Author Topic: Coin collecting: a mustachian hobby  (Read 1067 times)

curiositydriven

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Coin collecting: a mustachian hobby
« on: January 10, 2020, 12:24:29 PM »
I think it is, and I want you to point out the flaws in my logic. Let's say someone owns $1000 in rare coins. It's not a good investment (value changes -1%/yr over the last 10 years, previous decades were better), compared to let's say +7%/yr from the stock market. So you're paying $80 per year to own the coins instead of the stocks. It's essentially equivalent to having $1000 more in cash than you would otherwise. Not the optimal investment strategy, but as a hobby pretty cheap ($80 for let's say 100 hours of entertainment). You can play with various FIRE calculators and see that this doesn't change years to retirement unless we're talking about a significant fraction of your net worth (e.g., >10%).

I've seen some discussion on this in the past on this forum and people make the mistake of thinking about the $1000 as a one time expense (which would be very expensive), rather than as a suboptimal store of value. Plus there's the historical value, educational value regarding the value of money for children, and other intangible benefits vs another hobby.

Anyways, that's how I'm seeing it and I look forward to criticisms of this idea. I've recently taken up this hobby and think it fits well with a mustachian mindset, so talk me out of this if you disagree.

Retire-Canada

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Re: Coin collecting: a mustachian hobby
« Reply #1 on: January 10, 2020, 12:38:20 PM »
If you don't have any debt [besides say your mortgage], have an emergency fund [or sufficient investments you don't need one] and your retirement plans are on track for a date you are happy with and then you want to spend $1000 on a hobby that makes you happy I don't care if it's coins that can later be sold for $900 or it's Elvis Bobblehead dolls that are only worth $200 sold in bulk. For most people on this forum $1000 is irrelevant to their FIRE plans as long as they've killed their debt and it's not a recurring cost. At some point you need to be happy and do something with your free time so I wouldn't begrudge you a hobby that costs that much no matter what it is.

If you have $5000 in credit card debt or you want to retire at 45 and you are currently on track to retire at 50 I'd say there are more important things to spend your money on than coins. So get your priorities straight.
« Last Edit: January 10, 2020, 12:39:57 PM by Retire-Canada »

techwiz

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Re: Coin collecting: a mustachian hobby
« Reply #2 on: January 10, 2020, 12:50:23 PM »
I agree with RC that hobbies are about the enjoyment and happy. If you make money from your hobby that is a bonus.  I don't see an issue with any hobby if the spending is not out of control. Picking through your change and finding them on the street makes it almost free. 

curiositydriven

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Re: Coin collecting: a mustachian hobby
« Reply #3 on: January 10, 2020, 01:00:32 PM »
Retire-canada, great point and totally agree. No debt and satisfied with years to retirement is a nice simple rule to follow.

Techwiz, agree that making money on it would be a bonus. There are some ways to make it free (hunting change like you mention, or developing expertise in some area that lets you trade coins profitably). I'm interested in exploring those kinds of ideas but trying the more pessimistic assumption that I just buy the coins and then they slowly lose value as a reality check.

techwiz

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Re: Coin collecting: a mustachian hobby
« Reply #4 on: January 10, 2020, 01:08:28 PM »
I think that is a healthy way to look at it. My hobbies/sports are expensive and there is no chance I will make money. 

nirodha

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Re: Coin collecting: a mustachian hobby
« Reply #5 on: January 10, 2020, 01:48:42 PM »
It depends. How good are you at assessing the value of a coin? What do you want to collect? Will you be around when it is time to sell?

Some collectors make money doing it and use that to support their hobby. Others finance those collectors.

My grandfather collected mint sets. My Mom inherited those, they sat in her basement for 20 years, then she sold them to a local dealer at whatever he'd pay. Not a good store of value at all.

raincoast

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Re: Coin collecting: a mustachian hobby
« Reply #6 on: January 10, 2020, 11:57:06 PM »
Picking through your change and finding them on the street makes it almost free.

That's where my coin collection comes from: interesting coins I find in my change, and coins from countries I've traveled to. There's a small cost in the sense that I could have spent those quarters/pence/Euros/yen, but it's minimal (and currency exchange places usually don't take coins, so it's difficult to change them back to dollars). I don't look at my collection as an investment or as a store of value. Most of the coins are common in the countries they come from. It's just a unique souvenir.

AMandM

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Re: Coin collecting: a mustachian hobby
« Reply #7 on: January 11, 2020, 09:45:05 AM »
My grandfather collected mint sets. My Mom inherited those, they sat in her basement for 20 years, then she sold them to a local dealer at whatever he'd pay. Not a good store of value at all.

What should your mother have done instead? I ask because I have inherited some coins from my late uncle. At least one of them is gold. They've been sitting in my attic for years because I don't know how to sell them, other than taking them to a dealer, but I have no idea how to find a trustworthy dealer.

Bernard

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Re: Coin collecting: a mustachian hobby
« Reply #8 on: January 11, 2020, 10:32:38 AM »
Being a Mustachian doesn't mean not to have any hobbies that may cost a few bucks here and there. And $1K in coins, mate? I have about $12K in custom-built bicycles in my garage that I haven't touched in years. If I sell them, and I really should, I'll get perhaps 10 cents on the dollar for them. If you sell your coins one day, you probably don't lose any money, perhaps even make some.

I relative of my wife left her relative 64 LLardros, these Spanish porcelain figurines. She paid probably over $10K for them back in the day, and the street value is around $4,650 (we catalogued them). For the past months, we are trying to get rid of them for less than $2K, and there's not any interest so far. That's poor collecting.

