Avoiding Costly Mistakes When Building a Coin Collection

[EZ_E]

[font:Comic Sans MS]Avoiding Costly Mistakes When Building a Coin Collection [/font]

 

[font:Book Antiqua] Most new collectors make mistakes when they begin to assemble a collection of coins. Some of these are easily avoidable; others require a "heads up" from an expert. Here are some of the mistakes we see made most often and some practical suggestions on how to avoid them.

 

I. Buy Third Party Graded Coins

Unless you are purchasing inexpensive coins or bullion-related gold issues, you need to buy coins that have been professionally graded. It's a virtual guarantee that the "raw" coins you buy are going to be overgraded at best or counterfeit/repaired at worst.

 

 

II. But...Buy the "Right" Third Party Graded Coins

When it comes down to it, there are only two grading services that, as of early 2001, are readily accepted in the market: PCGS and NGC. Coins graded by other services either trade at a discount or are absurdly overgraded. You can save yourself a lot of grief and aggravation by buying only PCGS and NGC coins.

 

 

III. And...Buy the Coin and Not The Holder

Not every PCGS or NGC coin is "high end" for the grade. Establishing a relationship with a dealer who can determine which coins are nice and which are average (or inferior) is essential.

 

IV. "I Can Do Everything Myself"

No you can't. You need to have a close working relationship with one or two knowledgeable coin dealers. New collectors who think they can compete in the market against experienced dealers and collectors are a virtual certainty to have their heads handed to them. End of discussion.

 

V. Take Your Time

Most great coin collection are assembled over the course of decades; not months. Sure, you can complete a set of Indian Quarter eagles in thirty days. But rushing though a set is a good way to make mistakes; most of which will cost you in the long run.

 

VI. Learn about Coins

No matter what you collect, the more you learn the better your collection will be. Learn how to grade. Learn what nice coins look like. Learn about the coins you have decided to specialize in. Learn how the coin market works. If you don't have the time to learn as much as you should, establish a relationship with a dealer who can teach you basic knowledge in a short period of time.

 

VII. Don't Over-invest

When you buy coins remember this: they should be purchased for enjoyment not investment and they should be purchased for long term hold. Even if you buy good coins from a very reputable dealer, there is a good chance that if you have to sell them quickly, you'll lose 10-30%. If you can't afford this sort of market risk, either don't buy coins or buy issues with smaller downside risk.

 

VIII. Deals That Are Too Good To Be True ARE Too Good To Be True

You hear about a coin that generally sells all day long for $1500 but is priced at $750. Sounds like a "great" deal, right? Wrong! When you see a coin advertised in Coin World or listed on eBay that seems like its just too good a deal...need I say more?

 

outside-affiliatelinksnotallowed Buy Quality Not Quantity

We look at coin collections to buy all the time. Some of them have hundreds (or even thousands) of cheap, low grade coins. Others have a small number of really nice (and not necessarily expensive) coins. Take a guess which collections excite us more. If you have an annual budget of $10,000, buy three or four really neat $2,500-3,500 coins; not thirty $300 space eaters.

 

X. Coins Are A Hobby!

If you view numismatics as a life and death endeavor, you won't enjoy it. Coin collecting is a fun hobby with many obvious benefits. Learn to appreciate the positive attributes that come with coin collecting and leave the stress to others.

 

XI. Set Goals For Yourself

If your collection has a beginning, middle and end, the progress you make will be easier to measure. Make certain that your goals are realistic.

 

XII. Stretch For Truly Rare Coins

Don't make the common mistake that you skimp on the rarest issues in your chosen set and splurge on the most common. The right way to collect is doing the exact opposite.[/font]

 

© Copyright 2001, Pinnacle Rarities, Inc. All rights reserved.

[PerryHall]

Great list. Thanks for sharing with us.

[Jakeblue]

Great list, and as a newer collector, I agree with most of what you have written.

 

I do differ a bit with you on V.

 

I researched quite a bit before I purchased most of my CC collection and was able to get all but a 1879 CC that fit my eye appeal and budget, which I still have not found. If you look at Hertiage, Stacks, ebay etc. as well as a local dealer and auctions, and you know EXACTLY what you are looking for, it can be accomplished safely within a relative short amount of time, unless it is a truly specific, scarce or rare type of coin that is simply difficult to find.

 

And yes, I did buy nothing but the TPG big boys, after a couple of learning experience raw coins.

