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Buy the Best you can afford
Gazes
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I see this advice offered over and over when it comes to rare coins as an investment. However, I think it really needs to be said in conjunction with "and can hold for 5 years or longer (preferably 10 years or longer)." For instance, maybe I can afford to buy now a coin for $5000 and that would get me the best I can afford. However, the additional question is can I afford to pay $5000 now and not need that money for at least 5 years. Taking just the best you can afford advice without taking into consideration the holding period could be the worst advice for someone if they spend more money than usual on a coin and then need to sell a year later.
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The rule I try to follow: "Buy the best that fits into your collecting budget and goals."
Note I said COLLECTING.
If you are an investor, or flipper, or dealer, or speculator, or whatever, the logic and rules may be quite different. In some of those cases, it might be advisable to, "Buy the cheap crap you know you can easily sell".....or, "Stretch till it hurts, and sell when you make 5%"....who knows. The Risk/Reward scale shifts, and one rule does not fit all.
I think the word "afford" is a proxy for all of this. If you are not thinking about that, you should be.
Yes buy eye appeal, but not at any price.
If you buy fantastic eye appeal at a good price, you can consider it an investment, IMO.
i'm a simple collector who buys whatever gets his notice, i have no care what the coin looks like as long as it gets my notice
and fits into what i think i should spend on coin buying
https://photos.app.goo.gl/AtqXN9yPBzhpvP3TA
Buy the best that you can understand.
If I had bought mega grade late date walkers 5 - 10 - 15 - 20 years ago, it would still have been a lousy investment. I didn't see the value, and put my money into the earlier dates, albeit in lower grades (AU-63).
Folks overthink coin collecting.
I have often looked for “threshold coins.” By that I mean the highest grade before the prices to up by geometric proportions. I also have used the “best I could afford strategy.” I most often applied that to the early U.S. coins I purchased back in the mid-1970s and 1980s.
I was pretty much priced out of the market in 1979-80, when the pundits were telling people to get out of conventional investments, like stocks and bonds, and buy “things.” Coin prices went out of control, and I couldn’t buy much of anything that was decent. I worked on a set of Two Cent Pieces in EF to satisfy my collector’s sweet tooth. I accepted that as a challenge from a veterian dealer who told me that most of the coins in the set were hard to find in EF.
After the market collapsed I actually sold all but one of the coins for profit, which was more than one could say for the “investors” who were paying four or five times the Gray Sheet “bid” prices thinking they were paying prices that would yield them profits or keep the value of their assets ahead of inflation.
I kept one of those Two Cent Pieces, an 1870 in “1980s EF-40.” The coin is interesting because it was lightly struck, and it would not have taken too much time in circulation for it to have lost the “WE” in the motto and quickly gone down in grade. I remember I bought this piece from a dealer at one of the coin shows that were held in a shopping mall. A few malls used to run those in the early 1980s.
Yes, I agree with that advice. I buy the best I can afford, BUT on a budget. This is extra money, like someone would set aside for a big vacation cruise. I have money going into an account weekly for my hobby (not my investments). I also have money going into investments for when I retire (not my hobby). In my opinion these are two different things and the words hobby and investment don't belong in the same sentence. If your hobby is also an investment that you have to worry whether it makes money or not, how can it be fun? That sounds more like a job to me than a hobby.
Donato
Donato's Complete US Type Set ---- Donato's Dansco 7070 Modified Type Set ---- Donato's Basic U.S. Coin Design Set
Successful transactions: Shrub68 (Jim), MWallace (Mike)
baseball, this is something I'm trying to figure out and I think the answer, for some, is 'because the "better" coins have a better chance of appreciating, or will appreciate more relative to their purchase price'. At least this is my sense of it.
So could it be that 'buy the best you can afford' is strictly investing guidance and has nothing to do wit the joy or hobby of collecting coins?
That profit from the better coin is strongly dependent upon what you have to pay for it. If you have to stretch at auction because of the "crazy bidder factor" you could be better off with the lesser coin.
Back in the 1970s and '80s, buying the better coin was almost always the answer IF you had the eye to grade it properly because most things were raw or had ANACS papers, which had changing standards. Now you still have the changing standards, but you have also have "the higher grade is always the better investment" mentality. It all depends upon what the price of higher grade is.
