Almost everyone has a collection of some sort. For me, it’s the baseball cards I’ve had since I was a kid. Many of us, myself included, like to dream that the collectibles we own will someday be worth a fortune. But they probably won’t be unless we take steps to make them a profitable investment.
Before you sink time and money into a collection, here’s a guide to collecting for fun and profit.
Select a collection with potential for profit
If you’re looking to someday make your collection profitable, choose what to collect with care.
Many collections will never be profitable for a few reasons. Fads, such as Beanie Babies, can drive up prices temporarily, but the market for these things doesn’t always last.
Even popular traditional collectibles have dropped in value over the years. For example, The Street reports that Hummel figurines, popular in the 1960s and ’70s, now sell for less than $50. Prices drop as estate sales increase supply despite limited demand.
If you’re looking to make money from your collection, choose options that have fared well over the long term. Comic books, coins and sports memorabilia have stood the test of time and provide a good return on investment. In any market, including these, scarcity contributes to higher values when there’s a limited supply of what’s in demand. While there’s no guarantee you’ll make money with these ideas or any other, your chances are better if you’re careful about what you choose to collect.
Choose something you’ll enjoy
Successful collectors often enjoy the pieces they spend money on and hold on to. It’s their interest in their collection that makes them eager to read, research and learn more about different pieces and become experts.
Enjoying what you collect can lead to more profit, too. With this added knowledge, you’ll have an edge on the average Joe in acquiring and selling pieces.
Hunt for high-quality pieces
A profitable collection is often more about quality than it is quantity. Experts recommend buying a few great pieces rather than loading up on mediocre ones. The reason: higher-quality pieces will gain more value than average ones.
If you can’t afford the higher price tags at first, consider selling some of your lower-end pieces and trade up for better ones.
Finding good pieces for your collection is all about knowing value when you see it. As an expert collector, you may be able to find deals at thrift stores, yard sales, flea markets and other specialty stores, where you’ll need to make decisions on the spot. Buying online gives you the advantage of having time to research, but you’ll still need to avoid ripoffs or scams.
Care for your collection
There’s much more to a collection than holding on to the pieces. Several factors can affect how much a piece in your collection is worth.
Worn or improperly stored items can lose value. For example, according to Goldmine Magazine, records in “very good” condition compared with “near mint” condition sell for no more than 25 percent of the near mint price.
For your collection:
- Keep them clean. Dust itself can cause permanent damage.
- Store items properly. Moisture and light can affect condition. Items like books and records need to be stood up, not stacked, when stored.
- Keep the packaging intact. Original packaging on action figures and sleeves for records make a difference in value even if what’s inside is in perfect shape.
No matter what your collection is, make sure you have a firm grasp on the standards for maintaining the highest value.
Get your pieces appraised
When it comes to profiting from your collection, you need a good understanding of what the pieces are worth and if the value will increase.
For some markets, there are price guides that can estimate how much your items are worth. However, these guides are meaningless compared with what really matters: How much someone is willing to pay.
Fortunately, this is easier to discover than before thanks to the Internet and websites like eBay. Users can track and search eBay auction listings to find out the actual sales prices.
For valuable items where you want a more specific evaluation, take your items to a professional appraiser for a better idea of their value before you’re ready to sell.
Insure your collection
If you’re sinking large amounts of money into your collection, make sure you’re properly insured.
Collections may be covered by standard insurance policies, but you may be subject to deductibles and limits on coverage for items such as jewelry.
If your collection is valuable, consider additional, no-deductible coverage against loss or breakage and with replacement costs for your items. Kiplinger’s reports this coverage often costs 9 to 20 cents per $100 of coverage.
Be ready to sell
The value of your collection isn’t realized until you sell pieces. Selling can be tough and require work, which is why I have the same crate of baseball cards and no cash to show for them 20 years later. As J.D. explains on Get Rich Slowly:
Everyone wants three things when selling a collection:
1. They want to do it quickly.
2. They want to do it with little effort.
3. They want to get top dollar.
Well, you can only have two of those things. (And often you can only have one.)
Be ready to put in the work when it comes time to sell your collection and make that profit. Expect to pay fees or accept lower offers depending on how you sell. Kiplinger’s says selling to a dealer may net 50 to 70 percent of the retail price. Auction houses often take a 15 to 25 percent cut. eBay charges fees of 10 percent of the sales price, with $250 maximum fee per auction.
Of course, if you’re truly collecting for profit, you’ll have to be emotionally ready to sell your collection. Even if your collection is personal, eventually parting with your pieces is the only way to turn your collection into cash.Topics: Make Money