Wouldn’t it be great to combine a hobby with saving for retirement or investing for the next generation. For coin collectors, it’s something they’ve been doing for centuries and owning a rare penny could be a good way to grow your investment wealth.
The Professional Coin Grading Services index has risen 16% in 12 months
Coin collecting may insulate your portfolio from stock market volatility
How rare coins could make you very rich
In ancient times, only the very wealthy could afford to collect coins rather than spend them. But now, like many other alternative investments, coin collecting is becoming increasingly popular amongst ordinary investors. Investing in coins has increased 72% in the last 10 years, according to the 2021 Knight Frank Wealth Report.
Collecting coins can be a fun and rewarding hobby. Unlike fishing or aerobics classes, it’s a hobby where you could get back or even increase the money you put in.
Coins are fascinating, sometimes beautiful and interesting to research. They’re also easy to store, making them perfect for collectors and they range from ancient Roman and medieval coins to modern rare “mistake” coins.
You may even already own some valuable coins without realising. Modern valuable coins include the following:
Owning a rare penny can be a chance to own a little bit of history. That was a big draw for investors in March 2022, when they flocked to buy a share in a Edward VIII penny, released for sale by the shared ownership website Showpiece. The rare penny was valued at £200,000 and split into 400 pieces worth £50 each.
The coin, worth a staggering 20 million times its original value, is linked to the biggest royal scandal of the twentieth century. Edward gave up the throne on 11 December 1936, abdicating to marry the American socialite and divorcee Wallis Simpson. The coin release was abandoned.
Even if you missed the boat on this investment, there are many opportunities to own a little slice of history through collecting old and rare coins.
Perhaps the most compelling reason for considering an investment is the potential for increased value. And as more investors look for alternatives from traditional stocks and shares, the value of coins has risen.
A coin index created in 1970 by the Professional Coin Grading Services (PCGS), rose 16% in the year up to 22 January 2022 and an amazing 6315% since it began. That means £10,000 invested in rare coins in 1970 could now be worth an eye watering £641,500.
However, price increases aren’t guaranteed. Like other investments, the price of coins is driven largely by supply and demand so it’s possible that even a rare penny can go down in value if it isn’t in demand or collecting fashions change.
Owning rare coins can be a good way to diversify your investment stock portfolio. Branching out and investing in other types of assets, like coins, that don’t rise and fall with the stock market can be a good way to insulate your wealth from stock market volatility.
Alternative investments, tend to hold their value during a stock market sell off and often grow gradually in value over time.
Like other physical assets, you can pass on rare coins to the next generation. Many wealthy coin collectors have kept coins in their family for many generations. Coins can have sentimental value and make good assets to pass on a little bit of history as well as an asset with some value attached.
Owning rare coins can be risky and not all coins are guaranteed to increase in value. Let’s take a look at some of the risks involved:
If you decide to take the plunge and invest in a rare penny then here are some tips:
Given the risks involved, investing in rare coins isn’t suitable for all investors. But if you love history and you want to take up a hobby that’s potentially lucrative, then coin investing could be right for you..