Unless you are talking about early U.S. coins, many coins in the circulated grades are "dead." They have not gone up in price a lot in many years. In that case buying the higher grade, unless it is a key date coin, might not be the best strategy.
@Walkerguy21D nails it! Understand means to me going beyond the emotional thrill and being sure that you know what you are buying (quality) and do you know its relative value for the price (done the research).
To pile on what Bill Jones said, many coins in gem are dead and have lost money in the last ten years or so. Three Cent Silver, type Barber Coinage, Type SLQs in 6 FH. Many common date Mercs, many Commems, etc.
If you're going to stretch for a coin, it better be all there for the grade and you'd better be convinced you'll not see another one like it for at least five years, and have the funds so not having use of such funds for something else won't negatively affect your quality of life. Otherwise, you're scr**ing yourself.
Coins are NOT an investment. A man whom I will not name put together a really attractive set of pedigreed Bust Dollars. He went bankrupt in the process. People familiar with the series know whom I'm talking about. This is not an isolated incident.
"Seu cabra da peste,
"Sou Mangueira......."
The cynical part of me thinks dealers say this to hype pricey coins with very thin markets.
I think the saying should be BUY WHAT YOU LIKE!!!!!!
If you have plenty of money and you like ag3 coins that are common but you just like the look of them go ahead and buy what you like. If you have 10 a month you can spend on coins and you like low grade coins buy them! On the other hand if you have 10 a month you can spend on coins and you like ms65 Morgan's then you save and buy them if that's what you like.
The problem with this hobby is there are to many people telling others how they should collect. Collect what you want and don't worry how other people do it
HAPPY COLLECTING
If you plan to sell them at some point, coins are an investment. We've been over this. That doesn't mean they will always appreciate. Lots of investments go down sometimes.
Buy the best you can understand is excellent advice that doesn't necessarily even need the price appreciation part. You will simply enjoy the coins more.
The way I've interpreted this is not to try to force people to spend more. Rather, if your budget is $1K, buy the best quality you can get for $1K. This isn't necessarily the highest graded coin: look at the coin, not just the number on the holder. Prices jump significantly at particular grades so don't be the one paying up for the worst coin for the grade.
I've often found that paying more than I should worked out pretty good, over time.
For the things I collect seriously, my strategy is to buy the best that exists, whether I can afford it or not. For the things I collect casually, I don't have a strategy.
Probably best not to follow my example.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
If you want to make money, buy stocks, bonds, real estate etc. etc. Coins are a LOUSY investment. Obviously, there are a LOT of coins that over time do nicely for their owner. However, the VAST majority of coins have done piss poorly for their owners. Just look at the PCGS 3000 from 1970 to date. Yes, if you bought from ~ 1970 to 1985 you would have some sort of a profit (although clearly PCGS wasn't grading then, and you would have to factor in inflation against your profit). Note though, that since October of 1985 the index is actually underwater. Also, I think that we all know that high grade coins, AS A WHOLE, have lost money over the last 10 years.
My basic feeling is, IT'S A HOBBY. Buy what you like with disposable income. Enjoy the coins. If you make money, so much the better. If not, you've enjoyed the ownership, and met and made friends with other coin geeks.
U.S. Type Set
To me, it's just a trite expression that means buy the best that makes sense in the context of my collection.
I suppose many of us could technically "afford" a lot nicer grade of coin, but prefer not to live under a bridge and look at them by the light of burning trash
Liberty: Parent of Science & Industry
Hmmmmmm.......do I want millions of dollars at retirement or be stuck with a bunch of coins nobody wants at a Sunday coin show at a Holiday Inn that I may get robbed in the parking lot of my inventory as I pack up?
My advice to a young person would be to accept coin collecting into your life as a hobby. Invest in your future by investing in the stock market.
I would never tell someone to purchase " the best they could afford" unless I knew they were financially stable or set, especially young people. That's like gambling with their money.
Buy coins that have a large collector base
Buy quality
Buy PCGS over NGC if both are same grade
Avoid auctions
View the purchase as an investment that you will hold over a ling period of time
Stick with low pop coins
If you are investing quality common stocks that pay a good dividend will beat almost all coins over the long haul
Keep your investment in coins at 10% od your financial asset base
A couple of others
If it is for sale on television or the U.S. mint pass!