 

I do wholeheartedly agree with XII; if you can afford it, spend more on the rare ones.

 

 

[MTHead-migration]

THIRTEEN: Keep an inventory of everything you buy. For insurance purposes AND so you don't buy something you already own. Update your inventory AND keep a backup copy.

[MarkFeld]

Great list, and as a newer collector, I agree with most of what you have written I do differ a bit with you on. I researched quite a bit before I purchased most of my CC collection and was able to get all but a 1879 CC that fit my eye appeal and budget, which I still have not found. If you look at Hertiage, Stacks, ebay etc. as well as a local dealer and auctions, and you know EXACTLY what you are looking for, it can be accomplished safely within a relative short amount of time, unless it is a truly specific, scarce or rare type of coin that is simply difficult to find And yes, I did buy nothing but the TPG big boys, after a couple of learning experience raw coins do wholeheartedly agree with XII; if you can afford it, spend more on the rare ones

I believe that Pinnacle Rarities is the author. See the bottom of the first post. And they post some excellent articles on their website.

[WoodenJefferson]

And they post some excellent articles on their website.

 

But then again, arn't you rather partial to Pinnacle?

[okbustchaser]

I agree with much, however, 1 through 3 are totally wrong--and in fact are going to COST you money unless you first take into account 4 through 6, (especially 6). I guarantee you that even if you do obey rule 2 you are STILL going to end up with overgraded problem coins unless you first apply 5 and 6.

 

I also disagree with Rule 9. Buy what fits YOUR collection goals not what might excite a dealer who looks at coins every day for a living. Yes, that $3500 coin might appreciate in value more over a 10 year period, but as a collector I still would rather look at a nicely matched set of 50 $300 to $500 coins then 5 $5000 coins that have no cohesion as a collection.

 

I also feel that the new collector--the guy the article is written for--is much better off making his newbe mistakes--and regardless of how much attention he pays to this or any other advise he is going to make a few--on $300 dollar coins than on $3000 ones.

[MarkFeld]

 Originally Posted By: MarkFeld

And they post some excellent articles on their website.

 

But then again, arn't you rather partial to Pinnacle?

I sure am - I'm as partial to them now as I was when I worked there. They're great.

[nwcs]

Personally, I like the idea of suggesting a box of twenty concept to new collectors. Although it would be a bit like boot camp. Still, it forces you to evaluate value and learn how to sell -- two essential ingredients in collecting. Though the box of twenty isn't for everyone.

[EZ_E]

and learn how to sell

 

That is an extremely large part of becoming a good buyer!

[thehumantorch]

This list could very well apply to almost any collectable. If new to a hobby buy quality collectables that are certified genuine by a third party. Great list.

[michael]

(thumbs u

[lehigh96]

OK, I am going to play devil's advocate.

 

It is not that I disagree with the advice in the list, I don't. I think that just about everything in the list is right on target. However, I don't think a list of rules is needed for a hobby. This is a list for the hobbyist who is an investor.

 

I don't know if I can enjoy a hobby that comes with a page long set of rules that if I don't follow makes me a fool. The fact is that even a completely uneducated collector who pays above market value for every coin he purchases is still left with a coin collection worth money. Even if he can only recoup 70% of his purchase price, he is still way ahead of most other people who have hobbies that don't involve collectibles.

 

For example, if I spent $10,000 on coins and found out that they were only worth 70% what I paid, I would still have a $7,000 coin collection. My brother's hobby is playing golf. He spends $10,000 per year on his country club membership and is left with a 3 handicap. If we both enjoyed our respective hobbies equally, who is better off.

 

I really hate the term "overpaid" with respect to coins. IMO, you can't overpay for a coin if you know you are overpaying. If you don't know the value of what you are buying, then the term is accurate. However, if you know that a coin is market valued at $100, but you pay $200 for it, you did not overpay. You paid what it is worth to you. IMO, that is what the hobby is all about.

 

I really wish people would stop judging their coin collecting prowess by comparing their collection's value versus their purchase price. Personally, I would be fine with selling my collection for 70% of the purchase price because I enjoy the hobby and would consider the loss entertainment value. Money well spent IMO even if I can't break 100 on the golf course.

 

OK, flame away.

