The Economics of Stamp Collecting

Maybe you had a parent or grandparent who collected stamps or taught you about philately, the term for stamp collecting.

Stamp collecting began as a hobby shortly after the first postage stamp was issued in the United States in 1847. As stamps developed different values, the colorful squares from different locations like Hawaii and Madagascar were bought and sold for their collectible value.

Interest in stamp collecting has declined in popularity in recent years. Today, philatelists are largely made up of baby boomers and investors. Retirees may have more time to devote to the hobby, but they may be reticent to invest in the most expensive, high-end stamps that attract investors.
Learn more how investors approach buying stamps for their portfolio, how the economics of philately works, and more about current trends in stamp prices.

Key Takeaways

  • Investors aim to earn a profit with buying and selling valuable stamps.
  • Prices of stamp collections are declining due to recent trends of abundant supply and dwindling demand.
  • The global pandemic brought a resurgence of interest in stamp collecting.
  • Stamps are considered more illiquid assets because they typically take time to sell.

Is Stamp Collecting a Losing Proposition?

In 1988, the American Philatelist Society had 57,815 members, according to the organization’s website. Today, it has less than half as many. People may be losing interest in stamp collecting for a number of reasons, including the fact that the value of many stamps are declining.

The rise of more efficient research tools like the internet has improved transparency surrounding buying and selling stamps, and has actually led to their devaluing. That’s in part because collectors discovered that many stamps weren’t as rare as originally thought.

Several factors go into stamp valuation. They include the stamp’s image, its edges or perforations, the original denomination, the country of origin, and the history or backstory of the stamp. If a stamp has errors from printing, it may actually be more valuable because they were taken out of circulation, so they are more rare.

Older stamps may be more valuable if they are used, attached to an envelope with a special cancellation. Typically for a used stamp, the lighter the cancellation mark, the better.

Long-Term Returns

The depressed price of collector stamps may be viewed by some as a buying opportunity for long-term returns. However, most hobbyists collect stamps for the love of storytelling and passion for the history behind the stamps.

One study published in the Journal of Financial Economics found that British collectible stamps from 1900 to 2008 had returns of 7.0% nominally, and 2.9% in real terms. These returns are generally higher than the average returns on bonds, but lower than returns on equities. It’s more on par with returns found with art. More rare and expensive stamps tend to yield greater returns for investors.

The most expensive stamp ever sold was a British Guyana One Cent Black-on-Magenta, which sold for $9.5 million in 2013, then again most recently in 2021 for $8.3 million.

Stamps can be an excellent way to diversify an investment portfolio, but they are not a replacement for more traditional investments like the stock market or real estate to help you meet your financial goals.

Stamps are highly illiquid, meaning that they take time to convert into cash. That’s because if you want to sell a stamp, you may have to wait months or years before finding an interested buyer, depending on the demand for the particular stamp. Stamps are physical investments. You must store them properly or they can lose value.

Pandemic Resurgence in Stamp Collecting

Many dealers reported a resurgence in stamp collecting after the global COVID-19 pandemic began in 2020. Shuttered in their homes, people had more time to devote to their hobby.

For investing purposes, the value of stamps depends on demand, trends, origin, and condition of a stamp. Unused stamps are more valuable than used ones. However, if a stamp is very rare, it could be investment-grade even if its condition is less than perfect.

What do you look for in an investment-worthy stamp?

If you are looking for a stamp to buy as an investment, look for stamps with undamaged, original glue or gum; unused stamps with gum; used stamps without gum; stamps that are rare; and stamps in superb, fine, or good condition.

Does it make sense to invest in stamps?

Investment stamps can provide portfolio diversification. This is because they tend to be unaffected by the factors that determine the value of other assets. For example, their value is not influenced by the stock market or a real estate boom.

How do you invest in stamps?

You can either buy stamps on your own or buy a portfolio of stamps, such as five to seven rare stamps that you keep for a period, say five to 10 years. When the term is up, if the stamp’s value hasn’t increased, the selling company will refund your investment. On the other hand, if the value has increased, the seller takes a percentage of the profit. This type of investment can go up as well as down and is considered a capital-protected investment.

The Bottom Line

If you’re interested in investing in stamps, work with a reputable dealer while being aware of trends that could change a stamp’s value. Philately clubs also may include investors who may act as mentors. Keep in mind the fundamentals of what affects the value of a stamp, from its image to its perforation.
Be aware that while these assets have fairly low volatility and tend to steadily increase in value, they can also decline in value depending on demand trends.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. U.S. Postal Service, About Page. “.”
  2. American Philatelic Society. “.”
  3. U.S. Postal Service, About Page. “.”
  4. Journal of Financial Economics, via SSRN. “.”
  5. Stanley Gibbons. “.”
  6. Sotheby’s. “.”
  7. Linn’s Stamp News. “.”
Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Take the Next Step to Invest
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
m88bet mu88 casino fun88 wtf qh88 m88 cá cược trực tuyến