Whether a person is investing in stamps to gain a monetary benefit or he/she has some eager to satisfy their passion, it really varies person to person. When figuring out the value of a stamp one may try to find out the answer of two questions. How rare the stamp is? And is collecting that stamp is a good investment?
After knowing the answers those 2 critical questions, then you may invest in stamps. Nevertheless, these two factors add value in stamp’s worth. Catalog price also gives an idea of a stamp’s longevity and rareness. The stamp might be bought or sold at a price below or above its catalogue price, depending upon its condition.
Before digging deeper in to address Is Collecting Stamps a Good Investment, let’s get to know the stamp collecting better.
What is Collecting Stamps?
Stamp collection is one of the oldest and lifetime hobbies. It’s an enjoyable and knowledgeable driven process at the same time for all types of age groups.
One can start a stamp collection without a big investment. The study of stamps and postal materials is known as “Philately”, and the person who collects it is termed as “Philatelists”.
Some people collect stamps as a hobby, and some do for investment purpose.
There are many types of stamps around the world. Some of them are booklets or coil stamp, commemorative, definitive, sheets etc. Self-adhesive and conventional adhesive, have the difference no lick and stick and lick and stick respectively.
Is Stamp Collecting Dying?
With the passage of time, the number of people who do stamp collection has declined. The internet has replaced this hobby by attractive games, which makes users more engaging, and today’s generation thinks stamp collection is boring. As time goes by, stamp collection is losing its popularity among the younger generation.
Due to the limited availability of expensive stamps, people find other opportunities closer at hand. According to the estimated amount of collectors by The Wall Street Journal, there are globally only 60 Million people who still engage in stamp collecting. Out of them, only a few tens of thousands are stamp dealers, who are willing to supply stamps along with their albums, catalogues and other necessary things.
On the other hand, it is believed that stamp collection is still one of the best indoor hobbies of any time. Although, it will be unfair to predict that philately has become extinct, as long as there is a passion and love for stamps, people keep on collecting them.
There are still people who collect generational wealth through collecting and investing in rare stamps.
Why Invest in Stamps?
More than 150 years, people are investing in stamps. Philately invests in stamps to realize a profitable return in the future. Contrary, some philately are still investing in stamps even stamps collection is so rare.
Back in 2014 a shoe designer, Stuart Weitzman once paid $9.8 million for British Guiana Magenta 1c, almost four times than the previous record for a single stamp the Queen Elizabeth II, Franklin D.
The list of the most valuable stamps in the world discussed below.
Roosevelt, Charlie Chaplin, John Lennon and Ayn Rand are some famous personalities who used to invest in stamps as a hobby and investment.
Do Stamps Appreciate Value?
Investing and collecting of stamp is a hobby which is both rich in history and today do.
However, collectors who have traceable historical background are often considered more valuable, for instance with historical relevance and storied beginnings.
Condition of the stamp also adds significant value in its price.
Stamp’s worth is determined by assessing its historical background, condition, quality and the gum its hold at the back. Once Warren Buffett said, that the stickiness on the back of a postage stamp is the most worthy thing ever on the earth. This tells that gum on the stamp also contribute in its value.
The stamp collection begins when collector found a rare stamp in excellent condition.
Which Stamps Appreciate Value? Their Characteristics and Value Determinants
Stamps are categorized on a scale from
- superb,
- fine,
- good to
- below average.
Below average stamps are not worth acquiring for the senior collectors whereas, beginners often collect for starting point referred to as “space fillers”.
On the other hand, the value of stamps declined on the number of creases, tears and faded designs. Similarly, stamp’s stickiness also categorized in grading from
- mint,
- unused to
- unused without gum.
Mint are, generally those stamps which we can purchase from the post office.
However, unused and unused without gum are those stamps that are original stamp and have lost their original gum, respectively.
Rareness is one of the major factors in stamp’s value. Those stamps which are limited in number, have printing error are considered more valuable.
How to Measure Stamp’s Value Before Buying/selling Stamps?
Generally, when buying stamps, it is advisable to buy at a low price, so eventually one can sell it at a good profit.
The authenticity of a stamp, is another important contribution to its value. One of a good example is to search out for Penny Black. They are likely to be a good investment, and well regarded. One can purchase it as low as 10 Euros.
To ensure your stamp is authentic one must make sure to get a certificate from a trusted seller, stamp club or authority. According to the classic value-investment principle, the seller should seek to buy below fair value, which they could easily do because of their expertise, international networking and purchasing power.
