Becoming A Collector Can Be A Fun Way To Save
Posted on August 24, 2007
Almost everyone has been a collector at some point in life. It may have been marbles, dolls or baseball cards as a child or plates, clocks, stamps, guns, etc. as adults. Many collectibles are fads that have little or no value over time, but are fun to collect while they are popular. Other types of collectibles have established base values with good potential for growth, but these don’t typically fall into the fad category. I mention this because there is a big difference between collecting as a hobby versus collecting to save and build wealth.
All my life I’ve considered myself a collector. Collecting became one of my biggest hobbies. Among the things I collected were coins, savings bonds, gold, silver, and houses. Yes, I said houses! Over 35 years ago I started collecting houses. It took me a year to buy that first rental house, but I was able to buy two more the next year and four the following year. I’ve continued that collection for over 35 years.
I never thought of buying houses as investing, I viewed it as playing the board game Monopoly��for keeps. It was a fun way to generate income for which I didn’t have to work and earn and a great way to build wealth. Today my business cards read “I buy houses, apartments and other income properties.” I realize that most people would never consider real estate investing as collecting, but that’s the way I view it.
When my children were young, I started another unusual collection. In 1990 the interest earned on Series E Savings Bonds became tax exempt if the money was used to pay college tuition. I liked the idea and began buying savings bonds each week with the thought that I would use them to send my sons to college.
Again, I didn’t view them as savings, as I watched the stack grow, I thought of them as collectibles. When the boys entered college, I had collected enough of them to pay for a four year degree for each of them without having to go in debt. The most difficult part for me was cashing in the bonds each semester to pay the tuition. As a collector, I hated to see my collection of bonds dwindling, but the fact that they were serving the purpose for which they had been purchased made it easier. It sure beat going in debt to cover the tuition, which is what most parents have to do when they help their kids pay for college.
Becoming a collector is a great way for people who have trouble saving to get started. I prefer to collect things that have a minimum value and either produce income or have good upside potential. That was the case with both houses and bonds. The houses grew in value and produced income, while the bonds had a base price and earned interest at a certain percentage rate. I realize that collecting houses is not for everyone, but anyone can collect bonds that cost as little as $25 for a bond that will mature at $50.
There are many other things you can collect things that will always have value, and still have good growth potential. The US Mint offers one ounce gold and silver coins called Eagles. They are beautiful coins that can be purchased at the current price of gold or silver from a variety of sources. They don’t earn interest, but they are one of the most solid investments you can make and if you just collected one a month, it wouldn’t take long for your collection to become a considerable nest egg. Plus, most investment counselors recommend that you keep a small amount invested in gold and silver�just in case.
The US State Quarters are another example of a program that has attracted many collectors. These coins minted for only ten weeks each have been put into circulation at the rate of five per year since 1999. The program will conclude in 2008 when a quarter for each of the 50 states will have been minted. Will this collection show huge returns? Probably not for several years, but the quarters will always be worth a quarter. If you bought $100 of each uncirculated quarter (Each state has one from both the Denver and Philadelphia mints.) they would have saved $10,000 if they never went up in value. After the program is completed, if a full mint uncirculated set is only worth $50, your collection would be worth $20,000. Some of the early quarters are already trading for many times their face value.
Here’s a tip! If you have trouble saving, becoming a collector can be a great way to get started. This is especially true when you collect things that produce income, increase in value and are easily converted to cash. Collecting isn’t about maximizing return, but rather about forming the habit of saving, which can later be converted into more conventional forms of investing.
If you like the idea of collecting, there’s a new program that started in 2007 that fits my criteria of having solid value and growth potential. It’s the new Presidential Dollar Coin Program. Every year, for at least the next eleven years, four new one dollar coins will be produced, each depicting one of the US presidents. These beautiful gold colored coins will be minted in the order the presidents served. At the time of this writing, the George Washington and John Adams dollars are already circulating. If you would like to know more about this program, the state quarter program or other collectibles, there are a variety of sources on the Internet. One that I can recommend from personal experience is www.usstatequarters.com.
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