Is Collecting Coins a Good Investment?

People of all ages and backgrounds collect an array of “things.”  Many different products attract many different people.  So, why coins?

Coins, over the centuries, have been a source of wealth, commerce, trade and stability.  The original purpose of coins were purely for commerce:  A medium to purchase another person’s goods.  Coins were first introduced around the 5th or 6th century, BCE.  

For some collecting coins offer a sense of fulfillment. It is fun and provides a neat way to learn about different monetary values, designs and history. While doing so, you’re also increasing your asset value.

When collecting coins correctly it can be profitable and add to your net worth. Conversely, if done incorrectly and without knowledge, it can have the opposite effect.
So, why do coins have value? Coins typically have two types of value: their physical denomination (5 cents, $1, etc.) and their numismatic value. Numismatic value means the coin’s external value above its base value of the coin’s metal content, silver, gold, platinum, etc. Hard to find coins, or low minted quantities will sometimes have a higher (numismatic) value.
If you are interested in collecting or investing in coins, learn as much as you can before and during your venture(s). Understanding the market conditions, the shifts in popularity and market conditions are paramount in making your hobby profitable, fulfilling and rewarding.
Begin by learning how to identify “undervalued” coins. First, identify the coin’s market value. Next, search diligently coins, for whatever reason, are selling below their price. This is a sure way to buy with a profit already built-in to the coin(s). With time, most coins value will increase; mainly due to their age increasing which makes that particular coin’s availability becomes scarcer. But keep in mind, some coins will lose their numismatic value due to market conditions and supply. For example, let’s say you have a pristine condition 1884 CC Morgan Silver Dollar Coin valued in the hundreds of dollars. Then, one day a 95-year old coin collector dies and his collection of hundreds of these same coins hit the market; your coin could go down in value. This is what I mean by learning as much as you can about the market.
Whatever you do, make sure you do it for enjoyment and excitement. Make it fun. It is very rewarding and interesting to actually handle the physical coins while you’re investing and collecting. Buying stocks and bonds is usually a good investment, but not very exciting. Coin collecting, on the other hand, tends to add excitement. Enjoy and share it with your family, kids, grandkids, etc. Teach them your passion and coin collecting and investing will continue for centuries to come.