How to Collect U.S. Stamps for an Investment

How to Collect U.S. Stamps for an Investment
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Investing in U.S. stamps might be less volatile than investing in the stock market, but it still requires a great deal of research, intuition and deliberation. Investing in stamps isn't a sure-fire way to build a nest egg, but it can provide you another opportunity to make a little extra cash with what you have.

Study up on stamp investing and find out everything you can about the industry before you start investing your money. Books such as "Stamp Investing" by Stephen Datz can be a good start. Investing in stamps isn't a mere hobby to take on lightly, so make sure you're thoroughly prepared and understand which stamps make the best investments.

Don't buy stamps with faults. You'll have a tough time finding a dealer who wants to buy a stamp from you if it has faults. Don't buy stamps that have flaws in the perforation, have faded coloring or no longer have the original gum on the back. The stamp shouldn't be creased and, for best results, it shouldn't be used unless the "cancel" stamping is very light.

Aim for stamps in mint condition that were issued before 1935. Stamps issued later than this are less likely to garner a good return, mostly because too many stamps were issued then, and scarcity leads to greater value. Of course, stamps with errors are also rare, so you can make an exception and consider purchasing stamps with errors that were issued after 1935. Errors may sound the same as faults, but they are different. A fault or flaw is a blemish that lowers the value. A stamp error means the wrong kind of paper was used, such as watermarked paper, so there are only a very limited number of stamps of that design on that paper. Thus, the value goes up.

Use a stamp guide to get an idea of what the stamp's value might be or consult a stamp expert if you have one as a contact before you buy a stamp. There are a number of authoritative stamp guides out there. For example, Arago offers in-depth information about stamp values for both beginners and experienced collectors. The SG100 Stamp Index is another good reference to use.

Review the grading of the stamp before you purchase it, if you're buying one from a collector. Grading is an official rating system for the quality of a stamp. Make sure the stamp is not only graded high, but also is at the top end of its grading range. For example, a grading of 95 means the stamp is extra fine and superb. But if you want to only invest in 95 grade stamps, don't pick one that just barely made it into the category.

Find your stamps using a variety of outlets, both online and through stores. You might find good, rare stamps to invest in via eBay or by purchasing them from collectors. Use caution when buying from auction sites such as eBay, as some scammers may try to dump worthless stamps there and call them collectibles. You also might find a good stamp at an antique store or even at an estate sale or a garage sale. If you're dealing with an unconventional source, be extra cautious regarding stamp quality, popularity and rarity before purchasing it.

Store your stamps in a safe place. Don't leave them somewhere where humidity and other conditions can ruin the quality. Stamps will likely increase in value if they're stored well. Consider having them encased in a plastic or glass frame, and store them in a safety deposit box. You will also want to insure your stamps in case a fire or other accident destroys them.

Get your stamps certified and graded. When you're investing in stamps, you can sell them to dealers for the highest value if you have them graded and certified. This also ensures that you know you're getting the best deal for your stamps. You can get stamps graded and certified through the Philatelic Foundation.

Sell your stamps. Although stamps are easily liquidated and can be sold almost any time, if you hold on to your stamps for five to 10 years or more, they're likely to increase in value. You can try selling your stamps online, via websites such as eBay, or directly to dealers or stamp shops. You can also sell your stamps through auction houses, who may pay you an advance based on the worth of your collection. If you sell your stamps online, use PayPal or another online payment system that provides strict standards that prevent fraud. This way, you won't be at a loss if your buyer tries to claim later that he never received the stamp and wants his money back. Keep records of every stamp you ship, including getting a delivery receipt or even a signed receipt from the shipping service you use.