@ms71 said:
Don't forget that you'll be filing schedule C, which will tax your net profit at 12%, 22%, or 24% depending on your taxable income from other sources (higher if taxable income is over $157,500) Don't forget the additional Social Security self-employment tax of 15.3% that will be assessed on net profit (you have to pay the 7.65% you would pay on wages, plus the 7.65% an employer would pay on your wages). So, if you're in the 24% tax bracket (taxable income $82,501 - $157,500), your rate on the net profit from your coin business will be (24% + 15.3%) 39.3%.
All of this is true but you do get more deductions than if filing it as a schedule C (likely by setting up an LLC) than you would as hobby income on line 21 of a 1040. Some allowable expenses you could deduct would be advertising if you put an ad in the local paper, vehicle expenses (kind of tricky but if it is a private vehicle not owned by the LLC you will need to keep track of personal mileage and business mileage along with a trip log). But if you use your vehicle 50/50% for personal and business then you can deduct half of your vehicle expenses. Grading fees, supply costs, and even travel costs if you go to a large show.
Having the deductible expenses will help lower the taxes but those expenses are extra costs that cut into the profit margin. New part time dealers may not attribute all expenses to the business when they are incurred. If the lines between personal finances and and business finances are blurry the “profit margin” can actually be quite different.
Assuming you are going to report the income you might as well have the deductions as opposed to having the expense without the deduction. Reporting it as line 21 hobby income won't allow him to deduct any expenses incurred other than the cost. Assuming he set up an LLC and reported it as schedule C income he could deduct the cost of packaging, postage, vehicle related expenses for going to the post office. Assuming he is profitable he can deduct all his expenses when incurred. If he is not then that's a different
I don’t disagree with you. My point is that deductions are expenses that you actually have to pay. Which cuts into profit margin. Many new small at home business people don’t separate finances from other income sources properly. Maybe they had a book of stamps etc. they bought with money from their paycheck and deduct it on their taxes but then the real profit number is flawed.
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
@jt88 said:
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
Except is downright silly to sit on 1 million in inventory to turn a 10% profit over "a couple of years". There are MUCH better ways to invest a million that will yield more like 10% per year rather than half that...and with less risk than coins/metals.
The key to making money is not having a million in inventory, it's turning over $100k in inventory 10 times.
@jt88 said:
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
I think capital is important and makes coin dealing easier. But I think deep coin and business knowledge is more important.
@jt88 said:
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
I think capital is important and makes coin dealing easier. But I think deep coin and business knowledge is more important.
Here I fixed it for you as you are a start up ....
Deep coin and business knowledge can build capital.
@jt88 said:
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
I think capital is important and makes coin dealing easier. But I think deep coin and business knowledge is more important.
Here I fixed it for you as you are a start up ....
Deep coin and business knowledge can build capital.
To be a dealer everything is for sale. You could use your coin biz as schedule c deduction.
It takes big money be full time dealer. Probably half mill in inventory. If your for real your doing the show circuit and have online store / shop.
How u gonna live on $1300? At best your an investor. Your numbers are nowhere close to being a dealer. Find a job. Shows have been terrible - online has hurt them. The people coming in the door are broke probably spent it online or worse just looking for rip. I expect the bids to decline further.
Operating on eBay costs me 17 pct sales - shows a crapshoot but great for buying. It takes a markup of 40-50 pct over cost make it in coin biz.
I would suggest you liquidate put it in stock market. If u love coins take a table at show and draw your own conclusion. Don’t let them talk u down with their BS.
With eBay expenses at 15- 17 pct sales, 5 pct sales non online fixed cost allocation, and 10 pct commission for me I need 32 pct margin make it work. The Houston shows with $250 fee not counted in above. Unless u can buy it right it’s tough making money in coins. Everybody knows market been in tank for sometime. Having a bad selling show should not be a surprise. Declining pop of collectors another factor.
To be a dealer everything is for sale. You could use your coin biz as schedule c deduction.
It takes big money be full time dealer. Probably half mill in inventory. If your for real your doing the show circuit and have online store / shop.
How u gonna live on $1300? At best your an investor. Your numbers are nowhere close to being a dealer. Find a job. Shows have been terrible - online has hurt them. The people coming in the door are broke probably spent it online. I expect the bids to decline further.
