Coin
collecting has long been a hobby, but over the last few decades the
skyrocketing value of rare coins has attracted a new set of buyers
who are looking at coins as an investment. Making investments in
coins can be very lucrative and has out preformed many investment
sectors in the last decade. Unlike a collector, the investor has a
different set of rules for making purchases.
With
this in mind a savvy investor should be consulting more than one
expert.
Since
coins are the main focus of this investment sector a professional
coin dealer is an obvious first choice. A knowledgeable dealer can
steer one away from deals that are not what they appear to be. In
rising markets there are many sales forces out there that vie for
limited investment dollars. Salesmen are often focused on selling
coins that have a higher percentage of profit for themselves and not
on what is priced best in the market. Knowing how to steer through
these turbulent waters and getting price double checks is a must.
Investing
does not stop with finding a dealer though. One must also have an
accountant or tax adviser in their corner if they are looking to
maximize their investment. An accountant can help one through the tax
consequences of profit or loss accrued while investing. Keeping
records is first and foremost on the investing side. Knowing what the
profit, or loss, is can help one formulate a strategy for selling
when the time comes. Some items may be taxed differently than others.
You may end up paying more taxes if you sell without consulting your
accountant first, especially if you are straddling a new tax bracket.
When
investing, knowledge of the various rules involved in buying and
selling coins or bullion is very helpful. A professional coin dealer
can help with a host of these cash and reporting rules, but an
accountant will also help in knowing what the tax consequences may
be. Using experts in different fields helps streamline the process.
Of
course when it comes to coins very rarely do we see a person that is
strictly a collector, and conversely we rarely see one who is just an
investor. Collectors usually do not buy coins without having the
thought that one day it will hopefully be worth more. Investors
seldom buy coins unless inspired by an aesthetic desire. The blend of
emotional and rational thought goes into nearly every coin buying
decision.
For
most involved in coins, it will be a convergence of hobby and
investment. Keeping records of purchases and sales is one of the most
important things you can do. It can help to show where your emotional
focus is and give your accountant the accurate information needed to
comply with tax rules. Make sure you are talking to both you
accountant and coin dealer before making large uninformed leaps, both
professions can help you to make a sound decision.
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