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Ten years ago, Mumbai-based businessman Kishore Jhunjhunwala's briefcase was stolen from his car. Fortunately, he found it a couple of days later, in a gutter next to his house. The contents were intact. Not surprising, considering all it had was an album containing old, soiled and not-in-use currencies.
Jhunjhunwala, a philatelist and numismatist, says, "I am pretty sure the thief must have been disappointed with what was in the briefcase, which is why he threw it away. But if he knew a little about such hobbies, he could have got a good deal for it in some chor bazaar. Today, if I sell that album, it will fetch me anything above Rs 20 crore."
Hobbies like philately (collecting stamps and other postal articles as a hobby or an investment) and numismatics (the study or collecting of coins, medals, paper money) can be lucrative. In addition to fetching recognition and medals at national and international exhibitions, these can also turn out to be valuable investments.
Before investing in stocks, you read up about the company's financial details and reports on it by analysts. You keep track of the stock price movement and factors affecting before selling the stock. Similarly, for investing in stamps, coins or currency, you have to first know their history to understand why the items are valuable. While selling, too, you have to check how easily that coin or stamp is available, because that determines the final value.
According to Sudip Kheria, a Mumbai-based full-time dealer in coins and currencies, one can make 12-24 per cent annual returns on such collectibles. "However, to make exponential returns, one has to stay invested in that market for at least 20-25 years, long enough a period to collect items and at the same time, see the value of your collectibles grow," he says. The trick lies in knowing what to collect.
Such hobbies are more popular abroad. One of the companies listed on London's Alternative Investment Market is Stanley Gibbons, a stamp and coins dealers. Its website also offers investment schemes suited to different kinds of investors. While it is not that popular in India, you can start your collection with an initial corpus of Rs 10,000 and invest a similar amount annually to expand it.
Investing in collectibles is not easy. Unless you are a collector who is genuinely interested in what you collect, it is difficult to build a valuable collection. So, while all investors are collectors, not all collectors are investors.
Jhunjhunwala has been a collector for 40 years. However, he has sold only one album of currencies so far. "I am not interested in selling my collection, ever. None of my family members shares my interest. So, I have not mentioned my collectibles in my will. After me, I have identified a Bangalore-based collector, who shares the same interest, to look after my collection," he says.
To start a collection, first choose a subject and read on it. Certain subjects, by their very nature, tend to be more valuable. For instance, the gold mohur, which was the common currency in India during the British era, is valuable because of the history and not because of the value of the gold in these coins. In the case of postal collections, stamps and letters from the period of Queen Victoria are very valuable because they are very old.
Some articles are valuable due to particular incidents. For instance, stamps and coins sold following the retirement of a Pope are seen as highly collectable because they are issued during the brief period after one Pope steps down and before a new one is elected. These stamps are called 'Sede vacante' and went on sale on March 1, following the retirement of Pope Benedict XVI. According to reports, the initial print run was for 230,000 complete series of the stamps, whose use for postage is permitted only until the new Pope is elected. However, the Vatican post offices in St Peter's Square will continue to sell these to collectors after the election of the new Pope, for philatelic use. The price of these stamps vary from Euro 0.7 to Euro 2.5, depending on which country they are meant for. In addition, there are plans to issue 10,000 silver and 5,000 gold Sede vacante coins, for collectors' use only.
Coins and stamps are the most lucrative collection since the resale value is high. Other collections like picture postcards are popular when exhibitions are held, says Rajan Jayakar, a Mumbai-based solicitor. Jayakar has participated and won in several national and international philatelic exhibitions.
There are essentially three kind of collectors. The first is the schoolboy kind, who collect only because they like the stamp or coin. The second kind collect to participate in exhibitions. These regularly follow auctions, keep track of a stamp or coin's available stock, but don't usually sell their collectibles. The third kind is the investor who also keeps track of the items through auctions and exhibitions. They sell when they feel the value is right. These are people who may buy a very rare stamp or coin and just keep it in their bank locker until they find the right buyer for it or until it reaches the value they are hoping for.
One such investor-stamp is the one cent Black on Magenta stamp of British Guyana, printed in 1856. The only known copy of this is with the DuPont Group, which bought it in 1972 for $3.4 million. These are valuable because they were wrongly printed. The government wanted to print only two cent stamps but the press printed one cent stamps instead. They alerted the post office to stop selling such stamps. But some were already sold by then. Due to their rarity and uniqueness, these stamps are floating at high values in the market.
"The stamp has not come up for auction after 1972. Today, its value will be much more and if comes for auction, it will attract tremendous attention from collectors all over the world," says Jayakar. It is possible to buy stamps and coins from private collectors but a public auction will always fetch a better price. So, one must always keep track of auctions. You can get catalogues from the auction houses and study these in advance to familiarise yourself with the articles and choose what you want to buy. In some cases, the article could be priced cheaper internationally than in India, due to the stock available. Sometimes, an unknown collector might offload his collection in the market, which could dampen the price.
Jayakar cites the example of a stamp dealership based in London. A few years ago, they had come out with a portfolio of 10 stamps and offered any investor who purchased it a definite appreciation in value in five years. They were willing to underwrite the portfolio. But the scheme went bust because an unknown collector in Hong Kong had some of these stamps and these came into the market, leading to a fall in the price. The dealer eventually withdrew the scheme.
In India, Todywalla, Rajgors, Bhargava and Marudhara are a few dealers who carry out auctions, giving collectors a platform to exhibit their collections. Jhunjhunwala suggests getting introduced to philatelic societies, which will then update you about auctions and any other information you might need about building your collections. "Even for investors, there will never be a correct time to sell. Hence, taking tactical and calculated risk-based decisions will help you make good money. This, again, will depend on how well you know your collectible and its value in the market," says Jhunjhunwala.
Proper storage of such items is very important. Stamps should be kept free from sunlight and moisture. The ideal temperature is 15-17 degrees Celsius. They must be protected from white ants and silver fish and stored in non-acidic plastic. The condition of the stamp will also determine the value of the stamp. Both coins and stamps should preferably be kept in vaults or lockers to prevent theft. Coins, too, should not be exposed to air, to prevent getting rusted. If you have a collection whose value you are not sure of, you can get it valued by a dealer. However, make sure you've got a genuine dealer and don't let the dealer take advantage of you. That is possible only if you know the subject well.
"It is a lucrative investment, provided intelligently invested," says Jayakar. Another popular collectible is prints of paintings. These are cheaper than paintings as they are much smaller.
