Collecting coins can be an enjoyable investment if you avoid the following mistakes that many people make when they start collecting coins. Remember, nothing can replace the knowledge that you can acquire by reading coin books and joining a coin club.
01 of 08
Buying Coins from Television Coin Dealers
Not all coin dealers that you see on television are there to rip you off. But given the high advertising and marketing costs they must recover, you will definitely not get the lowest price for the coins you are purchasing. Even if the coins they are selling on television are certified by one of the top tier grading services (PCGS or NGC) it is only guaranteeing that the coin is authentic and it is accurately graded. This does not guarantee that you are paying a fair market price for the coin.
02 of 08
Following the Latest "Hot Tip"
Just like stocks and bonds, there are a lot of people that will tell you what's going to be the next hot coin tomorrow, next month, next year or next decade. If it was that easy to predict the future these people would already be rich and not have to make money by giving numismatic advice. This is especially true if the advice is coming from a person trying to sell you coins on television or over the telephone. If the advice is coming from a trusted source, for example a coin dealer or coin... collector that you have known for decades, you may want to consider it.
03 of 08
Certified Coins from Self-Slabbers
Most people consider the top tier coin authentication and certification services to be Professional Coin Grading Service (PCGS) and Numismatic Guaranty Corporation (NGC). The second tier is generally considered to be ANACS and Independent Coin Graders (ICG). However, anyone can buy a machine to encapsulate coins in special plastic holders and slap a label on them. There is one firm that states that they specialize in MS-70 and Proof-70 coins. In other words, every coin that is submitted to them... gets put in a slab with one of these two grades. That does not mean these coins earned that grade and most reputable coin dealers would consider them to be over graded.
04 of 08
Buying "Below Wholesale" Lots
There's nothing wrong with buying "below wholesale" lots and using these coins to start a new coin collection for a particular series or type. Unfortunately, you usually cannot inspect the individual coins before you purchase them. Most commonly these are the coins that the coin dealer has overbought or they do not meet quality standards to be sold individually. Therefore, it is highly unlikely that they will yield a good return on your investment.Continue to 5 of 8 below.
05 of 08
Foreign Coins from Small/Unknown Countries
It is the political right of any country to issue coinage. Some of these small or little-known countries will produce very low mintage coins with popular subjects. Although they will be touted as "rare" because of their low mintage numbers, this does not mean that there is a demand for them and their value will increase in price over time. There are many other factors that determine the value of a coin. Some of these small countries that issue popular commemorative coins include:... Liberia, Isle of Man, Marshall Islands, Niue, and Guinea. Also, avoid colorized coins and coins that are plated with precious metals (gold, silver or platinum). These type of plated or colored coins are considered damaged by numismatists and are most commonly worth face value.
06 of 08
Skip the Research
There is an old adage that says, "Buy the book before the coin." The people that I know which have made the most amount of money in coins were "coin collectors" first and "coin investors" second. Their primary goal was to assemble a quality coin collection and not to make a "quick buck". Just like financial investments, they were in it for the long-haul. Researching and learning about the coins you collect will give you the knowledge to make sound financial... investments in coins. There are no get-rich-quick formulas in the world of coin collecting. However, wise purchases made over a period of time will yield financial benefits in the future.
07 of 08
Know the Difference between an Advisor and a Salesman
There are a lot of people that will sell you coins over-the-counter, through the mail or over the Internet. They are also ready, willing and able to give you "advice" as to what are the best coins to invest in right now. More often than not, it is the coin they are trying to get rid of so they can make a quick buck. For example, if a "coin advisor" is proclaiming that the "financial sky is falling" and you need to invest in some "hard assets" like gold coins and... he can sell them to you, he is not an advisor but a salesman. A wise coin investor will build a relationship with a reliable and established coin dealer.
08 of 08
Buying Rolls of Coins
Back in the 1950s and 1960s the hot commodity in coin collecting was investing in rolls of uncirculated coins. This craze appeared again in 1999 with the advent of the 50 State Quarters program from the United States Mint. It was touted that someday these coins will be valuable and you will have a pile of them to make a quick and tidy profit from. People who invested over $1,000 assembling a complete collection of State Quarter rolls are now finding out that they are worth a little more than face... value. In fact, most coin dealers will only buy a few rolls if their stock is running low and then recommend that you take them to your local bank and cash them in for paper currency.