Investing in Stamps

A noticeable feature about stamps as an alternative investment is that it is a market that tends to be less volatile than some other forms of financial speculation such as commodities and equities.

Some rare stamps also have the capacity to generate some exceptional profits, with a collection put up for sale that included two Post Office Mauritius penny blue stamps being a prime example. These stamps were purchased for £29,000 back in 1972, which was a lot of money at the time, but they achieved a sale price of £1 million when sold at auction a few years ago.

Some of the most expensive stamps in the world with give some of the most iconic paintings a run for their money in terms of valuations. The Treskilling Yellow is believed to be the most valuable item in existence, if you are measure value by weight and volume. Weighing a mere 0.03 grams, the stamp had a face value of three-shillings but is now estimated to be worth £5 million.

Contrasting popularity

What is interesting about this market in particular, is the fact that the art of stamp collecting is in rapid decline amongst young collectors, as evidenced by the membership numbers of kidstamp, the UK national organisation for junior stamp collectors, which now has just 1,000 members compared to 100,000 in the early nineties.

In contrast to these figures, the popularity and reputation of stamp collecting as a viable alternative investment strategy is enjoying contrasting fortunes and is growing in number.

How to collect

It is now easy to buy a single portfolio of stamps in just the same way that you would buy a single investment fund holding a collection of stamps, or you can consider the traditional route of collecting.

Specialist funds like Stanley Gibbons offer several capital protected plans for example, which allow you to invest in rare stamps without having the required knowledge of the market and with the security of protecting your original capital invested against a decline in valuation.

An investment of upwards of £10,000 which will be for between 5-10 years will buy you a portfolio of rare stamps which you can keep securely or have stored and insured by the company.

If the stamps have not increased in value within the agreed term, there is a promise to refund investors money. This is a scheme that is not regulated or covered by a compensation scheme so it is not exactly risk-free, but a scheme like this might be attractive for anyone wanting exposure to rare stamps, who does not have the insight or confidence to make their own purchasing decisions.

If you want to create your own stamp collection, the suggestion from industry experts is to collect thematically, but unless you are fortunate enough to stumble upon a rare and valuable stamp, these collections do not normally show a great increase in value.

What is meant by thematic collecting, is sticking to just buying stamps that feature royalty for example, or a subject that interests you such as aviation or a historical theme. Building up a collection like this will help you to build confidence in the subject and may assist in giving you a better idea of the merits of an investment scheme you might be interested in.

Grades

You need to be aware that stamps are graded like many other collectibles.

These grades provide a valuable guide to condition and value and stamps being sold with the description of superb,very fine and fine/very fine, are worthy of consideration as investments whereas just fine and poor stamps are best avoided as they are not investment grade.

Always try to research thoroughly before investing. Stamps like the Penny Black enjoy notoriety but are not as rare as you might think, as nearly 70 million of them were printed and some can be bought for as little as £10.

Stamps as an alternative investment are proving popular and if historical trends are anything to go by, you should be able to enjoy steady but not spectacular growth if you invest wisely.