Operating me on eBay costs me 17 pct sales - shows a crapshoot but great for buying. It takes a markup of 40-50 pct over cost make it in coin biz.
I would suggest you liquidate put it in stock market. Your question tells me you have no concept of coin business nor understand current market conditions.
This is all true except the "40-50 pct over cost". That just doesn't exist in most coin sectors. A lot of the volume for dealers is bullion and scrap which has single digit margins.
Thanks for all the kind words and all the advice. I am doing this to see what I can turn it into the $50K goal was to pay my house off in 5 years. I now realize that I am not going to get there with just selling coins as it requires a lot of capital. If I was to sell everything and put it in the stock market, I have about $1000.00 to put in the stock market. I already invest in the stock market. This was to be a side business to help add money to pay off my house early. I like the freedom of not having a house payment. I have a couple customer that will text/call me tell me they want $5000 in silver they are willing to pay x X face value. Then I spend time trying to find silver to fill there order and I make a little and move on. I do not see this turning into a full time business. I have owned and ran sports card business years ago when I was in high school and it did well, but I closed it down because I went to college and there was no time for me to be in the shop. I realize that in order to make the $50K profit I would need to buy and sell nearly 4 Million wheat pennies and right now I have a hard time getting my hands on 100,000 of them. It has been a stress relief from my day to day job. I am learning and by no means is this my day to day income.
GOOD BST DEALS: cohodk, mikescoins, GritsMan, spinaker2000, My Ebay Auctions
@Cougar1978
I have a full time job that I have been at for 15 years so I do not need to go find a job. See above post to why my original question was asked. I understand that I am nowhere near being a dealer.
GOOD BST DEALS: cohodk, mikescoins, GritsMan, spinaker2000, My Ebay Auctions
****UPDATE***
I started to keep track of my buying and selling of coins and coin related items. So to date I have Gross Sales of $37,025.07 with a net profit of $1,381.32.
How many hours of your time did this take?
If you can do this 3 times a month, you are there.
If you can figure out how to consistently buy things at half their value, let me know.
@davewesen I am not sure how much time this has taken me. As I usually am doing this on my lunch time or in the evening. It is a very part time thing right now. I am trying to buy and sell things quickly. I know I have a lot to learn but I do believe it can work but maybe not to the scale I need it to and I am fine with that. Lot of the stuff I sell is an order to fill so I did not start with a huge amount money to buy inventory. I will pay with my CC receive the item and customer will pick it up.
GOOD BST DEALS: cohodk, mikescoins, GritsMan, spinaker2000, My Ebay Auctions
Yes I kinda thought u have full time job - glad to hear.
Find a friend in your coin club you can share a table with at a show. This will cut expense and give u a feel for being in the business.
All u need is a 2 by 3 ft glass case and light (architect lamp) plus enough material fill it. Use 100 watt bulbs. Don’t finance coin business with debt. Bring your price ref material.
Yes big money bullion dealers w shop can probably make something on single digit spread but not the little guy. Shops face pressure make a lot of money buying / flipping deals that walk in - this is where the money made. For little guy - It’s a part time income supplement / sch c write off.
The future of the coin business is online - it’s a foregone conclusion that shows are suffering and shops folding.
To be a dealer everything is for sale. You could use your coin biz as schedule c deduction.
It takes big money be full time dealer. Probably half mill in inventory. If your for real your doing the show circuit and have online store / shop.
How u gonna live on $1300? At best your an investor. Your numbers are nowhere close to being a dealer. Find a job. Shows have been terrible - online has hurt them. The people coming in the door are broke probably spent it online or worse just looking for rip. I expect the bids to decline further.
Operating on eBay costs me 17 pct sales - shows a crapshoot but great for buying. It takes a markup of 40-50 pct over cost make it in coin biz.
I would suggest you liquidate put it in stock market. If u love coins take a table at show and draw your own conclusion. Don’t let them talk u down with their BS.
With eBay expenses at 15- 17 pct sales, 5 pct sales non online fixed cost allocation, and 10 pct commission for me I need 32 pct margin make it work. The Houston shows with $250 fee not counted in above. Unless u can buy it right it’s tough making money in coins. Everybody knows market been in tank for sometime. Having a bad selling show should not be a surprise. Declining pop of collectors another factor.
