing in rare coins. You’ll only be taxed once you sell it in the market, but as long as you keep it, no taxes will be incurred on your account.

There are not many investments that offer tax exemptions like rare coins, so think about this carefully, especially if your goal is to save and earn at the same time.

  • Rare Coins Are Pieces Of History

Rare coins are pieces of history in their purest form, witnessing the entire history of mankind, including its priceless achievements and significant events. So, if you love history and want to experience a bit of the past, collecting and investing in rare coins is best for you.

To get you excited, some of the coins you may collect can date back to the time of well-known Roman emperors, including Diocletian, Caligula, and The Twelve Caesars. However, essential historical pieces also come at a hefty price. The price of historical coins may range from USD$5,000 to USD$100,000 or even higher.

  • You Can Bring Them Anywhere You Want

Rare coins may be the most expensive yet portable objects you can bring and put inside your pocket, purse, and bag. Also, there are no laws restricting the movement of rare coins from one country to another.

Also, you can keep a massive value of collection worth USD$80,000 in just a few grams. In addition, there are ancient coins that may cost around USD$90,000 per piece.

  • Rare Coins Are Marketable Internationally

You can find coin markets from every continent around the globe, including South America, North America, and other capitals. According to experts, there are coins that have a stronger presence and value in other countries. For example, rare coins produced in a specific country may be best circulated within its territories.

If you’re living within the borders of the U.S, there’s a system that allows you to transact with other dealers nationwide. Also, the market of rare coins in the United States rarely closes based on time and price, unlike stocks and commodities.

Likewise, selling rare coins is safer than building companies. They may get damaged from natural disasters, such as floods, fires, and other destructive phenomena, but they won’t go bankrupt, unlike businesses that can incur damages.

Furthermore, it’s now easier to sell and buy rare coins than before because of the increasing number of dealers and brokers around the world. If you don’t want to handle the transaction yourself, you may hire a broker and pay them a commission.

What Are The Tips For Investing In Rare Coins?

As mentioned above, investing in rare coins has risks like other investments. Even if it’s normally stable, easy to earn, and can secure your wealth, it’s important to understand that the coin market is still possible to suffer a decline. That being said, here are some tips to help you avoid losses and make your finances successful:

  • Establish a well-balanced and diversified portfolio.
  • Learn everything before you invest. You may ask an expert for help and advice to determine the advantages and disadvantages of investing in rare coins.
  • Avoid price bubbles that may burst anytime and affect your finances.
  • Know the important personalities, such as dealers and brokers, and attend coin shows to learn more.
  • Make sure to purchase certified, graded, and proofed coins. Also, check if they are certified by the Professional Coin Grading Services or Numismatic Guarantee Corporation.

With these tips, you’ll be able to minimize the risks of investments and increase your chance of being successful in this field of investment.

Final Words

Collecting and investing in rare coins is a form of investment open to everyone to try, but it’s important to take note of the possible risks it entails. Furthermore, it’s usually characterized by its ability to preserve and protect wealth, stabilize your record, and consistently appreciate its value.

These are the reasons why many people are considering investing in rare coins. Also, the coin market rarely declines, and when it happens, it can swiftly rise again, including the prices of rare coins.

On top of that, rare coins are exempted from annual tax, unlike investing in real estate and mutual funds. So, as long as you keep it in your collection, you have no taxes to pay unless you sell it. After reading this, are you now prepared to make your next investments with rare coins? It’s not too late, find a local broker or check online stores now.

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