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How to Invest in Stamps

If you have disposable income and want it to work for you in a secure way that keeps your initial investment safe and appreciate in value, buy savings bonds, treasury bills, or some other guaranteed investment vehicle. Buy some land. Buy an annuity. Don't buy stamps and expect them to make your fortune, or even enable you to break even. Yes, it is possible to buy stamps and sell them for a profit, but it is by no means a simple or a guaranteed process.

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Stamps are just pieces of paper and they have no value unless there is a willing buyer who selects them from among all the other available choices at the time that you want to sell them. As mentioned above, a stamp's value is dependent on condition, quantity available, and desirability in the current market.

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No two stamps are identical, so ads that promise, or even imply, that "The U.S. Scott no. xxx is a sure bet, buy now and make money later" are simply not telling the truth. Statements like that seem to say that all the copies of Scott xxx, and especially the ones they are selling, are identical as to condition (color, faults in the paper, centering), which is impossible, and also make impossible assumptions about what the future market will be.

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In the 1940's, a widespread belief in the future value of U.S. stamps in full sheets led collectors and some of the public to buy and save huge hoards of 3-cent stamps. There are so many of those stamps in existence now (in perfect condition!) that you can't sell them even at face value - dealers buy them at a discount. You may as well use them up on mail. When plate number block collecting was extremely popular in the United States, collections were selling for fantastic sums, and now the same stamps should be used for postage on letters, because collector interest peaked and then slid downhill.

For U.S. stamps, the so-called "Classic Issues" - stamps from the last century - probably are as close as you will come to blue-chip stock equivalents, but even that is not 100% true for all 19th century stamps. Stamps were printed in much smaller quantities in the last century than they are today, so there are fewer examples, which in turn influences how much collectors insist on perfect condition (you simply can't get it for certain issues), and they are always popular. But you will not be able to find these stamps at a cheap price, so any possible profit margin is fairly narrow.

Knowledge is a major part of making a profit on stamps. By knowing the marketplace and the history of the stamps, you will not be fooled by advertisements that state that a certain stamp is "rare" or "not seen often," and you will recognize a good price when you see one. No one should ever be taken in by an ad for "rare" stamps that appears in a mass market publication. Those ads cost thousands of dollars, and no seller would spend that much money on an ad when he had only a few of the products to sell! A mass-market ad means the seller has a huge pile of whatever he's selling, and you can be pretty sure that the condition of the stamps will be nothing to brag about, and they will be greatly overpriced compared to what you could probably find at any stamp show.

If you have a good memory for dates and historical events and a good visual memory, a philatelic area where it is possible to make money is in covers. There is great interest now in finding earliest known uses (EKU) of older U.S. stamps. It is only in modern times that stamps have had first day ceremonies with special postmarks for the new stamps.

Before about the 1940's, stamps simply were put on sale with no ceremony, and customers would buy them at the post office and use them on their mail. Collectors of EKU's are always exploring dealer stocks to find what look like ordinary letters but with telltale postmark dates that indicate usage - ideally - the day the stamp was put on sale. These covers can be worth literally thousands of dollars, and many do go unnoticed in the stock of dealers who don't have any special knowledge about this collecting specialty.

Other covers may be of special interest only because of some historical association that is evident from the sender's name, perhaps, or the postal marking. The dealer selling the cover may not have noticed anything special about it and is selling it for a modest price. You have to know the market in which to sell this type of item However, if you find the right buyer, with the collection for which this cover is ideal, you may be able to make a very tidy profit.

Many people might buy gold coins; a much smaller market exists for stamps in general, and even smaller markets for some stamps in particular. There are much more sensible places to put money that you hope will bring you a future return, but for those who love them, stamps bring a great deal of immediate return in the form of pure enjoyment.

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