Stamp collecting started way back in 1840 when the first stamp was issued. This stamp is known as Penny Black. Of course it started out as a hobby, but as so many things in civilization progressed, so did the value of stamps. People now collect stamps not only as a hobby but as a lucrative business.
There are two sides to investing your money on stamps. You must know that this is a long-term investment. A collector must wait at least 5 years for a stamp to increase its value. And like the stock market, the stamp value can also crash.
If you plan on starting a collection, you must know that not all stamps can be considered valuable. Only those that are very rare and in pristine condition can give you serious mint in the future. The most important thing for a stamp to be considered valuable is its condition.
Take for example, the Penny Black. Sure, it’s the first stamp ever, but during those times, stamps used to be cut individually. Any mistakes in cutting brings down the value of the stamp. An unused Penny black in perfect condition, taken from the corner where a plate number is also displayed, is valued at R385 800 (£30,000). On the other hand, a used one only costs £10.
Another thing to take into consideration is the gum on the back of a stamp. Stamps should be kept loose and kept in special folders. Also, and this may sound surprising to a newbie, production errors or flaws in a stamp can greatly enhance its value.
If you’re just starting out, chances are, you don’t know where to start. Stamps from the Victorian era are the rarest and most valuable. Another thing to look out for is the country of origin of a stamp. The most expensive stamp came from Sweden: In 1996, a whopping R16.7 million (£1.3m) was paid for an 1855 Swedish Treskilling Banco stamp. It is considered as the world’s most costly object. As stated above, production errors can enhance a stamp’s value. These Treskilling Banco stamps were printed yellow instead of green.
Stamps are now being used as an alternative investment. Some regard it as a sound investment while critics say it is a very risky strategy. The reason behind this is not all expensive stamps can fetch a higher price in the future. Some actually depreciate. For example, the 1929 £1 Postal Union Congress stamp cost £1,700 in 1970, but now it only costs £400-750.
In the early 2000’s, experts said that stamp collecting is not an investment but a hobby. Fast forward to the present and companies such as Stanley Gibbons are saying that stamps are a safer investment than houses and even more valuable than gold. Proof is the 11% per annum raise (in the last 40 years) in the value of rare stamps.
If you have the money, you can invest in a very rare stamp and get an investment plan from Stanley Gibbons. You can put a minimum R125 000 (£10,000) under the Capital Protected Growth Plan. Your stamps are then stored in a vault in Guernsey.
You can take the stamps away after 5 years, or they can be sold at auction or be sold at 75% of the catalogue value. 30% will go to Gibbons. If the stamp market crashes, Gibbons will give back the invested £10,000. But keep in mind that this is not regulated by the FSA. It also does not qualify for any compensation scheme.
Critics have raised concerns over stamp investing. The value of stamps is driven by the wealthy collectors. These are usually the old rich aged 50 and above so in 30 years, the market could be dead. There are very few young collectors now. Stamps in Asia and Russia have steadily risen over the past years mainly because of the wealthy collectors in these countries. So again, it’s the collectors who are driving the cost.
It’s very tricky to choose stamps from the present. You would think that the Royal Wedding or Jubilee stamps would cost a lot in a few years. Wrong! Experts say that these won’t cost much because these are widely printed and distributed as souvenirs. Some first-day covers can fetch you a good price, some don’t. Some stamps also don’t cost much when individually sold, but cost around £100 and above when sold as a pack.
Stamp Collecting Tips for beginners
- Don’t use your hands when handling stamps. Use stamp tongs or tweezers. No matter how clean your hands are, the oil and dust in your hands can damage your stamps.
- Check the envelope if it’s a First Day Cover or Event Day Cover or it may have a mark identifying it as special.
- Not all stamps are created equal. Be careful when removing excess envelope in your stamp. Make sure that it is really a part of the envelope and not a part of the stamp.
- Store your stamps loose in a stamp album. Don’t glue or tape them.
The first thing to be able to start a collection is by loving it. You won’t be able to raise money if you don’t like what you’re doing; Philately is not limited to stamp collecting. It is the study of stamps, its history and the art that it represents.
Did you know that you can be called a philatelist without actually owning a single stamp? Start with the museum to learn more about stamps. Do some research, read books, interview dealers and you are sure to succeed in stamp investing.
Franking provides an alternative to stamps. Many people collect franked envelopes as well as stamps. Today franking used by businesses can save up to 38% on your postage costs.