Six Potential Pitfalls of Coin Collecting – And How to Avoid Them
While we have extolled the virtues of coin collecting, there are also some pitfalls that we would be remiss to not mention. Coin or currency collecting can be a rewarding, educational and informative hobby. But as with any sort of collecting or investing, there are inherent risks.
Coins can be addicting. They can be all-consuming. A collector can be bitten by the “collecting bug” and this casual hobby can turn into a passion, possibly to the detriment of the collector’s family and friends. This passion can control finances, vacations and spare time. There are collectors who have little time for their family because they spend hours looking at their collections or looking online and in catalogs for the coins missing from their collections. You should begin collecting with a strict budget in mind and stick to those numbers.
- The Poor House
As in any financial endeavor, your finances can take a hit if you are not careful or pay no mind common sense. Weak-willed collectors can spend more than their budgets, as completing their collection becomes an all-consuming and uncontrollable passion. You can wind up buying more and more trying to acquire those elusive specimens. But most collectors are imbued with enough common sense to control their urges to “add just one more coin” well after they have broken their budgets. Stay level-headed and always keep your financial security in mind.
- Only the Best will Do
Many collectors want to keep buying better and better quality coins. This passion is fueled not only by dealers but also by the major grading services that encourage collectors who purchase certified coins to register their high-quality sets. The higher each of your coins is graded the more points you get and the more publicity comes along with it. It can become all-consuming and extraordinarily expensive if you aren’t careful. Don’t get caught up in that game of validation. A well-matched set of any grade of coins is a pleasure to behold. Your coin collection should be for your own enjoyment.
- It’s Worth What?
Collecting is often pursued for the satisfaction of completing something, for the educational value the research brings and for the comradery of your fellow collectors and the dealers with whom you associate. Many life-long friendships have been built from purchasing coins and assembling a collection. But collectors may forget why they started to collect when they see the values going up, up, up. What happens when prices go down? Your fortune, your nest egg, your savings can be gone if you aren’t careful. Remember to always be aware of how prices are moving have an exit strategy if need be.
- Would I Lie to You?
The dealer(s) you choose to purchase from can be your greatest asset. They help you acquire valuable specimens that will enhance your collection and often actively look for specific coins you need in the grades you want. They share their knowledge with you and bring back treasures from their travels. But what if they aren’t your friends? What if they only care about their profits? What if the coins they sell you aren’t quite as good as advertised? These are risks, but none of them are insurmountable. A good dealer will help you and wants you to make a profit and to enjoy your collection. An unscrupulous dealer cares only about himself and his profits. Make sure you do your research on any dealer you work with and try to work only with the most reputable.
- Don’t Worry; These Coins are Certified
Certified coins provide a great measure of safety, especially for investors or novice collectors whose grading skills are minimal. Third-party grading services independently authenticate and grade coins for a fee. The fee is not dependent upon the grade received but on the value of the coin and the time in which the coin must be graded. However, not all grading services are alike. The Professional Coin Grading Service (PCGS) the Numismatic Guaranty Corporation (NGC) are the two top-tier grading services. Their grading standards are well-known and are comparable. They are the two most trusted grading services in the industry today and their products are often bought and sold sight-unseen. The American Numismatic Association Certification Service (ANACS) is the oldest grading service and is also well-respected but ANACS coins are not widely available nor are they widely traded throughout the industry. Be wary of other grading services besides those listed, as they may not be reliably graded.
This article was not written to scare you or to cause you concern. It was written to give you a different perspective and some points to ponder as you think about your first or your next coin purchase. Do your research on the coins, the prices and the dealers you work with and you will be fine. Happy collecting!