I generally agree to buy high quality, but I would also caution collectors to avoid thin markets with small numbers of players. Who is going to buy your material when the time comes to sell? At your chosen grade/price level, are there three other eager collectors besides you, or three thousand?
Coin collecting surely isn't all about investment and profit, but I'd still rather make a profit in the long run.
It is simply dealer nonsense. Just a way to get collectors to spend more than they are comfortable with. It's lot more fun collecting when you are in your comfort zone.
Joseph J. Singleton - First Superintendent of the U.S. Branch Mint in Dahlonega Georgia
Findley Ridge Collection
About Findley Ridge
To make a small fortune in coins, start with a large fortune.
True, there are dealers that make a living in coins. That is a business, not a hobby. If you are in business, you have capital, skill and a network. Not all dealers succeed. I have firearms that have quintupled in price since I purchased them.... When I bought them, I had no idea that would happen. I am neither a coin, nor a firearms dealer. I collect coins, I am a collector of firearms - and an instructor in tactical firearms training. I do not buy coins as an investment...I buy them because I like the coin(s) and want to own them. The economy is littered with failed businesses... far more fail than are successful. I congratulate all those who succeed - in coins or otherwise. I warn those who, on a limited budget, sink 'stretch' funds into coins. The coin market is fickle, and what is hot in one year, may be dead in another. Best of luck to all, collector, dealer or flipper... Life is what you make of it... Cheers, RickO
considering thAt top quality has generally been the best investment over the years, I disagree. Besides, most dealers would welcome customers who don't insist on finest knowns. More to sell them.
Doggedly collecting coins of the Central American Republic.
Visit the Society of US Pattern Collectors at USPatterns.com.
I don't think planning on holding what you buy for 5 or 10 years guarantees you anything. If you buy any coin that would financially devastate you if you were forced to sell it, it's probably better to put your money some other place.
Buying the best you can afford sounds like good advice, but nobody would ever say "buy the best you can't afford." How about just "try to buy the best coins".....
Whether or not you make money or lose money on a coin depends on what happens on the day you buy it and also what happens on the day you sell it. Probably the more important of the two is the first one.
On the big bang theory one character talking about a nerdy collectable says "in the future it could double in price and be worth half of what i paid!"
Buy the Best has always been BS and will always be BS. Look at everyone here that are singing the blues about past huge purchases that are worth way less now. Need I say more?
Ken
A five to ten year holding period used to count if you bought the "right cons," but I am not sure if that matters any more. With the lack of interest among the young and ever rising buyers' fees with major auction houses, this hobby or industry, whatever you want to call it, might be due for an extended dormant period.
If everyone buys the best, the best becomes overpriced, as in baseball's MS64/66 example, and the less than best becomes a better deal.
Kudos to Fairlaneman and sellitstore.... I agree with you.... The average collector ( NOT INVESTOR ) is happy with a VF graded coin or banknote as the wear is not to bad and well visible....Personally ( as i am an aussie ) i bought over the years from when i finished school Australian 1933 shillings , 1925 pennies and 1946 pennies in any grade. Even down to VG as they are the next hardest to get after the 1930 penny and dont require a COA.. All Australian silver minted in the year 1915 has a very low mintage and that was for WW1 ending and the money in the country was not there to get currency made. Go have a look on ebay for the results on low grades silver Australian 1915 coins The 1915 threepence is so thin that it wore out so quckly and very few remain because in all my years i have never seen a true xf 1915 threepence..Note that it is .925 sterling as very soft. Some australian silver coins were minted in birminham ( H Mintmark ) and others had no mintmarks . You will be stunned at the results. There will always be the collector out there that wont worry about making a buck in the next 12 months but just wants to fill their collection. Those were the people i tried to lean towards...Any fool can buy MS63 ( or Unc ) but more often Unc means junk as the price is way over the top for the average person with a family to buy. You people do not look at the generations coming up. if you think about it, when you are at stamp and coin shows, how many youngsters are in attendance??? Hmmm, you cant count on one hand ay??? Coins may have been great in the eras of 1965 - 1990 but after that , kids just did not want to take on the hobby. How many families do you lot know that had items handed down to the kids refused them?? The parents then sold for melt. I know many of them. We all have our opinions but i guess i must have done something right by going for the lower grades that i could sell quickly to the collectors and not necessarily the trade or investors.
