Newspaper article The Christian Science Monitor

Collections Build Wealth, Sometimes in These Days of Low Inflation, Think of Your Coins or Dolls as a Hobby, Not an Investment

Newspaper article The Christian Science Monitor

Collections Build Wealth, Sometimes in These Days of Low Inflation, Think of Your Coins or Dolls as a Hobby, Not an Investment

Article excerpt

A thought for your pennies.

Dig through your loose change. If you've got an almost reddish, mint condition, 1955 Abraham Lincoln one cent piece with a "double die" mark - a doubled image of Old Abe - you're actually sitting on a cool $16,500.

The '55 Lincoln is one rare cent. "There is strong demand for rare and semi-rare key date issues," such as coins that are required to complete a full set of Lincoln cents or Buffalo nickels, says Keith Zaner of Coin World, a newspaper for collectors. Welcome to the esoteric world of collectibles: coins, precious metals, gems, paintings, antique dolls and furniture, and rare objects d'art. While there is definitely money to be made in collectibles - such as finding a rare coin in mint condition - risks are high and returns are iffy. Generally, coins currently sell at lower prices than five or 10 years ago, Mr. Zaner says. The challenge with collectibles stems from one key factor: low inflation. Many collectibles move in tandem with inflation. In the late 1970s, for example, prices for antiques, paintings and other collectibles skyrocketed, reflecting double digit inflation. The value of hard assets, such as coins, scoots upward when the value of stocks and bonds fall. They become financial alternatives to traditional investments. Today, with inflation low, the best returns come from stocks and bonds. Over the years, stocks, bonds, and real estate have whipped exotic investments, including precious metals such as gold. If you buy collectibles as investments, be prepared to pay a lot, without earning a lot. An antique, for example, earns no interest or dividend payment. Some items, such as jewelry and coins, require special insurance coverage. You usually have to kick in storage costs for furs, gems or bullion. Financial planners say most people should treat collecting as a hobby, not an investment. …

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