Are you searching for an alternative investment? If yes, the idea of investing in rare coins must have come to your mind at one point. This is because the rare coins investment has considerably risen in value over the last few years. And with the growing uncertainties currently seen across many traditional investments, rare coins are undoubtedly a great alternative to shield yourself from high market volatility.
But before you start investing in rare coins, you must first understand some things to ensure positive returns in the future compared to traditional investments and to protect yourself from losing your hard-earned money. With this in mind, here’s a look at valuable insights you need to know if you’re passionate about investing in rare coins. Let’s get started.
1. Diversify Your Portfolio
When investing in rare coins, diversity is key if you want to hedge yourself from significant loss. This is the same principle employed by professionals such as stockbrokers and day traders, and rare coins aren’t any different. Hence, you should be ready to diversify your rare coins portfolio and include a wide variety of coins. Doing this will help you shield yourself from potential and unwanted market fluctuations, thereby maximizing your potential profit from the most valuable coins.
Some rare coins to include in your investment portfolio are half dollars, dimes, early nickels, silver dollars, and quarters. You can also add classic gold coins to your rare coin portfolio. Diversifying your rare coin collection and maximizing your returns help you have a lot more fun displaying them in your portfolio.
2. Work With Reputable Professionals Only
Don’t jump into the rare coins market without first taking your time to get to know the experts in this industry. This is especially vital if you’re looking to buy high-quality and certified coins. Fortunately, you shouldn’t have difficulty getting to know reliable professionals in the coin industry as they often form an informal community open to interested individuals.
Make sure to always look at the track record of any seller before making the purchase. This shouldn’t be a challenge today, thanks to the internet where you can check out reviews from their past clients. Only after gauging the seller and professional should you proceed to buy rare coins from them.
3. Avoid Price Bubbles
The rare coin market occasionally suffers from price fluctuations like every other free market, such as stocks. This drastic shift in prices is usually due to the forces of demand and supply, which might eventually negatively affect the coin’s overall valuation. This happens because the demand for coins increases during times of high inflation and economic boom. However, coin values fall because of decreased demand from potential buyers during a recession.
A good example was during the 1980s when the price of rare coins soared and reached its peak in 1988. Yet after 1989, the price fell drastically only to pick up after six years in 1995. The value of these coins has also dropped in the last two recessions alongside other assets such as silver and gold.
Therefore, you need to understand these price bubbles often experienced in the rare coin market. This helps ensure that you’re buying coins at the right time and protect yourself from any unforeseen price fall that might cause you to suffer substantial losses.
In addition, you should hold the rare coins for a prolonged duration rather than hoping to earn quick cash from this investment. This is because earning a quick profit from investing in rare coins is often quite hard to come by and also bears many risks.
4. Educate Yourself Before Buying Rare Coins
Don’t make the mistake of jumping into the rare coin market without doing exhaustive research first to acquire as much knowledge about this investment. After all, it’s only after gaining knowledge that you’ll be in a position to pinpoint high-quality coins to buy. Extensive knowledge will also help you buy coins that promise to offer you the best value in the long run.
Thus, get as much knowledge as possible about rare coins. Luckily, this shouldn’t be an issue today as you can source this crucial information from the internet. You can also find many books that share plenty of information regarding rare coins, be it a type collection or a specific series of coins.
As you can see, you’re spoilt when it comes to the library of books that can provide you with knowledge about rare coins. This will guide you and help ensure you’re making the right investment decision and not losing money.
5. Only Buy High-Quality Certified Coins
Rare coins aren’t the same, with some having substantial value while others aren’t as profitable. This is why you should understand this before investing in rare coins, or else you’ll only have insignificant coins in your hand. Thankfully, there’s a way to get high-quality certified coins by buying from certified grading providers, for instance, Numismatic Guarantee Corporation (NGC) or Professional Coin Grading Service (PCGS).
Other accredited third-party coin grading services, such as Independent Coin Grading and American Numismatic Association Certification Service, offer second-tier certification services. However, the downside is that these third-party grading services don’t get certification from the big players. Because of this, their coins aren’t always deemed to be of the best possible quality.
When investing in rare coins certified by reputable grading players such as PCGS or NGC, search for those that fall within your target grade. These coins can also have the same pricing and an identical grade, but look for one that’s a lot more pleasing to the eye than the other.
Investing in rare coins can be a profitable investment if done right. You shouldn’t spend your money first without taking the time to understand the market, or you risk a substantial loss. This guide looks to avoid such an unfortunate situation by taking you through the essential factors you must learn before investing in rare coins. These insights will help you better see whether rare coins are an ideal investment option that you should consider.