I heard this from a dealer at a show I attended early on. It's not a bad idea but I apply it as a target average per piece in an inventory or portfolio.
Too late.
Baley said "I suppose many of us could technically "afford" a lot nicer grade of coin, but prefer not to live under a bridge and look at them by the light of burning trash".
I am nominating this as post of the year (POTY).
LOL
Interesting stuff and a lot of good advice here. There’s a lot of generalities too. My thoughts on a few points:
I buy the best I can afford, but I think I buy more often than most because I buy online and never do coin shows. If I’m spending $100 a week, that’s comparable to $400 a month or $5,200 a year. So the best I can afford depends on how often I buy coins. It also depends on other factors, like what else I’m buying. I think the 10% of your “portfolio” number is a good one, but I collect other things and spend more money on them. So the best I can afford is also the best I can allocate to coins because I’m buying other stuff.
The best I can afford would give me way different results if I collected British Shillings vs. $10 U.S. Gold Pieces. I can only collect one of those in BU, and you can probably guess which one.
Lastly, the best YOU can afford might put you so high above the market that others can’t participate. And I think that’s a trap the U.S. coin market is falling into. It’s probably a good idea to buy the best that OTHERS can afford, so you can sell your stuff to them later. And price resistance is a factor in this. I remember when I was a kid thumbing through the redbook, with rare exceptions, most all of the coins in there were $10,000 or less. Seemed like that was a threshold. That was a magical price resistance value that was hard to pierce It seemed to me that once one kind of coin hit a certain threshold, it became almost uncollectible to the masses, and they lowered their sights to the next best thing. Until that next best thing got priced up, and then it was the third bananas that people started collecting. Seems to me that the top of the market is so high that people are looking for fifth and sixth bananas, and they are buying the best fifth and sixth bananas they can afford. My guess is those will do the best moving forward. If I was a dealer, that’s what I’d focus on selling.
IMHO, the coin market has focused for so long on the top end, that the top end is detached from the rest of the market. Maybe instead of buying that one big MS coin that’s crazy rare because of the mintmark and the lack of bag marks, it will be shown moving forward that you’re better off buying a roll of BU Type coins because the aggregate demand for them will be greater.
Yes, the American kids aren’t going to the coin shows. But what about other countries? I’m in some weird coin collecting groups on Facebook and there are a bunch of beginners in those across the globe. People love Americana. Maybe it will save U.S. coins.
If coins are a buy and hold item, and it makes sense to buy low and sell high, then doesn’t it make sense to buy what’s cheap (but still cool) because it is unpopular (nice specimens) and hold them for a long time? My wife tells me the U.S. coin market is going through a rebirth. Maybe she’s right?
Have to say that the mantra that stock returns are guaranteed bugs me. I know that nobody here is saying that, but the Baby Boomers have screwed everything up and I fear stock market turmoil will be their final hurrah. When all the Boomers aren’t buying stocks anymore, and they are also selling stocks to fund retirement, I think the market will stall. Fact is that much of the market is propped up by the companies buying their own stocks and possibly baby boomers using the catch-up provision in their IRAs. I’m not saying it’s going to crash, but the demographics for stocks aren’t bright either. “Kids” today have learned that they can screw around like grasshoppers and then get a bail out. Are we really betting that the same kids who ran up student loans to dizzying heights then have the balls to ask the government for help are going to responsibly start buying stocks? I think they’ll push for higher social security and form human chains to block traffic and stuff like that until they get it. Real diversification should include all types of investments, including real estate. I love real estate investing. It might actually be prudent to buy more than 10% in the kinds of collectibles that the millennials are interested in, but I could never recommend that.
I feel blessed that I love coins in general. All kinds. To me they are like a mail order bride…just send me one and I’ll fall in love with it. So because of that, I find it’s wiser for me to take my profit when I buy the coin. I try to only buy stuff that I can resell for more than I bought it for....then learn to love what I bought. Takes a lot of work to do that, but I have more time than money for coins and I enjoy the hunt.
Last, I have to agree that it makes sense to learn something well, and then buy what you know. You get burned when you do the opposite so that's probably the key to success.
My currency "Box of Ten" Thread: https://forums.collectors.com/discussion/1045579/my-likely-slow-to-develop-box-of-ten#latest
I buy coins as if they are a stock. I look for high quality at a discount.