I mean this with the utmost respect, but why do you believe putting money in the stock market is better Long term than starting a business. Both the coin and stock market move in cycles. The coin market is in a down cycle, probably the best but hardest time to learn to be a dealer. I'm not knocking the stock market, but deep knowledge of coins and the coin market can give a person an advantage that they could never hope to get in the stock market. I do think the OP goal of being a start up part time dealer with little capital that nets 50k immediately is optimistic. The people that will make the most and fastest money in the next coin bull market are the people that are already in the coin business.
I mean this with the utmost respect, but why do you believe putting money in the stock market is better Long term than starting a business. Both the coin and stock market move in cycles. The coin market is in a down cycle, probably the best but hardest time to learn to be a dealer. I'm not knocking the stock market, but deep knowledge of coins and the coin market can give a person an advantage that they could never hope to get in the stock market. I do think the OP goal of being a start up part time dealer with little capital that nets 50k immediately is optimistic. The people that will make the most and fastest money in the next coin bull market are the people that are already in the coin business.
Most dealers do NOT get rich. If you are comparing starting a business to the stock market, I'll agree with you. Although, the risk of bankruptcy is higher in almost any business than it is in the stock market (low cost, broad-based index funds). But, if you are comparing a COIN business to the stock market, then I disagree.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
I mean this with the utmost respect, but why do you believe putting money in the stock market is better Long term than starting a business. Both the coin and stock market move in cycles. The coin market is in a down cycle, probably the best but hardest time to learn to be a dealer. I'm not knocking the stock market, but deep knowledge of coins and the coin market can give a person an advantage that they could never hope to get in the stock market. I do think the OP goal of being a start up part time dealer with little capital that nets 50k immediately is optimistic. The people that will make the most and fastest money in the next coin bull market are the people that are already in the coin business.
Most dealers do NOT get rich. If you are comparing starting a business to the stock market, I'll agree with you. Although, the risk of bankruptcy is higher in almost any business than it is in the stock market (low cost, broad-based index funds). But, if you are comparing a COIN business to the stock market, then I disagree.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
Relative to what? You can turn 10% annually on S&P 500 funds. You can turn 15-20% if you sell covered calls against an S&P portfolio with little risk. Bid/ask spreads are lower than that and there is risk both with respect to PMs and the coin market itself. It all boils down to how many times you can turn your inventory in a year. Doing this part-time would be a challenge.
Do the math. Let's assume you carry $250,000 in inventory and turn it every year. [Which means spending $250k per year, by the way, not easy to do on easily saleable material working part-time.] I'll give you a net 10% pre-tax net margin. That means you'd make the $25k the OP wanted.
Alternatively, take the $250k and put it in an S&P fund which has averaged 10% over the last century. That's $25 k.
Now, let's say you can buy $375,000 per year, turning your entire inventory 1.5x per year. Then you are at $37.500 which is stock market plus 20 hours per week in your $12 per hour part-time job. Still a push.
You only start to win if you can turn your inventory more than that. And it is simply not easy to find $300k-500k per year in stuff that can be sold quickly at a 20% gross margin and 10% net margin.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
Relative to what? You can turn 10% annually on S&P 500 funds. You can turn 15-20% if you sell covered calls against an S&P portfolio with little risk. Bid/ask spreads are lower than that and there is risk both with respect to PMs and the coin market itself. It all boils down to how many times you can turn your inventory in a year. Doing this part-time would be a challenge.
Do the math. Let's assume you carry $250,000 in inventory and turn it every year. [Which means spending $250k per year, by the way, not easy to do on easily saleable material working part-time.] I'll give you a net 10% pre-tax net margin. That means you'd make the $25k the OP wanted.
Alternatively, take the $250k and put it in an S&P fund which has averaged 10% over the last century. That's $25 k.
Now, let's say you can buy $375,000 per year, turning your entire inventory 1.5x per year. Then you are at $37.500 which is stock market plus 20 hours per week in your $12 per hour part-time job. Still a push.
You only start to win if you can turn your inventory more than that. And it is simply not easy to find $300k-500k per year in stuff that can be sold quickly at a 20% gross margin and 10% net margin.
In actuality it’s not easy to stay long all the time for the life of most investors.
Most investors pull themselves out of the market or cut back and often at the wrong time.
Getting in at the wrong time and getting out at the wrong time dramatically affects an investors long term returns in the stock market.
