I’ve never been very optimistic about making money with collectibles. When I was young I dreamed of owning one of the coins listed in a coin book with a value of many thousands of dollars, but I never found any of those coins in my change. A while back I was asked to take a look at a deceased family member’s coin collection, and this gave me a chance to see how this collection fared as an investment.
The coins I examined were collected over a great many years from change; none of the coins were purchased from other collectors. So, the “investment” cost was just the face value of each coin (adjusted for inflation).
For this little test, I decided to focus only on coins at least 50 years old. Among these coins, I was surprised to discover that their total current value exceeded the total face value (adjusted for inflation based on each coin’s date) by 19%. This means that the average rate of return was about inflation plus 0.25%. In fact, the return is a little better than this because some coins were saved in a later year than the year that they were minted.
By stock market investing standards, beating inflation by less than 1% over several decades is quite dismal, but I was surprised that the collection even kept up with inflation. I remain pessimistic about collectibles as investments, but many collectors are in it for the love of collecting rather than investment returns.