Are Rare Coins Also An Investment?

Are Rare Coins Also An Investment?

The Advantages of Putting Your Money Into Rare Coins

When you think about investing, the chances are that your first thought goes to either the stock market or your 401(k) (k). Even though those are the most well-known and have the potential to earn you money, there are other investment vehicles besides those that also have the potential to earn you money. You may have seen a rise in the value of sports cards or Pokémon cards as an investment recently. The plan is for you to put your money into an investment that will grow in value over time.

Coin collecting is a popular pastime that has been practiced for a considerable amount of time. There are a variety of factors that might determine the value of a coin as rare, including its age and condition. Investing in coins is, and will continue to be, an excellent way to generate returns on investments. A few of the advantages will be discussed in the following paragraphs.


A Protection against the More General Market

The first advantage is that it provides protection against the overall market. Investors should have diversification in the forefront of their minds at all times. It would be nice to be able to remove the influence of market volatility on one's portfolio. For instance, even if the market has a pullback of twenty percent over the course of the next several months, the value of your coins will most likely not change.

If you decide to liquidate your assets at this time, you might find a smaller market for them. On the other hand, if you are patient and take your time, you can nearly always get a reasonable price for your rare coins.



Tax Advantages

One thing to keep in mind regarding investors is that they are always on the lookout for ways to reduce their tax liability. Tax exemptions are a perk that is sometimes associated with collecting rare coins. In addition, you are exempt from paying any tax on the increased value of the asset until such time as it is sold. Rare coins are a fantastic place to look into if you are interested in nothing more than accumulating an asset that has the potential to grow in value over time.

Below is a chart of the Knight Luxury Investing Index (KFLII) divided out by performance of asset classes.

luxury goods price chart

 As can be seen, the value of coins has increased significantly over the past decade and, more recently, over the past year. You can see that coins keep and appreciate value with a reasonable amount of confidence, and the only thing that outperforms coins in this regard is rare whiskies.



Liquidity

Last but not least, one of the advantages of investing in rare coins is increased liquidity. Rare coins, in contrast to other investments, which may have difficulty finding buyers or sellers, are constantly being traded by individuals. This ensures that if you wish to acquire something at a low price and then sell it a few years later, you can do so without risk.

Additionally, as time goes on, the amount of coins and currency that is available will continue to diminish, which will make the possessions you now have a greater asset.


Take a step back from the conventional investment vehicles for a moment when you think about making an investment. You should be able to find gains elsewhere that not only provide market diversification but also give you an appreciating asset. When searching for coins, it is important to take into consideration the population, rarity, and grades assigned by professional coin grading companies. The fact that many older and more rare coins were originally produced using silver and gold is an added plus.


You may check where coins rank in terms of returns and determine if they would be a good fit for your portfolio by using the excellent website provided by Knight Frank.

These statements are only opinion. This is not legal, or tax advise. All decisions must be made after consulting your legal and tax professional. 

Back to blog