Secondly there is more than a little risk in the stock market.
Your just spitting out numbers that don’t take in account the human emotional element that all investors have .
I manage money. I earn money. I save money . I give away money. I collect money. I don’t love money . I do love the Lord God.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
Relative to what? You can turn 10% annually on S&P 500 funds. You can turn 15-20% if you sell covered calls
Your just spitting out numbers that don’t take in account the human emotional element that all investors have .
Of course, the analysis relies on holding a long-term position in the market. That is not a negative, it's the only way to calculate it. To assume any kind of timing model would be dishonest. It is also not that difficult with low cost mutual funds. People do it all the time with their 401k's.
Have you ever tried to make $50k per year in the coin market on a PART-TIME basis?
Everything you say is probably true - and WORSE for a coin business. The risks are higher. The emotional attachment is higher. The need to make flawed human decisions higher. Unlike the theoretical long-term hold on the broad-based low-cost mutual fund, you have to constantly be making buy/sell decisions in the business environment.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
Relative to what? You can turn 10% annually on S&P 500 funds. You can turn 15-20% if you sell covered calls
Your just spitting out numbers that don’t take in account the human emotional element that all investors have .
Of course, the analysis relies on holding a long-term position in the market. That is not a negative, it's the only way to calculate it. To assume any kind of timing model would be dishonest. It is also not that difficult with low cost mutual funds. People do it all the time with their 401k's.
Have you ever tried to make $50k per year in the coin market on a PART-TIME basis?
Everything you say is probably true - and WORSE for a coin business. The risks are higher. The emotional attachment is higher. The need to make flawed human decisions higher. Unlike the theoretical long-term hold on the broad-based low-cost mutual fund, you have to constantly be making buy/sell decisions in the business environment.
I'm not disputing that the stock market has been a solid performer in the past.
I think the flaw in your logic is in your inventory turns, I'm not sure why a good business person would invest 250k just to do 250k in annual sales at 10 percent net. A smart person would either lower inventory levels or increase turnover. So at say 3 or 5 times inventory turnover the numbers change dramatically. This is where having both coin and business knowledge gives a dealer a chance to get above market returns. The OP stated he has 1k ( not 250k) in working capital so if he wants to be a dealer his best chance to make it is sourcing deals for other dealers and working want lists both of which create profit from knowledge not capital. I know it would be hard to make 50k doing this in today's market. But when the market was hot in the past it was possible at a number of points in history. but again the opportunity is only for people with the right knowledge.
Have you ever tried to make $50k per year in the coin market on a PART-TIME basis?
Everything you say is probably true - and WORSE for a coin business. The risks are higher. The emotional attachment is higher. The need to make flawed human decisions higher. Unlike the theoretical long-term hold on the broad-based low-cost mutual fund, you have to constantly be making buy/sell decisions in the business environment.
I'm not disputing that the stock market has been a solid performer in the past.
I think the flaw in your logic is in your inventory turns, I'm not sure why a good business person would invest 250k just to do 250k in annual sales at 10 percent net. A smart person would either lower inventory levels or increase turnover. So at say 3 or 5 times inventory turnover the numbers change dramatically. This is where having both coin and business knowledge gives a dealer a chance to get above market returns. The OP stated he has 1k ( not 250k) in working capital so if he wants to be a dealer his best chance to make it is sourcing deals for other dealers and working want lists both of which create profit from knowledge not capital. I know it would be hard to make 50k doing this in today's market. But when the market was hot in the past it was possible at a number of points in history. but again the opportunity is only for people with the right knowledge.
>
I TOTALLY AGREE.
I discussed that. The issue was a part-time business. It is hard to flip your entire inventory by going to 4 shows per week unless you are very well connected.
You're right. If you can turn your $250k inventory 4x per year, you'll make $100k pre-tax net on a 10% net margin. The problem is, you have to buy $1 million in coins that have a 20% gross margin that you can flip every 3 months. That is REALLY hard to do unless you are a niche expert or have a well-heeled client list you shop for. It is very hard to find that much to buy as a part-timer. Think about the logistics, you are at shows every weekend trying to flip your inventory. Your only opportunity to buy is at those same shows - you work all week. Nearly impossible for mere mortals.
