MONEY COMMENT
A First Class Investment Opportunity

By David Kuo (TMFDragon)
November 19, 2004

If you own a "penny black" in fine condition, then your little Victorian stamp could be worth around £150 today. Interestingly, a "tuppence blue" is worth a lot more, and an 1867 £5 orange may fetch almost £3,000. However, if your "penny black" was printed from a rare plate then it could command a price tag of £2,500.

Lofty valuations such as these have tempted some people to consider stamps as an alternative investment. If you are a philatelist already, then you are in good company. It is estimated that there are 30 million stamp collectors worldwide, and they number the Queen and Real Madrid footballer Luis Figo as enthusiasts.

Starting a stamp collection is not difficult. After all, most letters that are delivered through the post have a stamp stuck to the front of the envelope. However, turning a stamp-collecting pastime into a serious investment proposition is a different matter altogether

If you plan to collect stamps as an investment, then it is important to focus on stamps that have a significant number of active collectors. This will ensure that there is sufficient liquidity in the market if ever you decide to sell.

Currently, pundits believe that stamps from the Victorian era to the start of World War II are some of the most popular. Additionally stamps from former commonwealth countries are said to be quite sought after too. That said some collectors like to focus on themes such as flowers or animals for their aesthetic value.

But fashions can change quickly, and this can have a dramatic effect on the back-of-the envelope valuation of your collection. It seems that at one time, stamps issued by the United Nations Postal Administration were in high demand. However, a souvenir sheet to celebrate the 15th anniversary of the UN that once fetched £180 is only worth around £50 these days.

Another consideration is the condition of the stamp. It is reckoned that a stamp in "fine" condition can be worth ten times more than one of lower quality. Other issues pertaining to quality include the clarity of the post mark if the stamp has been used, and the gum on the back for unused stamps.

Consequently, caring for your stamp collection is vital, and it is here that you must decide if you are prepared to devote the necessary time to your investment. It also helps if you have an interest in history and geography, which can prove invaluable when judging the worth of stamps if you plan to buy and sell.

Bear in mind also that it can take many years for your stamp investment to pay off. Dealers reckon that you should be prepared to invest in the region of five to ten years to achieve the best returns. According to stamp specialist Stanley Gibbons' SG Index, stamp prices have grown by about 6% per annum. However, some stamp prices have appreciated at a much greater pace.

Dealers such as Stanley Gibbons can also be a good source of information if you are new to philately. Other dealers that include Bonhams and Sotheby's are also a good port of call when you wan to sell your portfolio. Other ways to dispose of your collection include auctions, but bear in mind the commission taken by the auction house can dent your returns.

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