How not to waste cash on collectibles

What's "Collectible" & What's Not

by Rich Finzer

These days the airwaves and your mailbox are choked with ads and flyers urging you to purchase some type of "collectible." With the potential threat of inflation looming, nearly every one of these offers makes the not too subtle hint that whatever these gee-gaws are they're designed to appreciate and will soon skyrocket in value. Sadly for you, it's not true. So what exactly defines a "collectible" or what's good to collect?

Actually, anything is collectible. And some people derive great enjoyment from collecting. You're not going to net a fortune when you sell your anvil collection, but there's no harm in collecting them, provided you don't spend too much acquiring them. So what collectibles hold their value? (Hint: it isn't anvils)

Stamps: Collecting stamps has been popular since Great Britain issued the first "Penny Black." And classic US and British stamps command great value. Why? To begin with, they were issued in very limited quantities. Second, they were issued so people could prepay postage, not collect them. As an example, the three "Zeppelin" airmails that the Post Office issued were to pay the postage on the various legs of the Graf Zeppelin's historic round the world flight. There were only enough issued to make about 80,000 sets of three. And make no mistake about it; an unused set of "Zeps" commands a high price in the collector market. But these days the Postal Service issues dozens of stamps each year just to be collected. It's nearly free money for them. Folks buy the stamps, which cost a fraction of a cent to produce and squirrel them away. They're never going to be used for postage, so the USPS gets a free ride and makes a profit on every first class stamp sold to a collector of about 1700%.

Coins: Much like their vintage postal counterparts, gold and silver coins were issued to facilitate commerce, not to be collected. And because many were melted down during the 30's and 80's, few pristine examples exist. But, spurred on by the popularity of the state quarter program, the mint is now issuing coins at a breakneck pace. Like the avalanche of postage stamps, these coins are minted specifically to be collected. And for the most part, they will never become rarities. As an example, 1.2 billion state quarters were minted for each state. With about a billion in existence, they're worth in this case is about $.25. However, if you want to sort through your pocket change and build a state quarter collection, good for you. Do it for the enjoyment, not because you're going to get rich.

Privately issued collectibles: Numerous companies market replica toys, replica proof coins, artsy-craftsy plates and such. The stuff is very well made but extremely overpriced. And remember that they're only replicas. The real objects they are designed to substitute are the ones worth the money. Yet these replicas are sold with the caveat "quantities are limited." They are. They're limited to the number of orders received! Now if you want to own a replica 1920's Texaco® toy truck, for goodness sake, go buy the thing. Just bear in mind that yours is a look-alike. Conversely, a mint condition original from the 20's is worth thousands, but yours is never gonna be worth more than $29.95.

Fad merchandise: About 10 years ago, the country was swept up in the Beanie Baby craze. Folks went ga-ga for what amounted to nothing but cute little beanbags. Some were sold by the manufacturer for upwards of $50 each (ouch)! And while the frenzy lasted, the secondary market for the things was hot too. But then reality set in and the Beanie Baby "bubble" burst. These days you can buy Beanie Babies at most garage sales for a pittance. The same is true with Power Ranger figurines and plenty of other fad type junk.

In the collectibles marketplace, one truth remains constant. Price is a product of rarity and condition. As examples, an inverted "Jenny" airmail is always going to command a six-figure price tag, because only 100 exist. Carson City minted Morgan silver dollars are much the same, as "CC" mintage accounted for a mere 2% of all the Morgan dollars that were ever struck. They're rare and their prices reflect that reality.

So if you're bitten by the collecting bug, do your homework, shop wisely and become as knowledgeable about your collecting specialty as you can. If you fail to heed this advice, you can still end up with a small fortune from collecting, but you'll have to part with a large one to do it.

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