All the old-timers will tell you about the 80s. I have a friend who still talks about how he would go to a show on a weekend, but $10k in dollars and have sold them for $15k within the week. He was working 3 days a week and making more money than he makes now. But that didn't last long.
It's not as easy as it seems. And there is no way, as the OP wanted, to make $50k per year with $10k in working capital. You'd need to flip your inventory 50 times per year. Good luck. And if you have $250k in inventory, you've got a better chance but then you are up against other safer, easier investments.
@Cougar1978 said:
My online eBay store low cost, variable overhead max exposure - world audience. Fixed costs mainly books, supplies, publications.
Yes, me to. And I've never come close to $50k on a part-time basis. One year, when I was between jobs, I went full-time for about 6 months. I did about $20k pre-tax. I could have done more IF I COULD HAVE BOUGHT TWICE AS MUCH. That is the problem. Margins on coins are low, you need to turn $500k+ to net $50k.
The faster you want to turn inventory, the worse your margins. The slower you turn inventory, the better the margins but the higher the capital requirements.
There's a lot of full-time dealers that don't make $50k.
@Insider2 said: N O. The TPGS's have leveled the playing field too much. Perhaps if you specialize and become the "top dog" in a particular coin series.
@Insider2 said: N O. The TPGS's have leveled the playing field too much. Perhaps if you specialize and become the "top dog" in a particular coin series.
Curious what this comment means?
Old days a dealer could dip an AU coin, call it MS 64, get MS 62 money and make a customer happy.
In them times , sliders made fat margins, and dealers lived high on the hog... if not on the lamb. TPGs have helped collectors, in that they've eliminated many sketchy / shady players from getting away with such. ( I think that's what was meant )
Comments
I don’t disagree with you. My point is that deductions are expenses that you actually have to pay. Which cuts into profit margin. Many new small at home business people don’t separate finances from other income sources properly. Maybe they had a book of stamps etc. they bought with money from their paycheck and deduct it on their taxes but then the real profit number is flawed.
My Ebay Store
I think the whole thing is capital requement, if you have one million I think you can. You can buy rare coin and sit on it for couple years and sell for a more than 10% profit. Most common coins is about 10% to 15% profit. Ebay claim will eat into your profit.
Except is downright silly to sit on 1 million in inventory to turn a 10% profit over "a couple of years". There are MUCH better ways to invest a million that will yield more like 10% per year rather than half that...and with less risk than coins/metals.
The key to making money is not having a million in inventory, it's turning over $100k in inventory 10 times.
I think capital is important and makes coin dealing easier. But I think deep coin and business knowledge is more important.
Here I fixed it for you as you are a start up ....
Deep coin and business knowledge can build capital.
Thank you
No
Margins are thin and market in bad shape.
To be a dealer everything is for sale. You could use your coin biz as schedule c deduction.
It takes big money be full time dealer. Probably half mill in inventory. If your for real your doing the show circuit and have online store / shop.
How u gonna live on $1300? At best your an investor. Your numbers are nowhere close to being a dealer. Find a job. Shows have been terrible - online has hurt them. The people coming in the door are broke probably spent it online or worse just looking for rip. I expect the bids to decline further.
Operating on eBay costs me 17 pct sales - shows a crapshoot but great for buying. It takes a markup of 40-50 pct over cost make it in coin biz.
I would suggest you liquidate put it in stock market. If u love coins take a table at show and draw your own conclusion. Don’t let them talk u down with their BS.
With eBay expenses at 15- 17 pct sales, 5 pct sales non online fixed cost allocation, and 10 pct commission for me I need 32 pct margin make it work. The Houston shows with $250 fee not counted in above. Unless u can buy it right it’s tough making money in coins. Everybody knows market been in tank for sometime. Having a bad selling show should not be a surprise. Declining pop of collectors another factor.
This is all true except the "40-50 pct over cost". That just doesn't exist in most coin sectors. A lot of the volume for dealers is bullion and scrap which has single digit margins.
