Investment in Stamps

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Investment in Stamps
A Golden Opportunity
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Why invest in stamps
Should we invest solely in Indian stamps
Investment in Mint vs. Used Stamps
Investment in rare classic stamps
Collector vs. Investor profile
Investment cycles
Where do we normally invest?
Investment in collectibles
Types of Stamps
Postal Stationery
Other things to consider when purchasing stamps
Facts about Philately
Things to consider when selling stamps
Other types of new Stamps
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These days, stamps are considered as an
alternative investment. Stamp possess
considerable aesthetic qualities and there is
also psychological appeal of something
tangible, rather than figures in the bank,
pass books or demat accounts
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A world of opportunity opens up when you start to
learn about a stamp. Philately is one of the more
interesting and educational hobbies as it teaches
us about history, geography, politics, art & culture,
all insides the borders of a postage stamp. It trains
our power of observation, improves our perception
broadens our view and adds to our knowledge of
many field of learning.
Stamp collecting today is the world’s oldest and
most widely followed hobby. It is also one of the
very few hobbies which has acquired authentic
status and enjoys extensive government support.
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The introduction of the postage stamp and its
popularity gave rise to an interest in philately and
birth of the philatelist . The history is as old as the
history of the postage stamp itself
Stamp collecting or ‘Philately’ is one of those
timeless hobbies that might have been enjoyed by
your grandfather and could be a past time for your
grandchildren. Stamp collecting is far more
compelling than just the removal of the paper from
the back of the back of the stamp
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Philately is the second most popular hobby in
the world after Football
Ten Billion US$ Market of global philately
48 Million philatelists exist worldwide
18 million philatelists in China alone
India Post issue approximately 800 Cr. Worth
of stamps and philatelic material every year
(at least since last 5 years)
Almost 12 lacs philatelists exist in India
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Bank savings account – 10,000
Fixed deposits / recurring deposits – 10,000
Lending out to market - 20,000
Mutual funds – 50,000
Shares, stocks & commodities - 50,000
Land and real estate - 5,00,000
Gold, Silver other precious metals – 1,00,000
Investment in collectibles - 100
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Antique goods – 1,00,000
Coins and Currency
◦ New @ premium rate – 1,000
◦ Old @ Market value – 10,000
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Stamps
◦ New Stamps - 100
◦ Rare classics – 15,000
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Art and Paintings -50,000
Normal investment cycle
Time
vison
Knowledge
This combination Make >>>\
Philatelic investment cycle
Knowledge
Time
Vison
This combination Make >>>\
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Low cost of investment
Relatively confidential investment
No risk of capital loss, always retains face
value
Government regulated investment
Low space requirement
Highly portable – tangible asset
Minimal risk of theft
Finite supply of stamps
Investment
Collection
Knowledge
Profit
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Readily available from Post office (Philatelic
Bureau) at Face value
Specific details easily available from the P.O
No detailed research required
Foreign stamps attract other factors
Postage & Shipping costs
FX rates – currency fluctuation
Risk of theft/ damage in transit
Environmental conditions for mint stamps
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Stamps are not highly correlated with other
forms of investment and may represent a
valuable diversification within a wider portfolio.
Stamps are highly portable stores of wealth and
are easily transported over national borders.
An ageing population in western countries
means that investors approaching retirement
may resume childhood hobbies.
There are million of enthusiastic stamp
collectors around the world creating a
global marketplace.
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There is a finite supply of classic/ mint stamps.
Stamps are not a financial asset and so may
perform better than cash in times of high inflation.
As a tangible asset, a stamp cannot go out of
business like a company quoted on the stock
market.
Stamps are a relatively confidential investment.
Unless bought at a public auction, ownership is
private and there is no public register as there is
for many investments in equities.
The investor is able to hold and admire his
investment, and enjoy its aesthetic aspects.
Many stamps have an interesting historical
background.
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There is no right or wrong investment
For investment purpose Mint is preferred
Used stamps are more hobby oriented
Mint stamps are investment oriented
Conditions of stamp differ in used stamps
Mint stamps are always MINT
Used stamps usually have slow price incline
Mint stamps have sharper incline in value
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Knowledge and research required for
collecting a rare classic stamp
Average time required for gauging fair
market value is 2-4 years
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Relationship with philatelic fraternity
Regular web based research
Visits to Public auctions and exhibitions
Magazines & catalogues
Classic stamps have slow incline in value
Collected as a prestige item in collection and
for mental satisfaction
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The genuine commercial covers, correctly
franked and postmarked and perhaps bearing
other
transit Postmarks showing their
passage across the
world, will always
demand a considerable premium over the
single used or mint stamps in such cases.
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Commemorative stamps
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Definitive stamps
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Service stamps
Which of these are suitable for
Investment?
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Sheet
Se - Tenant
Sheetlet
Miniature Sheet
Which of these are more
suitable for Investment ?
