Investment in Stamps A Golden Opportunity 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 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 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. 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 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 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 Antique goods – 1,00,000 Coins and Currency ◦ New @ premium rate – 1,000 ◦ Old @ Market value – 10,000 Stamps ◦ New Stamps - 100 ◦ Rare classics – 15,000 Art and Paintings -50,000 Normal investment cycle Time vison Knowledge This combination Make >>>\ Philatelic investment cycle Knowledge Time Vison This combination Make >>>\ + 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 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 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. 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. 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 Knowledge and research required for collecting a rare classic stamp Average time required for gauging fair market value is 2-4 years ◦ ◦ ◦ ◦ 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 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. Commemorative stamps Definitive stamps Service stamps Which of these are suitable for Investment? Sheet Se - Tenant Sheetlet Miniature Sheet Which of these are more suitable for Investment ? All of the above Healthy growth in value in short time More attractive than normal stamps Prepaid Postal envelope Inland letter Aerogram letter Post card Registered envelope Meghdoot postcard Should we invest in these ? FDC - First Day Covers with special cancellation Information Brochure Special Folder Special Cover Booklet Maxim Card Others Should we invest in these ? 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. 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.” The number of collectors worldwide was estimated at 30 million in 2004. 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. 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. According to Stanley Gibbons, rare stamps have averaged an annual compound return of 10 per cent over the past 50 years, 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. 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 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 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. 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. 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. 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 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. 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! 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. 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 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. 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!