Thanks for all the kind words and all the advice. I am doing this to see what I can turn it into the $50K goal was to pay my house off in 5 years. I now realize that I am not going to get there with just selling coins as it requires a lot of capital. If I was to sell everything and put it in the stock market, I have about $1000.00 to put in the stock market. I already invest in the stock market. This was to be a side business to help add money to pay off my house early. I like the freedom of not having a house payment. I have a couple customer that will text/call me tell me they want $5000 in silver they are willing to pay x X face value. Then I spend time trying to find silver to fill there order and I make a little and move on. I do not see this turning into a full time business. I have owned and ran sports card business years ago when I was in high school and it did well, but I closed it down because I went to college and there was no time for me to be in the shop. I realize that in order to make the $50K profit I would need to buy and sell nearly 4 Million wheat pennies and right now I have a hard time getting my hands on 100,000 of them. It has been a stress relief from my day to day job. I am learning and by no means is this my day to day income.
My Ebay Auctions
@Cougar1978
I have a full time job that I have been at for 15 years so I do not need to go find a job. See above post to why my original question was asked. I understand that I am nowhere near being a dealer.
My Ebay Auctions
****UPDATE***
I started to keep track of my buying and selling of coins and coin related items. So to date I have Gross Sales of $37,025.07 with a net profit of $1,381.32.
How many hours of your time did this take?
If you can do this 3 times a month, you are there.
If you can figure out how to consistently buy things at half their value, let me know.
@davewesen I am not sure how much time this has taken me. As I usually am doing this on my lunch time or in the evening. It is a very part time thing right now. I am trying to buy and sell things quickly. I know I have a lot to learn but I do believe it can work but maybe not to the scale I need it to and I am fine with that. Lot of the stuff I sell is an order to fill so I did not start with a huge amount money to buy inventory. I will pay with my CC receive the item and customer will pick it up.
My Ebay Auctions
Yes I kinda thought u have full time job - glad to hear.
Find a friend in your coin club you can share a table with at a show. This will cut expense and give u a feel for being in the business.
All u need is a 2 by 3 ft glass case and light (architect lamp) plus enough material fill it. Use 100 watt bulbs. Don’t finance coin business with debt. Bring your price ref material.
Yes big money bullion dealers w shop can probably make something on single digit spread but not the little guy. Shops face pressure make a lot of money buying / flipping deals that walk in - this is where the money made. For little guy - It’s a part time income supplement / sch c write off.
The future of the coin business is online - it’s a foregone conclusion that shows are suffering and shops folding.
IMO, the future thought of a B&M or doing the show circuit is not how to start out in today's world.
The world is at your fingertips.
Become a proactive internet dealer. Very low overhead. Maximum exposure.
I mean this with the utmost respect, but why do you believe putting money in the stock market is better Long term than starting a business. Both the coin and stock market move in cycles. The coin market is in a down cycle, probably the best but hardest time to learn to be a dealer. I'm not knocking the stock market, but deep knowledge of coins and the coin market can give a person an advantage that they could never hope to get in the stock market. I do think the OP goal of being a start up part time dealer with little capital that nets 50k immediately is optimistic. The people that will make the most and fastest money in the next coin bull market are the people that are already in the coin business.
Most dealers do NOT get rich. If you are comparing starting a business to the stock market, I'll agree with you. Although, the risk of bankruptcy is higher in almost any business than it is in the stock market (low cost, broad-based index funds). But, if you are comparing a COIN business to the stock market, then I disagree.
For the most part, the coin business has HORRIBLE margins and is capital intensive. That doesn't mean it's not a possible part-time job. It doesn't mean it isn't a possible full-time job for someone who has the knowledge, the capital and the interest. But it is not the easiest business to run. And if you are carrying $250,000 in inventory, you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk and getting paid market rate ($12 per hour) working a retail job instead of running to coin shows.
Just remember, when you want to spend money on a coin and the wife wants a new kitchen; buy the coin.
Forget the roof and the overhead.
“ And if you are carrying $250,000 in inventory , you might well make far more money putting that in the stock market to yield $25,000 with little effort or risk .....”.
On a relative basis I highly doubt that comment.
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Relative to what? You can turn 10% annually on S&P 500 funds. You can turn 15-20% if you sell covered calls against an S&P portfolio with little risk. Bid/ask spreads are lower than that and there is risk both with respect to PMs and the coin market itself. It all boils down to how many times you can turn your inventory in a year. Doing this part-time would be a challenge.
Do the math. Let's assume you carry $250,000 in inventory and turn it every year. [Which means spending $250k per year, by the way, not easy to do on easily saleable material working part-time.] I'll give you a net 10% pre-tax net margin. That means you'd make the $25k the OP wanted.