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All of the above
Healthy growth in value in short time
More attractive than normal stamps
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Prepaid Postal envelope
Inland letter
Aerogram letter
Post card
Registered envelope
Meghdoot postcard
Should we invest in these ?
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FDC - First Day Covers
with special cancellation
Information Brochure
Special Folder
Special Cover
Booklet
Maxim Card
Others
Should we invest in these ?
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Unlike stocks and shares, the majority of transaction in the
philatelic or stamp market take place informally, by mail
order or in retail environments, and therefore the size of the
market is hard to determine. The market is certainly much
smaller than the financial markets but it is not trivial. It has
been estimated at £5 Billion.[4] The majority of these
transaction, however, are likely to be low value item rather
than investment. In a 2007 interview, Mike Hall of Stanly
Gibbons estimated that “About $1 billion of rare stamps trade
annually in the $10 billion-a-year stamp market.”[2] The
number of collectors worldwide was estimated at 30 million
in 2004.[4] In 2009, Adrian Roose of Stanley Gibbons
estimated the figure at 48 million including 18 million in
China. It is not know how many of these are serious
collectors.
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While there are long term record of retail stamp prices, the first
catalogue being prepared in 1862, there is little objective historical
data about the past performance of stamps as investment. No long
term indices like the DOW Jones Index exist, although some figures
have started to be complied by Stanley Gibbons and Stamp Magazine
in the UK.
Since 2002, Stanly Gibbons have compiled a SG 100 Stamp Index
based on retail and auction prices for the “top 100 most frequently
traded stamps” in the world. This index now appears on the
Bloomberg website. In 2004 they also launched an index of 30 rare
British stamps.[9] According to Stanley Gibbons, rare stamps have
averaged an annual compound return of 10 per cent over the past
50 years,[10] however, it is important to remember that this figure
has been calculated using back testing as stamp price index are a
recent innovation. In addition, the prices in the indexes are based in
part on Stanley Gibbon’s own retail price lists.
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Stamp catalogue prices are not considered reliable
as they are nothing more than estimates at the top
end and represent a retail selling price at the
bottom end of the market. Auction realizations
may be more reliable but are difficult to use as the
investor has to personally analyze the realization
from many auctions over a long period of time in
order to come to any useful conclusion. While most
trading in shares is on a recognized stock
exchange and task place transparently in public,
that is not the case with stamps where only
auctions transactions take place in public view.
Cat. Year
Gandhi 1948
Set of 4
Gandhi '48
"Specimen"
Set of 4
1971
1982
1990
2000
2011
110.00
1,450.00
1,000.00
2,000.00
15,000.00
5,000.00
35,000.00
60,000.00
5,00,000.00
Sold at
Auction
45,000.00
12,80,000.00
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Never rush to sell stamps
Sell like a Investor not as a Dealer
Safe form of investment
Loss of interest No loss of capital
Investing in blue chip stamps via Auctions
You are your best judge for investing
◦ Both when purchasing and selling
Period
Issued Stamps
Face value
Market value
1947-56
1957-66
1967-76
1977-86
1987-96
1997-06
2007-10
Total
39
119
266
343
439
636
350
2192
Rs. 22.63
Rs. 25.66
Rs. 118.75
Rs. 370.30
Rs. 1,243.20
Rs. 3,327.00
Rs. 2,050.00
Rs. 7,157.54
Rs. 26,500.00
Rs. 4,500.00
Rs. 6,000.00
Rs. 13,000.00
Rs. 33,200.00
Rs. 25,300.00
Rs. 6,500.00
Rs. 1,15,000.00
2011-16 *
540
Rs. 4,000.00
Rs. 15,000.00
* projected
Investment
2016 Projected
returns
2011
1,15,000.00 (M.V)
2011-16
4,000.00 (F.V)
Rs. 2,25,000.00
Rs. 15,000.00
Years
Total
Rs. 1,19,000.00
Rs. 2,40,000.00
Yearly
investment
12% Rate of
Int.
2011-12 Rs. 1,15,000.00
Rs. 700.00
Rs. 13,800.00 Rs. 1,29,500.00
2012-13 Rs. 1,29,500.00
Rs. 750.00
Rs. 15,540.00 Rs. 1,45,790.00
2013-14 Rs. 1,45,790.00
Rs. 800.00
Rs. 17,495.00 Rs. 1,64,085.00
2014-15 Rs. 1,64,085.00
Rs. 850.00
Rs. 19,690.00 Rs. 1,84,625.00
2015-16 Rs. 1,84,625.00
Rs. 900.00
Rs. 22,155.00 Rs. 2,07,680.00
Years
Investment
Total
Year
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
Gold per
10 Gms
108
109
112
111
113
114
114
117
118
120
Average rate of gold for 10 Gms = Rs 113.60
Cost to purchase stamps for the same period Rs. 22.63
Cost to purchase 1.99 gms Gold = Rs. 22.63
ROI in gold Rs. 5671 sold at 28500 per 10 gm
ROI in Stamps Rs. 26300 sold at M.V
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The future market for the sale of philatelic items is uncertain. The
demand for philatelic items comes principally from collectors, not
investors, and the majority of collectors are aged over 50 in western
countries. There are relatively few younger collectors in Europe and
North America that would be expected to be the buyers of the
future, although anecdotal evidence suggest that may not be the
case in India, China and other developing countries.