[Jakeblue]

 

Yep, the overall information here is invaluable and has been of extreme importance and I am appreciative....but ultimately I buy for me as it is enjoyable and knowingly probably paid too much for one of my coins. That coin fit perfectly with the rest, and to me, that is MS perfection.

 

I also bought a coin that was not as quite as highly graded and was under my budget, but again applying the above principle, fit perfectly with the rest.

[Dcoin]

I really have to disagree with the only buying TPG.

 

Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start.

[MarkFeld]

I really have to disagree with the only buying TPG.

 

Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start.

For lower value coins, I agree with you, but for higher value coins, I don't. Also, I think people can learn how to evaluate, grade, etc., by studying and discussing certified coins and not just uncertified ones. In fact, in many cases the former provide a better perspective and a good starting point.

[Oldtrader3]

Bob (Supertooth just wrote a "WYNTK-Reviewing Some Thoughts" post yesterday which outlines a good many things to remember and learn as you progress in this hobby. I think that Bob's post is a good read for all of us, as well as this (Victor's) post which is very good advice as well.

[Dcoin]

 Originally Posted By: Dcoin

I really have to disagree with the only buying TPG. <br /><br />Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start.

For lower value coins, I agree with you, but for higher value coins, I don't. Also, I think people can learn how to evaluate, grade, etc., by studying and discussing certified coins and not just uncertified ones. In fact, in many cases the former provide a better perspective and a good starting point.

 

Agreed on the higher value coins, but as a rookie you really shouldn't be spending huge sums on a coin anyway IMO. A dealer at a local show gave me some good advice when I started collecting. He said you shouldn't spend more than 100$ on a coin for the first five years of collecting.

 

So I listened, and like most others on this board i took my lumps, but nothing that broke my collecting spirit.

[EZ_E]

If I followed that advice then I'd be paying double for some of the coins I bought a few years ago in my earlier rookie days. I regret that I didn't buy certified early dollars in 2002-03 like I was being drawn.

[Jakeblue]

 Originally Posted By: MarkFeld

<div class="ubbcode-block"><div class="ubbcode-header"> Originally Posted By: Dcoin</div><div class="ubbcode-body">I really have to disagree with the only buying TPG. <br /><br />Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start. </div></div>For lower value coins, I agree with you, but for higher value coins, I don't. Also, I think people can learn how to evaluate, grade, etc., by studying and discussing certified coins and not just uncertified ones. In fact, in many cases the former provide a better perspective and a good starting point.

 

Agreed on the higher value coins, but as a rookie you really shouldn't be spending huge sums on a coin anyway IMO. A dealer at a local show gave me some good advice when I started collecting. He said you shouldn't spend more than 100$ on a coin for the first five years of collecting.

 

So I listened, and like most others on this board i took my lumps, but nothing that broke my collecting spirit.

Maybe...but I collected currency for some time which gave me a basis to work from and researched extensively what I wanted in coins and stuck mostly to TPG's...so far so good. Coins and Currency, for the most part continue to rise in value and if you wait up to 5 years because of a set limit, the prices will undoutebly continue to rise and become that much more expensive.Even from a pure hobbyist standpoint, your collection will probably be sold at some point.I would prefer to max the value in the future by buying smart now.

[Dcoin]

 Originally Posted By: Dcoin

<div class="ubbcode-block"><div class="ubbcode-header"> Originally Posted By: MarkFeld</div><div class="ubbcode-body"><div class="ubbcode-block"><div class="ubbcode-header"> Originally Posted By: Dcoin</div><div class="ubbcode-body">I really have to disagree with the only buying TPG. <br /><br />Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start. </div></div>For lower value coins, I agree with you, but for higher value coins, I don't. Also, I think people can learn how to evaluate, grade, etc., by studying and discussing certified coins and not just uncertified ones. In fact, in many cases the former provide a better perspective and a good starting point. </div></div><br /><br />Agreed on the higher value coins, but as a rookie you really shouldn't be spending huge sums on a coin anyway IMO. A dealer at a local show gave me some good advice when I started collecting. He said you shouldn't spend more than 100$ on a coin for the first five years of collecting.<br /><br />So I listened, and like most others on this board i took my lumps, but nothing that broke my collecting spirit.

 

Maybe...but I collected currency for some time which gave me a basis to work from and researched extensively what I wanted in coins and stuck mostly to TPG's...so far so good.

 

Coins and Currency, for the most part continue to rise in value and if you wait up to 5 years because of a set limit, the prices will undoutebly continue to rise and become that much more expensive.

