Investing in Rare Postage Stamps
A guide to investing in rare postage stamps - and how you can beat stocks with a stamp investment
Investment-grade stamps - those rarest, most valuable examples - have put the stock markets to shame in the past decade, posting double digit annual returns.
And the world's sharpest investment minds are taking note.
Business moguls Warren Buffet and Bill Gross are both major investors in the sector. Gross recently sold part of his Great Britain postage stamp collection for $10.5m - up 22.75% pa on his original $2.5m purchase price seven years earlier.
Reasons to invest
Historical returns: Stamps have been a respected asset with investors for decades and have continued to perform well during the recession, much better than the stock markets. As tangible assets they excel during times of high inflation.
Liquidity: There are an estimated 50m serious stamp collectors globally, and the finest rare stamps are always in demand. Rare stamps have worldwide recognition and global tradability.
Low volatility: Prices are underpinned by the sector's large and passionate collector base - collectible stamps are a $10bn pa global market. In addition, hundreds of books and price guides exist. This extensive data increases the level of comfort for investors. There are no nasty surprises.
Limited supply: With only a finite supply of investment-grade stamps available, prices can only rise as demand increases.
o Baby boomers now own 80% of the world's wealth: As they enter retirement, baby boomers will return to hobbies of their youth and spend their disposable wealth on investments such as rare stamps.
o By 2030 some 2bn extra people will be in the middle-class bracket, Goldman Sachs predicts: This demographic produces the majority of investment-grade stamp collectors.
o China, the world's booming second-largest economy, is a nation of stamp collectors: There are an estimated 18m enthusiasts. This figure will rise sharply as both its population and prosperity continues to grow.
o The growing economies of Brazil, Russia and India will also boost demand: India already has 2m stamp collectors. Its rapidly expanding middle class can only increase this figure.
o Stamp collecting is an increasingly "aspirational" investment, with leading collectors fighting over the best pieces.
The 30 rarest stamps from Great Britain have brought an average return of 9.5% pa over the last 50 years, according to the GB30 Rarities Index. Returns have been even more impressive of late, up 10.8% pa since 1998.
The value of 100 of the most collectible Chinese postage stamp sets was up 46% pa between March 2009 and February 2012, according to the China 100 Stamp Index.
The world record for a sheet of rare Chinese monkey stamps was broken four times in 18 months between 2010-2011. A sheet of the stamps sold for $192,000 in September, 2011 - a 186% increase in price since January 2010.
A mint condition 1968 The Whole Country is Red set a new $1.15m record for a single Chinese stamp at auction in May 2012.
Bill Gross bought a plate block of four Inverted Jenny airmail stamps for $2.97m in 2006 - the highest price ever paid for a US stamp item. It had last sold for $1.1m in 1989 - a 6% pa rise.
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