My late dad collected coins as well. When he passed, I got 14 gold coins, mostly $20 coins starting in 1888. The oldest one is probably worth $1,600, give or take, and the other ones probably on average at least $1K. I haven't touched them since he passed in 2017, and I'm not worried about losing any significant money doing so.

Keep on collecting.

curiositydriven

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Re: Coin collecting: a mustachian hobby
« Reply #9 on: January 11, 2020, 11:08:14 AM »
Thanks to everyone for these great comments and feedback.

Nirodha - great point that the degree of gain or loss definitely will depend on what you purchase and knowledge base. That's been some of the fun so far, gaming out what to collect and what it's worth so that it gives me the greatest chance to break even in the future.

AMandM - I've seen a few resources on what you can do in that situation. Basically it breaks down to :
1) Check out a local coin dealer to get a basic offer, but know that it will be a wholesale price they will offer and not top dollar. May be fine if what you have are a bunch of less valuable coins or if they are mainly valuable for silver/gold content. Probably worth trying a few offers.
2) If you have individual coins that are valuable (>$100, say), you can auction them online through Heritage auctions/stacks bowers, especially for very valuable stuff this is good. Greatcollections is a smaller site which may be good for the medium valuable stuff.
3) If you want to invest time into it, check out cointalk web forums where you could get feedback from collectors on the value of the items if you're not sure.
Places to estimate the value of the coins - coinstudy.com (wholesale value), numista, ebay previous sold. I'm assuming you're talking mainly US coins, answer may be different if they're ancient coins. Overall, advice is to go slow and read about the items carefully before selling if there's the possibility that they have substantial value.

AMandM

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Re: Coin collecting: a mustachian hobby
« Reply #10 on: January 11, 2020, 02:44:22 PM »
Thank you!

E350

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Re: Coin collecting: a mustachian hobby
« Reply #11 on: January 11, 2020, 04:56:18 PM »
It may not be the most beneficial hobby, but I think that it's a great way to introduce young ones to finances.  While growing up, coin collecting is something that my family encouraged.  I think that it helped me build a foundation for financial literacy and form good habits.  This year I actually plan on dividing them into groups and finding out how much the coin stash is worth. 

pressure9pa

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Re: Coin collecting: a mustachian hobby
« Reply #12 on: January 11, 2020, 06:50:07 PM »
If you are already mustachian, there is nothing at all wrong with your hobby.  I do get irritated when spendypants people treat certain collections as assets and honestly believe that they count as an emergency fund.  That's clearly not what you're doing here, but based only upon the subject line I would argue. 

JAYSLOL

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Re: Coin collecting: a mustachian hobby
« Reply #13 on: January 11, 2020, 08:09:37 PM »
My grandfather collected mint sets. My Mom inherited those, they sat in her basement for 20 years, then she sold them to a local dealer at whatever he'd pay. Not a good store of value at all.

What should your mother have done instead? I ask because I have inherited some coins from my late uncle. At least one of them is gold. They've been sitting in my attic for years because I don't know how to sell them, other than taking them to a dealer, but I have no idea how to find a trustworthy dealer.

If you have any set with actual gold coins in it, you can get decently close to the value by selling to a large online bullion dealer like Apmex.  To get a good idea of value, look up the exact set you have on eBay, then select “sold” in the search criteria, that will show you what they are actually selling for, not their list price which is often meaningless. 

JAYSLOL

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Re: Coin collecting: a mustachian hobby
« Reply #14 on: January 11, 2020, 08:57:18 PM »
I got into the hobby quite a while ago and have a pretty good collection stached away.  What I try to do is buy coin collections whole from private sellers, mostly at garage and estate sales, and I also check with my local bank branches and have bought some amazing stuff for face-value there.  The fun there is I really end up with a crazy variety of coins (and paper money) that I wouldn’t otherwise find or set out to buy.  Also it helps that I typically pay well below what I would have to at a coin shop or buying online.  I’ve also sold off parts of collections that I’m not interested in, or have too many of already, and usually turn a decent profit on it. 
I don’t have any debt, and am saving 40+% of my income, otherwise I wouldn’t spend anything significant on any hobby.  I treat the collection as 1. A hobby.  I enjoy both the collecting, and the buy and sell aspect of it, and it’s cool buying big random collections, it’s an easy way to treasure hunt.  2. Part of my emergency fund.  If I suddenly need extra cash I can fairly quickly return some of the more common coins and bills I’ve accumulated to the bank for what I paid for them.  3.  A small part of my AA.  I consider the gold and silver I have in the collection as a part of my asset allocation, which I try to keep at 5% for precious metals. 

JAYSLOL

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Re: Coin collecting: a mustachian hobby
« Reply #15 on: January 11, 2020, 09:09:47 PM »
If you are already mustachian, there is nothing at all wrong with your hobby.  I do get irritated when spendypants people treat certain collections as assets and honestly believe that they count as an emergency fund.  That's clearly not what you're doing here, but based only upon the subject line I would argue.

Warning, you may find irritation in my post above :)

But to explain myself more fully, I wouldn’t pick coin collecting as a hobby if I was buying coins at anywhere close to retail prices, and/or they didn’t have any use beyond something to look at.  I also wouldn’t go out and buy coins as my emergency fund if it wasn’t also a hobby, and having them at home does allow me to not have as big of an emergency fund laying around.  Also, I wouldn’t consider them an asset/investment outside of a strict (and very small part of my) asset allocation.