Most people who pursue stamp collecting became seriously interested at a young age. They noticed a foreign stamp or read an article about some of the million dollar stamps that have been discovered in an odd location. They get intrigued by the history behind these miniature works of art. Eventually, they became more than avid collectors, they became investors.
Stamps, like any collectible, have a monetary value. That value is the result of supply and demand, just like anything else. But the demand for stamps is highly volatile, just like other works of art. Collecting with an eye to investment requires an aptitude for risk taking and a substantial amount of expertise.
There are forgeries around, and even when the item is genuine it can lose a great deal of value almost overnight. Keeping your collection maximized from an investment standpoint requires doing a lot of research into the current market and past history in order to make reasonable guesses about future trends.
Even though stamps were often issued as nothing more than an ordinary means for paying for postage, the history of any particular stamp can transform it into a highly valuable collectible. That’s in fact what happened with all ‘The Champs’, which were once just inexpensive pieces of colored paper, worth a bit of postage.
There’s a paradox involved sometimes. If collectors believe that the worth of an item will be large in the future, there may be a widespread practice of hoarding them for future sale. But the act of hoarding produces a situation in which many of them exist later.
Like any collectible, when there is a large supply, the value goes down. Even though a stamp may be a first day, postmarked December 7, 1941 (the day of the Pearl Harbor attack), if there are a million of them around it will be worth only a modest amount. Many 19th century stamps are today worth only slightly more than their face value, even though they are old.
Rarity is a major factor in monetary worth, but it works hand in hand with the condition of the stamp. Just as with coins, an otherwise so-so collectible can be many times more valuable if it’s in pristine condition. Any stamp you hope to use for a trade should be handled with care. Be sure to use the proper techniques to prepare and store it.
Beyond the inherent properties of the stamp, its rarity or condition, the market is volatile because knowledge isn’t uniform. You may not know that a certain stamp could be sold for a high price, but a professional dealer might. That knowledge is worth something, since it can bring the dealer a large profit. It pays to do your homework before trading. An otherwise ordinary issue can be worth thousands because of a certain postmark or other factor.
Anyone looking for a safe investment would do much better to invest in bonds or selected stocks. But if you want to combine your passion for stamps with an interest in high stakes trading, stamps just might be the investment for you.