 

Even from a pure hobbyist standpoint, your collection will probably be sold at some point.

 

I would prefer to max the value in the future by buying smart now.

I get what you and Victor are saying, but think about it this way. For every score you had in your first five years, there would certainly be a ‘goat’, which would negate the profits.

[EZ_E]

True, but if I would have bought certified PCGS or NGC coins then I wouldn't have had the dogs in NTC holders that I got.

[DC Dawg]

Originally Posted By: Dcoin

I really have to disagree with the only buying TPG.

 

Yes it will eliminate most of the risk, but it also limits your ability to learn how to evaluate coins. You become dependent from the start.

For lower value coins, I agree with you, but for higher value coins, I don't. Also, I think people can learn how to evaluate, grade, etc., by studying and discussing certified coins and not just uncertified ones. In fact, in many cases the former provide a better perspective and a good starting point.

Sorry Mark, I disagree in the area of a collector buying a coin for a collection. I have seen coins in other holders with superior eye appeal to coins from NGC and PCGS. I've cracked some nice Morgans out of NTC and ANACS slabs for my collection because I liked the coins and thought they were accurately graded (allowing for a +2 point differential). My MS67s are probably really MS65s or even MS64s. For my collection, that's fine and they look better in my album than in a plastic tomb.Now if I was collecting certified coins, then I would either buy the NGC/PCGS graded coin, or send the other TPG slab to NGC or PCGS for entombment. But I am buying the coin, not the plastic.My point... BUY THE COIN, NOT THE HOLDER!Scott

[EZ_E]

OUR POINT: Learn about coins first so that you can "Buy the coin and not the holder".

[lehigh96]

MY POINT: Forget all the rules, buy whatever you want, it is your money.

[PrezErrors]

Great topic as I am a new collector. I tend to buy slabbed coins and a few raw coins which I send in for grading.

My error collection which a couple cost just under $500.00 but the rest are under $100.00 are fasinating to collect. It's the best hobby I have ever had.

I just sent in 14 error coins in for grading and I'am waiting to see if my instincts have served me well after learning a lot from you guys. thanks, Charlie

[bsshog40]

MY POINT: Forget all the rules, buy whatever you want, it is your money.

 

This can be a costly point to YN's. This forum has been greatly acknowledged by very informative people with great advice that is taken by a lot of YN's here and also non-registered on-lookers. I have gotten alot of good advice here and have been most appreciative of the "Above and beyond" steps that some here have taken to pass on knowledge and bits of "words of Wisdom, such as Vics OP. Your point can very well be taken as a lack of knowledge to some!

[lehigh96]

This can be a costly point to YN's. This forum has been greatly acknowledged by very informative people with great advice that is taken by a lot of YN's here and also non-registered on-lookers. I have gotten alot of good advice here and have been most appreciative of the "Above and beyond" steps that some here have taken to pass on knowledge and bits of "words of Wisdom, such as Vics OP. Your point can very well be taken as a lack of knowledge to some!

 

You must have missed the . I was just continuing my role as devil's advocate in the thread. The advice given in this forum can be invaluable to every collector new and old. However, I does peeve me a little when I see criticism that IMO is not constructive but instead given because the two collectors have different styles of collecting coins.

 

I think that everyone should attempt to avoid costly mistakes when building a collection and I fully support obtaining the knowledge from any source (this forum included) that will help in that endeavor. However, I believe that every collector should embrace the little mistakes they make along the way, because that is how you really learn. I actually started a thread on Cointalk the other day about the mistakes that I made when I was a novice collector building a Dansco Album of Barber Quarters.

 

BTW: What is a YN?

[Oldtrader3]

OT, Charlie (Marchas45), I have a question for you. My Uncle, Norman Mansur was Principal of Belfast High School back when I was attending Higgins Classical High School in Charleston, Maine in the 1950's and early 1960's. Did you attend Belfast High and are you old enough to remember Norman? Just curious.

[farthing]

Sorry, these "rules" are just so much bull droppings.

 

PCGS will slab only a scant handful of the coins in my primary collection. The total percentage of the population of coins in the series that have been graded by NGC statistically approaches 0%. Furthermore, when selling, collectors and dealers really are not interested in slabbed coins.

 

Only 2 rules matter:

Study before you buy

Buy what you like

 

Nothing else matters, or makes a difference.