In the longer term, the future existence of postage stamps may be in
doubt as people use electronic communications more and more and
send fewer letters. If stamps are no longer sold for postage they may
cease to be collected and if they are not collected, the vital collector
demand that underpins the investment market may disappear.
Stamps have little intrinsic value, they do not have the raw material
value of gold coin, they do not represent a share in a business like
equities, and they usually lack the enduring visual appeal of a great
work of art.
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Stamps investment is relatively unregulated compared with, for
instance, investments in mutual fund and investors may have little
protection if things go wrong.
Stamps do not generate any interest or dividend.
It may be impossible to determine the current market value of your
stamps without selling them.
Stamps may be relatively illiquid as finding a buyer may take time.
Investing successfully in stamps requires a high degree of
specialized knowledge. This takes time to acquire and there are
many pitfalls for the inexperienced investor. Some of the risk and
disadvantages are:
The return is uncertain.
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Special instruction will need to be given to spouses or executors
in the event of the owner’s incapacity or death as they may be
unfamiliar with philatelic items.
Stamps may take time to be sold unlike cash, equities or mutual
funds which can usually be realized with minimal delay.
There is very little reliable historical information about the
performance of stamps as investment.
A long term view is necessary. A quick purchase and sale is
unlikely to be profitable.
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Stamps purchased for investment do not normally have any
special regulatory protection for the purchaser. In the United
Kingdom there is no regulation of this area at all from the
Financial Service Authority. Rules elsewhere may vary. Where
investment is collective though a mutual fund there may be
some regulation of the find depending on where it is based.
In India SEBI and RBI are already planning to set up an
intermediary regulatory body with representation from among
the wealth managers themselves. The new rules would cover
entities offering wealth management or investment advisory
services across various asset classes irrespective of the
different financial markets
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You have to ask a few question of yourself if you
want to be an expert of philately.
Do you want to lead your fellow philatelists, rather
than being ignored by them? Then educate yourself
and share what you know with others.
Do you want to get goodies that busy and lazy
dealers over look for cheap prices?
Then ………READ.
Do you want to make fruitful investment in stamp?
Then the answer is, READ as much as you can.
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You have seen them. They are usually quiet. They sit at
a dealers table and sift through everything within their
specialty. What are they looking for? Dozens of things:
cancellations, the rare shade, different perforations, die
variety, rare rate, rare destinations and many more
things. Don’t ask these experts; they are professionals
at what they do and they won’t tell you the secret. They
took the time to READ the book. They are experts and if
you know what they know, you would get in line or
ahead of them, wouldn’t you? So keep reading!
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A. Be a regular visitor at the post office philatelic bureau. The
advantages are many.
B. By opening a philatelic deposit account, you are secured about
your supply of Mint Stamps, First Day Covers, Brochures and postal
stationary etc.
C. You get the material delivered to your address without extra cost.
You get the stamps from the post office at face value, which is a
parallel currency and hence you are never loser.
D. The brochure of any stamp is worth reading. It will help to learn
the details of the particular stamp. It will help to learn the particular
stamp. It is also a collectable item.
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E. You get a chance to meet fellow philatelists of your area and it
gives you chance to exchange views.
F. The department is carrying out all these activities to promote
philately. You can take advantage of them. So what are you waiting
for? Go and open a philatelic account.
G. Be in touch with senior philatelist – they have learnt philately the
hard way and their experience will help you a lot.
H. Refer to the many Internet auction sites on philately. Try to get
few good catalogues, reference books, auction lists Magazine,
articles written by senior Philatelists, and postal information from
time to time from post office.
I . Always buy Mint stamps – At the first available opportunity
on the release date from the PO
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Go for Quality material even if is a bit more costly.
will be more worthy in the long run.
Buy good accessories to preserve your philatelic
material in good condition.
Visit National And International exhibitions witch
will broaden your vision for collecting.
Become a member of local philatelic society where
u can interact with philatelists of your area.
Never speculate on stamps unless you are guided
by the specialist of that subject.
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In conclusion, COLLECT or STUDY STAMPS FOR
ENJOYMENT. If you sell your collection someday and
make a bit of money on it, then fine. But if you
collect, with a focus on education and enjoyment,
you will never be disappointed!
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