Robert Murray Stamp Shop, Edinburgh
Established 1977
Members SPTA, PTS
Scotland's Best-Stocked and Most Popular Stamp Shop


Investing in Stamps - CLICK HERE FOR FIRST PART OF ARTICLE

 FOURTH ROUGH OF ARTICLE - please note that this article is not yet in its finished form, so if any bits seem badly written, or don't make proper sense, please look back again later.

Difference between purchase and sale values.
With any investment, the cost of reselling your items must be taken into account. Even if something increases in value very handsomely, if the cost of selling is going to be 50% one would have to hold your investment a long time before you even broke even.
Let's look at the size of some of these hurdles.
{1} Auction. In auction there's a cost of buying and a cost of selling. It is standard practice now with most auctioneers that the successful bidder is charged a "buyer's premium" of usually anything from 5% to 30% on top of the "hammer price". Some auction lots will also have tax added, or a handling charge. And of course if you buy at a distance there's the cost of delivery.
The seller at auction is normally charged a commission (this again anything from 5% to 25% - some auctioneers at times offer 0%, but this is normally because they are taking enough off the buyers), plus the possibility of various other fees. The vendor might find any of the following on their final settlement calculation; tax, insurance, administration fees, lot fees, illustration charges.
In effect, the auctioneer's fee is the difference between the bottom line on the buyer's invoice and the figure on the seller's settlement cheque.
So, depending on one's choice of auctioneer, the gross charges attached to the sale of a stamp could be anything from 15% to 50% (in some cases even more or less).
{2} Dealers. There is a vast range of profit margins charged by dealers. So wide a range as to make things very difficult to define here. A dealer has to estimate their risk factor (how likely and how quickly they are likely to sell it), the work involved, their capital outlay, and any overheads. So at one end of the scale a dealer might buy a big batch of material difficult to sell, and make a very high percentage on any they do shift. At the other end, take a 10,000 stamp to a dealer who has a customer waiting for it, and they might be happy to process the deal for only 5% or 10%. Generally speaking, when looking at "investment-type" stamps, a dealer might be expecting to make anything from 15% to 50% of the eventual sale price.
{3} Private sale. A private purchase and sale might be effected without costs. (The problem of course is that the private individual will by themselves have great difficulty finding a suitable range of material to buy, and then have difficulty in offering their property to a wide potential market.)
{4} Internet auctions. Fees through most internet auctions are reasonably moderate. On big value items fees can be below 5%. The biggest drawback on the present market is that especially in better quality stamps there is some degree of mistrust. In most cases this is misplaced mistrust, but there have been many many cases of items offered for sale being misdescribed. The level of misdescription is much, much higher than one would find in mainstream traditional auctions.


Defining one's investment. There are three points one should define before entering into any investment.
1. The amount of your investment.
2. The term of your investment (how long you intend to hold your investment).
3. The level of risk you are willing to take.
In most traditional investments (bank deposits, unit trusts, stocks and shares, etc.) most people would be quite clear on all three of these points before they invest. Most stamp investors are not. OK, if you challenged them on it, they might well make up an answer once asked, but very few go further than deciding how much they might spend. Investing in stamps without first defining these three points will almost certainly lower your chances of success.


A Suggestion;
If you have something you think is an investment, why not check it out ?
We often hear people tell us of items they own (stamps, coins, books, comics, prints, teddy bears, whatever) which they "know" are valuable and where they watch happily the prices rising, proving their good investment.
An investment is good only if the price you sell it for is sufficiently high in comparison against the price that was paid. Note that I say "the price you sell it for" rather than "the price you think you can sell it for" or even "the price you are totally confident you can sell it for".
Attempt a sale. Actually go and try to sell one of the items you think you know the value of. This can be done either by actually trying to get offers, or by selling through auction. If you don't quite want to go that far, then take it to someone who can effect a sale for you (i.e. a dealer or auctioneer) and ask them how much they would pay, or think it would fetch at auction. The professional probably won't mind (or might charge a nominal fee) if you are quite open and honest with them about what you are doing. Taking an item back to the original seller is not always going to give an accurate impression.
A few years ago I inherited some prints. I'd always been told that they were good and quite saleable. I checked online and found people selling exactly the same prints for 150 each or more. But the people selling did not want to buy. I put them into auction, where they sold for 14 the lot !
Never assume that things must get more valuable as they get older. Never assume that what appears in a price guide has more than a passing connection to actual market prices. 
                                           



use of terms "limited edition" "certificate of authenticity" "heirloom" "treasured" etc.

http://www.guardian.co.uk/money/2010/aug/07/stamps-gibbons-harmers-investment"When Money asked Gibbons about stamps as an investment in an article published in 2002, it was extremely cautious. Reporter Tony Levene visited its showroom to be told: "Stamps are not an investment, they're a hobby. We don't sell books on stamps as a money-making plan or offer advice on how to make gains." (

read the full article at: http://www.guardian.co.uk/money/2010/aug/07/stamps-gibbons-harmers-investment#ixzz2Uho9vmeK)


Has this article saved you some money ?  Have I just stopped you wasting a thousand or two ? Feel like bunging me a few quid by way of thanks ? I'd even be happy to get a note of thanks. Or tell me you've stuck some money into a charity.

Still thinking of investing ?  Want to use our services ?  Why not use me as a consultant ?  We do not assemble portfolios, nor do we sell stamps specifically as investments, but I can look over your purchases and check that you've got a good deal. You'll be charged for the time spent. 

Robert Murray
Copyright Robert Murray 2008-2015


CONTACT DETAILS
Postal Address; Robert Murray Stamp Shop, 5 & 6 Inverleith Gardens, Edinburgh, Scotland, EH3 5PU
Telephone 0131 552 1220, or 0131 478 7021, or UK local rate number 0845 0500 886 

Email murray@stamp-shop.com  Website http://www.stamp-shop.com  Skype name "stampshop"
Members; Philatelic Traders Society, Scottish Philatelic Trade Association.