3 Steps for Getting Started Investing in Rare Coins

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Investing in rare coins takes the same amount of preparation as do other forms of investment. The smart investor will always take his or her time in understanding the landscape of the investment market before putting any money on the table. When investing in rare coins, this research is particularly important because it is vital for preventing fraud or mistakes that can waste a huge portion of the initial investment.

Read on for three tips on investing in rare coins the smart way.

1. Understand the Difference between Bullion and Coins
Investors have increasingly turned to precious metals as a good form of investment over the past several years for a variety of reasons. The security “paper investments” like stocks and bonds came into question when the market slipped in 2008, and investors began to realize they needed better ways to invest away from currency-dependent products.

That’s where precious metals come in. However, before investing in rare coins or bullion (or one of the other forms of investment in precious metals), individuals need to understand the differences between the two.

One major difference is liquidity. Bars of gold, silver, and other precious metals come in larger amounts, meaning that they are typically more difficult to sell. Coins are sold in smaller amounts, and as a result, they have higher liquidity. In addition, the value of coins can vary according to numismatic value, whereas bullion varies only according to spot price.

2. Know the Rare Coin Market
Investing in rare coins can be more difficult than investing in other forms of precious metals because of the influence of their value as collectibles.

For other types of precious metals, investors can consult price indexes and obtain an accurate picture of the market for various forms of precious metals investment. For investing in rare coins, it is a different story. Coins are dealt on the basis of multiple factors, and rare coin dealers are not always as investor-friendly as investment brokers in other areas may be.

Before you get started investing in rare coins, you should understand how the prices of rare coins can vary, as well as why they shift when they do. Also, keep in mind that dealers will not pay more than blue-book prices for rare coins, so you should work to limit the premium you pay for your coins above the spot price for the precious metal.

3. Start with Safe Investments
It may be tempting to jump into the rare coin market with a major investment because of the inherent advantages to investing in rare coins. Whenever you invest in precious metals, you are giving your portfolio important diversification, and rare coins are also a fun investment to make because of the historical quality of certain coins.

However, when you are first getting started, it is smart to go for coins of lower value initially so that you can minimize the blow if you make mistakes. The coin market takes some getting used to, and the lessons will be easier to take if they don’t cost you hundreds of dollars.