I know coins don't lie, they are what they are. I know what I buy.
When buying stock, the CEO may lie, the CFO may lie, the company may become out of favor, the market may tank, or one lawsuit could affect stock price.
I have way more control over a coin I buy than a stock I could buy.
I have thought about this quite a bit. Nowadays I always end up buying a coin over stock.
I don't agree with this at all. That is especially true of some key dates where the grading services tend to get very conservative about giving the coin the grade that will send the price to a much higher level. Sometimes you can get some great values from those pieces.
Good post. In my (very) limited reading, I've never heard it put this way before.
Q. David Bowers used to refer to this as the Optimal Collecting Grade (OCG). He recommended buying at that grade because over time, people will do just like you are saying. They will demand the best quality they can afford before the price jump. So over time, the OCG will slide down the grading scale. Like if the OCG was in AU, eventually the OCG will move to XF because there will be so much demand for the AU coins. I've lived long enough to see that happening first-hand with some collectibles.
Interestingly, in extremely popular collectibles, I've seen what I call a "threshold grade" price. There are certain comic books that are so popular that any low grade comic, from Fair up to VG condition will be worth about the same price, and then will climb higher at Fine and beyond. That's because the price at lower grades is driven by the "I just want one" phenomenon and people will pay a certain threshold amount just to have it regardless of condition. With those, that kind of price structure is a tell-tale sign that the collectible is going to make healthy price increases in any grade.
My currency "Box of Ten" Thread: https://forums.collectors.com/discussion/1045579/my-likely-slow-to-develop-box-of-ten#latest
The stock market is driven by the institutional investors not the individual investor buying 200 shares of ABC corp. P/E multiples are not out of line like they were when the dot com bust hit. As long as the U.S. is the only real safe haven for any investor bond yields will be very low as U.S. treasuries are preservation of capital. Quality stocks that have a good dividend will do well provided they company has the cash flow to keep paying it.
Right now the 30 bond yields about 2.8% which after inflation and taxes is nothing. I like quality weather its common stocks or coins as we have a market of coins and and market of stocks. Point is money can and will be made but the days of throwing darts at a chart and buying the stocks the darts hit are over. Same goes for coins.
If I were strictly a speculator I would buy common gold coins that trade at a small spread over melt value. This way if gold goes up you reap the benefit. If U.S. gold coins see increased demand from foreign investors you may well make some money on coin appreciation. One of my best buys was the most common $20 DE (1904 MS 63) as i paid $300 for it when gold was $280/oz. When gold hit $2,400 it was out the door. I personally like quality and hold on but if an asset runs up very quickly I am apt to sell when any weakness in price appears. A good example was Chevron when it was about $65/shr when oil prices dropped by over 70%. The dividend yield was 5% and covered by cash flow. The institutional buyers came in and the stock ran to $119 as it was over sold at $65 but not worth $119/shr. Anything that goes up that quick can fall just as fast coins, real estate or stocks.
As far as the Baby Boomers are concerned they either have a comfortable retirement or next to nothing, depending on what they did with their money in their 20s and 30s. Inheriting over $10 trillion from their parents helped some and bought Harleys for others. What is scares me is 50% of Americans over 50 years of age have NO retirement savings at all.
This is no different from previous generations and I suspect it will continue.
Don't disagree with anything you're saying. Good stuff and I agree that buying quality on the cheap is the best move here. And yes, with interest rates so low, you may as well speculate and the U.S. is a hotspot for that kind of activity.
And even though I whole heartedly agree that buying common gold for not much more than melt is a good idea, one really needs to do their research and look for the gold that hardly moved at all when gold rose until gold moved higher than it is today.. For example, if a person thought that a $20 Double Eagle from 1904 in MS63 is a good purchase, they need to realize that it was only $300 when gold was $280/oz.
Stands to reason that it could drop back to a $300 coin. I'm guessing that (ideally), you'd want the coin that as $1,000(ish) when gold was $280/oz and then barely moved in price until gold got over the price that it's at now...what were the $1,000 coins when gold was $280?. If anyone know that kind of material that was, please share.
My currency "Box of Ten" Thread: https://forums.collectors.com/discussion/1045579/my-likely-slow-to-develop-box-of-ten#latest