Investing in coins is in fact an investment, but it is so much more than that. You can also pick your hand at collecting rare coin collectibles, which can be a rewarding hobby.
There are two categories of coins that can be bought as an investment or collectible. People tend to buy bullion coins for investment purposes and collectors usually buy numismatic coins to add to their collectibles.
Whether you are an investor, collector, or are looking to dabble in rare coins, here’s what you need to know to determine which coin is right for you.
The $10 Indian Head gold coin is highly collectible.
Bullion Coins vs Numismatic Coins
Numismatic coins are bought and sold by investors for their rarity, metal purity, and historical value. Their value is based on the coin’s rarity, condition, and collector demand.
Numismatic coins achieve their value from the way they are minted, their historical value, or being unique in their category. This value can increase or decrease depending on demand.
Numismatic coins usually attract collectors who are willing to hold their coins for years in order for the value of their coins to increase. Apart from being a long-term investment, numismatic coins can be a great collecting hobby.
The bullion market on the other hand is much larger and there are more investments made in this category. As a result, there is more liquidity in the bullion market. Bullion coin investors all over the world can easily buy and sell their gold or silver coins.
If you are not that concerned with collecting but are more interested in a safe haven asset to diversify your investment portfolio during an uncertain market environment, buying bullion coins may be a better option.
3 Reasons to Invest in Coins
1. Coins Offer Inflation Protection
Investing in coins is a great way to combat the risk of rising inflation. Inflation is the rate of price increases of goods and services over time. It is an unfortunate reality of things in the economy getting more expensive, where the cost of living for the average consumer rises.
The effect of inflation is that the value of each dollar (or unit of currency) shrinks.
To deal with the depreciation of your money, you must invest to compound your wealth and increase your purchasing power. One way to do this is by investing in physical coins.
While it may not be the best inflation hedge in all circumstances, physical gold coins have been the traditional safe-haven asset to beat or keep up with the pace of inflation. This means, if you are just …….