Investing in postage stamps
Rare stamps are not only one of the most collected items in the world, but they are also a popular form of alternative asset. This is due to the fact that the value of rare stamps bears little correlation to other assets classes, and in times of economic downturn they are often likely to hold their value or even appreciate.
This factor, combined with the huge growth in the collecting markets of China and other emerging economies, has seen the value of rare stamps as an investment out-performing the stock market since the year 2000.
The hobby has attracted a number of notable financial experts such as the world’s second richest man Warren Buffet, and Bill Gross, head of PIMCO (the world’s largest investment fund). Gross himself has described investing in stamps as “better than the stock market” due to the potential profits.
Investing in stamps also offers an opportunity to own rare, occasionally unique historical items and the challenge of building a great collection.
Stanley Gibbons maintain three main indices which track the value of rare stamps over a period of several years. These are:
- The Stanley Gibbons SG100 Stamp Index©
- The Stanley Gibbons GB30 Rarities Index©
- The Stanley Gibbons Commonwealth Rarities Index©
For anyone investing in rare stamps these indices are a vital tool for reading the markets.
Size of markets
Stamp collecting is one of the world’s most popular hobbies, with an estimated 48 million collectors worldwide. In China alone there are around 18 million collectors, and with the hobby still in its infancy in the emerging economies of India, Russia and Brazil the figures look set to grow further still.
The market for stamps worldwide is estimated to be worth £6 billion per year, and they are the third-most traded item of eBay. The stamp market is one of the biggest collectibles markets on the planet, which makes rare stamps one of the most liquid investments available.
Value as investments
When investing in stamps, the most important factors are rarity, quality and demand. Only the very finest condition stamps are likely to be worthwhile investments, and the rarest of these will always be sought-after by collectors.
The oldest stamps are not necessarily the most valuable; the Penny Black, for instance, was the world’s first postage stamp. But the sheer number in which they were produced means that today there are hundreds of thousands of examples on the market.
The key is to purchase stamps of which there are few known examples, or to focus on the stamps of an emerging economy where the hobby is likely to develop. In the past few years the number of collectors in China has risen to 18 million, and as the hobby has grown in popularity the value of early Chinese stamps has risen dramatically.
Main article: List of notable postage stamps
Researching the markets
When investing in stamps, research is vital in deciding which area to invest in and which stamps to focus on. There is a wealth of information regarding the printing history, rarity and variation of nearly every stamp ever issued, and sales catalogues exist from the 1840s up to the present day. The price of a stamp can decrease by up to 90% with the slightest crease, thinness of paper or missing perforation, so it is important to research the condition of the stamps you’re interested in.
There are a large number of stamp collecting organisations and clubs which can offer advice and experience to new collectors and those investing for the first time. Ideally, investors should establish relationships with both a reputable dealer and an independent philatelic expert, who doesn't have a vested interest. It can also be important to research popular areas for collectors. By concentrating on stamps that have a large number of active collectors, investors can ensure there is sufficient liquidity in the market when they wish to sell.
Main article: List of postage stamp collectors clubs and societies
Where to buy investments
Stamps can be bought from a number of sources, including stamp dealers, dedicated auctions, stamp investment firms, internet auction sites and other collectors. They can be purchased on an individual basis, or as part of a complete collection. Stamp investment companies such as Stanley Gibbons can build their clients a portfolio of investment-grade stamps based around a number of themes.
The Philatelic Traders Society has around 450 member dealers around the U.K, all of whom are signed up to the society's code of ethics. For anyone looking to begin a collection or invest in stamps for the first time, any purchases made through these dealers offers the customers an opportunity for recourse with the Society if they face any problems.