1. Hobbies & Games

The Philatelic Money Machine: Myth or the Real Deal?

How to make your collection pay for itself indefinitely

From , former About.com Guide

The ideal for stamp collectors, once we move beyond the beginning stage of our hobby, is to make the pursuit of things philatelic pay for itself. This is both easier and harder than it sounds. But if you want to become an active presence in the hobby, there are certain steps you should take at the beginning to get on course while enjoying your ride.

Figure out what sort of collector you are: Don't be dazzled by offers of exhibition quality material if you don't exhibit. What are your priorities? Does it matter if the stamp is VF++ or VF? Know your level of happy acceptance and buy the stamp that fits it, not the superb gem that no one but you will see. At the beginning you won't get the machine going with a few high powered stamps. You're not buying junk, but at this point quantity and decent quality is key.

But don't even think of buying current stamps in any quantity. You'll never make a profit selling them. (Even now older stamps are selling in cheap sheets. Once they sold to dealers and other buyers as postage at slightly below face value. Today those collectors from the 50s who thought those 3 cent sheets were investments are getting as little as 70% of face value, not even close to a decent percentage of catalog value. Would you want to spend all day pasting 3 cent stamps on your envelopes to make up the first class rate?)

And don’t imagine you might beat the odds. You want to invest and you think buying current issues at the post office is investing. To see real investor material, order a sale catalog from one of the major philatelic auction houses. There’s nothing saying your collecting must take you into the realm of the big boys. But if your budget tops out at a dollar or so for a stamp, paging through an auction catalog can be a real eye opener.

Buy mixed collections and lots. Remember, you're not trying to get rich, just have enough to continue your hobby without taking a personal financial hit every time you want to add an item to your collection. One of the most basic activities of dealers is buying collections and stripping off the cream to sell. But there are often still plenty of good items left. Buy one of those lots. Shop the Internet or just ask a local dealer if he has mixed lots. Then arm yourself with a good current catalog and an innate sense of condition to find the better items. You can then sell them individually, on sites like bidStart, Delcampe, eBay and others. Online sites have made the individual seller king. Go and rule your domain.

Try to keep organized. Many a very nice premium item has been mixed into a dealer's disorganized stock, which in its condition can only be sold in bulk at an estimated price. Most collectors don't like to deal with a chaotic mess of stamps. (But that’s exactly what you’re doing, dealing with them, so you can deal them, to your eventual profit.) Neat stockbooks and albums win the day when going for a sale. But there are also off-center collectors who will be happy to pick up your bulk lots in hopes of a "find." And yes it's not a bad idea to keep a stock of your post-stripped lots and collections -- sometimes known in the trade as mish-mosh -- handy for fun and profit: your buyer's fun and your profit. Hopefully you've already gotten your fun out of it.

Your sales -- and the time you spend to get them -- should account for no more than 25% of your philatelic time. Use the rest to carry on enjoying your hobby, at no expense. You might want to read about experiences others have had in the stamp world and pick up a profitable tip or two while you're at it. Books by dealer authors like Steven Datz and Herman Herst can make you feel good about yourself, while at the same time offering you solid pointers. Their books read like mysteries one minute, Wall Street investing advice the next, an exciting tale of a (usually bloodless) coup the next. And all framed in the romance of stamp collecting. OK, you're having trouble picturing stamp collectors/casual dealers (in earlier days called satcheleers, for the bag they carried their offerings in) as dashing figures? Yes, that may be stretching it a bit. But certainly, interesting isn't overstating things. And remember the thing about dealers: they all started as collectors.

©2013 About.com. All rights reserved.