October 9th, 2013

Coins may appreciate but they’re no pension

By MintState

So, I’m going to start this by letting a cat out of the bag. Writing is just a side passion of mine – in line with collecting coins – that also happens to pay. In the real world, I work in financial planning and help clients of all ages manage money. First and foremost, the No. 1 priority for these individuals is how they should save for (or fund, depending on what stage of life they’re at) a comfortable retirement. In almost every circumstance, that means maintaining the lifestyle they’re accustomed to. It doesn’t equate to a beach house or any kind of exotic purchases.

That’s why when I read a recent article from a reputable news source, it left me with some concerns. In the piece, the author talks about eight hobbies that retirees could use to help fund their retirement. That’s an idea I’m all for, as many of my clients continue to work long after they quit the full-time game. A few of the ideas on the list even make sense. But there, at the top of the docket, is coin collecting. And to me, that’s a head scratcher.

Coin collecting, for me, has mainly been about enjoyment. I like to pick up pieces based on their history. I’m all about the lore and the legend of a coin. Sure, there are plenty of coins available that could be money makers for collectors. Even I marvel at the millions of dollars some coins fetch at auction. But does that mean that your everyday collector can turn this hobby into a consistent money maker? In my mind, probably not.

The piece in question even points to auction sites as a way to sell coins or open a virtual coin store. Maybe it’s just me, but the coins I’ve seen on sites such as eBay have been selling below book value in recent years. Sounds like a great way to accumulate losses if you need to offset gains. It also sounds like a stretch to consider this as a means to fund living expenses. At a time when people need a steady source of income, relying on something as volatile as the coin market seems like a gamble.

That may sound pessimistic, but I’ll repeat the mantra I’ve been preaching since the start. If you keep coin collecting more about fun than profit, there’s no way you’ll ever suffer a loss. No matter what age you are.

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