Alternatively, take the $250k and put it in an S&P fund which has averaged 10% over the last century. That's $25 k.
Now, let's say you can buy $375,000 per year, turning your entire inventory 1.5x per year. Then you are at $37.500 which is stock market plus 20 hours per week in your $12 per hour part-time job. Still a push.
You only start to win if you can turn your inventory more than that. And it is simply not easy to find $300k-500k per year in stuff that can be sold quickly at a 20% gross margin and 10% net margin.
In actuality it’s not easy to stay long all the time for the life of most investors.
Most investors pull themselves out of the market or cut back and often at the wrong time.
Getting in at the wrong time and getting out at the wrong time dramatically affects an investors long term returns in the stock market.
Secondly there is more than a little risk in the stock market.
Your just spitting out numbers that don’t take in account the human emotional element that all investors have .
I give away money. I collect money.
I don’t love money . I do love the Lord God.
Of course, the analysis relies on holding a long-term position in the market. That is not a negative, it's the only way to calculate it. To assume any kind of timing model would be dishonest. It is also not that difficult with low cost mutual funds. People do it all the time with their 401k's.
Have you ever tried to make $50k per year in the coin market on a PART-TIME basis?
Everything you say is probably true - and WORSE for a coin business. The risks are higher. The emotional attachment is higher. The need to make flawed human decisions higher. Unlike the theoretical long-term hold on the broad-based low-cost mutual fund, you have to constantly be making buy/sell decisions in the business environment.
I'm not disputing that the stock market has been a solid performer in the past.
I think the flaw in your logic is in your inventory turns, I'm not sure why a good business person would invest 250k just to do 250k in annual sales at 10 percent net. A smart person would either lower inventory levels or increase turnover. So at say 3 or 5 times inventory turnover the numbers change dramatically. This is where having both coin and business knowledge gives a dealer a chance to get above market returns. The OP stated he has 1k ( not 250k) in working capital so if he wants to be a dealer his best chance to make it is sourcing deals for other dealers and working want lists both of which create profit from knowledge not capital. I know it would be hard to make 50k doing this in today's market. But when the market was hot in the past it was possible at a number of points in history. but again the opportunity is only for people with the right knowledge.
My online eBay store low cost, variable overhead max exposure - world audience. Fixed costs mainly books, supplies, publications.
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I TOTALLY AGREE.
I discussed that. The issue was a part-time business. It is hard to flip your entire inventory by going to 4 shows per week unless you are very well connected.
You're right. If you can turn your $250k inventory 4x per year, you'll make $100k pre-tax net on a 10% net margin. The problem is, you have to buy $1 million in coins that have a 20% gross margin that you can flip every 3 months. That is REALLY hard to do unless you are a niche expert or have a well-heeled client list you shop for. It is very hard to find that much to buy as a part-timer. Think about the logistics, you are at shows every weekend trying to flip your inventory. Your only opportunity to buy is at those same shows - you work all week. Nearly impossible for mere mortals.
All the old-timers will tell you about the 80s. I have a friend who still talks about how he would go to a show on a weekend, but $10k in dollars and have sold them for $15k within the week. He was working 3 days a week and making more money than he makes now. But that didn't last long.
It's not as easy as it seems. And there is no way, as the OP wanted, to make $50k per year with $10k in working capital. You'd need to flip your inventory 50 times per year. Good luck. And if you have $250k in inventory, you've got a better chance but then you are up against other safer, easier investments.
Yes, me to. And I've never come close to $50k on a part-time basis. One year, when I was between jobs, I went full-time for about 6 months. I did about $20k pre-tax. I could have done more IF I COULD HAVE BOUGHT TWICE AS MUCH. That is the problem. Margins on coins are low, you need to turn $500k+ to net $50k.
The faster you want to turn inventory, the worse your margins. The slower you turn inventory, the better the margins but the higher the capital requirements.
There's a lot of full-time dealers that don't make $50k.
Curious what this comment means?
Indian Head $10 Gold Date Set Album
Old days a dealer could dip an AU coin, call it MS 64, get MS 62 money and make a customer happy.
In them times , sliders made fat margins, and dealers lived high on the hog... if not on the lamb. TPGs have helped collectors, in that they've eliminated many sketchy / shady players from getting away with such. ( I think that's what was meant )