Experts suggest, the collectors to invest only in those stamps, which have a healthy number of collectors. Hence, appreciation or depreciation of stamp’s value is highly dependent upon the 5 characteristics of a stamp;
- rareness,
- liquidity,
- condition,
- price, and
- authenticity.
Which Stamps are Losing Money? What are Their Characteristics?
The stamp which is purchased from a post office has a similar condition to ‘mint’. The hinge marks containing on mint stamps can decline its value. That is why, it is recommendable to buy mint stamps.
Those stamps copies which are in faded color or torn are less likely to be valuable but, they can serve the purpose of space fillers, for beginners. In short, there is no organized forum for stamps trading usually it has a flea market.
Adding to this fact, eBay doesn’t provide trading information in ready to a usable form. Therefore, catalogue companies have to do this job. With these facts, overall stamps prices have dwindled.
The major reason behind their decline in prices, is part-time or one time sellers, who want to undercut the market to liquidate their collections. They just want to sell their bloodlines lifelong efforts to pennies and have a meal at MacDonald’s.
Which Factors Should You Keep in Mind, While Dealing With Stamps?
What professional dealers need to know is that most of the sellers are retired now, they contribute very less time and effort to conduct their business.
Factors that might affect the condition of stamps are
- color,
- perforation,
- margins,
- centering, and
- gum on the back of the stamp.
Those stamps which have not lost their color in exposure to dirt, pollution, sunlight, lighting and human contact are likely to be more valuable.
The stamp will be valued more if its design is centered inside its perforations.
Condition of stamp still is the highest factor in determining its value.
What are the Current Trends in Investing in Stamp?
Over the last 40 years, GB Rarities Index has shown 10.1% of compounded annual growth rate for investing in rare stamps.
Surprisingly, with steady growth in the number of stamp collectors from the UK and countries of BRIC economies, it has observed that stamp prices are increasing significantly. However, it will be wrong to compare the stamp’s profit with any other class of asset. The reason being as a valuable asset, stamps has a limited supply of investment-grade stamps.
Trends had shown that 250 Great Britain stamps, had reached GB 250 Index as listed on Bloomberg over the last 10 years. This also shows the stability and consistency of the stamp market.
Why Stamps are a Valuable Asset?
In an investment portfolio, stamps had shown diversification. This is because it is unrelated to other popular classes of assets. In other words, that means its value is not dependent, upon an increase or decrease of other valuable assets such as property, equity, and gold.
Investment in stamps is relatively more secure than any other asset. But, as always, the risks are high.
Most of the professional collectors invest in stamps to secure the capital, they have saved over the years. At the time, when classic preservation assets gilts and cash are giving low returns, stamps investment might become more valuable.
Currently, Gilts are so overpriced that financial analysts termed them as ‘gilt bubble’, also said they are nearly impossible to invest in them.
Whereas, cash provides low-interest rates and due to inflation, investing in cash is even more worse and risky.
How Stamps Become Valuable?
It is generally understanding that stamps, which have margins with printing plate number or other inscriptions that found with a block of stamps, are more valuable. Also, perforations around the four edges of the stamps make it’s more preferable.
A hinge is a small paper attached at the back of the stamp which helps in pasting the stamp on the paper. It should be as pristine as possible because it adds good value to the stamp. Sometimes hinges leave marks on the back which affects in reducing the value of the stamp.
If stamp collection is worth anything as an investment strategy, one may ask then why it became a hobby?
Let’s find out.
How Stamp Collecting Became a Hobby?
In the early 90s, during the time of Victorian-era, the post became nominal because of the little black stamp. This is one of the oldest stamps to date. It had turned 175 years old in May 2015. However, in pristine condition, they remained in demand and sold out for thousands of pounds.
Due to its popular demand in China and other emerging economies, that kept the stamp as a valuable asset. Surprisingly, there is more than 60 Million collectors of the black stamp, and its price has appreciated 3 times over the past 10 years. Which had generated a compound growth rate of 11.6%.
Similarly, it is also observed that over the past 7 years Chinese and Hong Kong stamps, also had good amount of collectors. Chinese are keen on collecting their own country’s stamp.
In Financial Times June 2015 Stanley Gibbons investment depicts, 250 British Stamps with the sale of British Guiana 1-cent Black on magenta for $9.48m. This is the highest price ever a stamp auctioned in the stamp market.
Let’s find out what are the most valuable stamps in the world to invest on.
10 Most Valuable Stamps to Invest
On 1 May 1840, in Great Britain first stamp came into being. After a year, people started knowing and collecting them.
One of the women collected 16,000 stamps to decorate her room. Just imagine how much they worth now.
From then, for 180 years, stamps have been collected by people for different purposes. Philatelists, the person who collect stamps have put the highest price for the rarest stamps, since prices have risen because more collectors are chasing fewer kinds of stamps. Whereas, fewer newly discovered unused old stamps said Keith Heddle, managing director of Stanley Gibbons.
1. Penny Black
The first stamp issued was Penny Black in the UK in 1840. It carries a picture of Queen Victoria ll. The origin of the country is not mentioned on the stamp as it was against the custom. It was not the rarest one nor it was issued as a valuable item for collectors, but it just had set a path for postage stamps for British.
Being favorite among the collectors, an unused Penny Black stamps cost up to €3,000, although there being plenty of Penny Blacks for sale.
2. Inverted Swam
The second most valuable stamp is the Inverted Swam.
It was issued in Perth, Australia in 1855. It was printed after following a lengthy process of lithography. You would be amazed to know that it is one of the unique and most famous stamps in the world, not because It’s beautiful, but it had first made errors in the world.
Its frame is inverted, which makes it unique, and people love for its imperfection. In 1983, it was lastly sold for €35,500, which is obviously a massive amount for a single stamp.
3. Red Mercury
The third one is Red Mercury which is of value €37,000. The purpose of its usage was mailing newspaper rather than postage. It has a picture of the Roman God in yellow, red and blue prints, which was usually depended on the number of newspaper in the bundle.
Unfortunately, it survived less and soon was replaced by other stamps.
4. Hawaiian Missionaries
The next most rarest and valuable stamp is Hawaiian Missionaries, worth of €39,000. It was the first-ever stamp being produced in Hawaii. It was used by missionaries for their correspondence along with their names.
5. Inverted Dendermonde
The fifth stamp named Inverted Dendermonde depicts upside downtown.
Due to its printing error, it became the greatest contribution of Belgium. People say that the reason behind the error was two sheets of the stamp’s first run and one pane of the second.
Only 17 of these stamps still exist from which two of them are lost as a result of the murder of a famous stamp collector.
To own one of them, you just need €75,000.
6. Inverted Jenny
It is another stamp having printing error, issued in 1918 in the US.
It has an inverted image of the Curtiss JN-4 airplane.
Today it’s worth is €750,000 because only 100 copies were managed to produce.
7. Baden 9-Kreuzer
The next money marker stamp is popular not because of its invertedness but due to its color.
Baden 9-Kreuzer was issued in two-colour pink and green. The former worth 9-Kreuzer and the latter worth 6-Kreuzer. In 2008 one of them was sold over €1 million. Only four are known to exist today.
8. The First Two Mauritius
The first British Commonwealth Stamps that were produced outside Great Britain was the Mauritius stamps. It was issued in 1847 in Mauritius.
These stamps were like British stamps with an image of Queen Victoria, and holding the value of more than €1 million each.
9. The Treskilling Yellow
The second last most expensive stamp is The Treskilling Yellow which is worth around €2.1 M.
It is known worldwide because of the fact that originally it had to be printed in a blue-green color having three skilling print but actually printed in yellow color.
10. The British Guiana 1c Magenta
The first most valuable stamp in the world is The British Guiana 1c Magenta which costs 9 M Euros.
You must be thinking of the fact that each year is adding more value to stamps. Hence, there is only one known to exist of this kind which makes it more valuable in the eyes of collectors.
Conclusion
Hence, due to historical and geographical background, people take an interest in collecting Stamps. On stamps, many subjects have beautifully depicted on the small miniature of art, ranging from horses, ships to birds, Kings and Queens pictures.
There are Stamps of flags, cartoon Film/TV, country, animal, holiday, buildings and many more. The most popular ones are by the country. One can choose one of the topics and start collecting. Most individuals make stamp collecting hobby because of enjoyment and relaxation.
While purchasing stamps from the post office, do check stamp’s condition, which will add value in the long-term. Contrary, the American Philatelic Society does not promote the fact that stamp collection is a better investment than any other hobby.
It is observed to be impossible to invest in stamps without acquiring the right knowledge, as stamps are a miniature work of art.
On the other hand, stamps do provide a much greater return on one’s investment if he has the right amount of stamps in his collection. Philately secretly wishes to attain rare and elusive stamp that helps makes them wealthy in the distant future.
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