Yahoo Finance 6 Best Things To Do After Cashing in Your Rare Coins
Lots of people who collect coins are in it for the chase: the hunting down of hard-to-find coins, digging through boxes in attics and basements, all for a chance to say they are the keepers of something unique and, often, incredibly valuable.
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Then there are the folks who find the coins and sell them, taking advantage of the price associated with a not-so-run-of-the-mill nickel, dime or quarter. If you are one of these collectors, then it’s time to ask yourself this question: What should you do with the money after selling rare coins?
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Reinvesting vs. Using the Money
GOBankingRates reached out to some financial experts to get their opinions on the best ways to invest the money earned from selling a rare coin. Could it be that the most financially sound recourse is to reinvest in buying and selling coins to continue this hobby?
“On the one hand, a hobbyist in this area might look to reinvest in other similar opportunities,” said Dale L. Shafer II at Life Moves Wealth Management.
“They would probably wait to reinvest until happening across an interesting tangible collectible, something that may have a higher value to other collectors at some point,” Shafer explained. “In some respects, this can be considered as speculative as other investments but may not feel so, due to the real item that will have some value because it exists… [as opposed to] an equity investor who takes a risk but has nothing backing the investment.”
On the other hand, Shafer posed the notion that “this individual may be looking to reinvest in other areas, like stocks, bonds or real estate, but it seems less likely to me that someone would sell coins and buy into, say, the hottest AI stocks.”
Whichever side of this debate the collector finds themselves on, here are six of the best practices any investor may consider taking up after selling a rare coin.
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Diversify Your Earnings
The golden rule of investing is diversification in the eyes of the president of Titan Funding, Edward Piazza.
“The proceeds from selling rare coins present a perfect opportunity to spread investments, such as in stocks, bonds and real estate,” Piazza said. “Diversification helps mitigate risk and capitalize on the growth potential of various sectors. Investing in a mix of assets is key to protecting your wealth from market volatility, a principle that holds whether you’re an experienced investor or just starting.”
But it is also important to know your risk tolerance at the end of the day: What are you willing to bid farewell or potentially say “hello” to with the money you have earned from the sale of a rare coin?
Shafer put it like this: “If you had $100, how much of that would you be willing to lose? That dollar amount may be a simple yet very good indicator for evaluating how and how much to invest going forward.”
Figure Out Your Timeline
“Know how long you intend to hold the investment to reach your expected return,” advised Shafer. “The longer you are willing to hold, the more patient you can be with changes in value.”
“After netting a profit from your coins, I would encourage you to take a hard look at your current financial situation and identify the most pressing need,” added Jeff Rose, the former CEO and founder at Alliance Wealth Management, LLC.
Rose noted that some people might have the temptation to splurge after selling a rare coin for big bucks. His advice in one word: “Don’t.”
Reshape Your Financial Plan
“Know what you’re buying and why,” Shafer said. “How does it fit into your total net worth and other investments? Is it your only investment, or is it intended to add diversification to your assets?”
If selling rare coins is not just a one-off but part of a hobby or business, reinvesting some of the proceeds back into numismatics can be profitable and fulfilling. This approach allows collectors to continue engaging with their interests while strategically growing their investment, according to Piazza.
“Leverage your expertise in coin collecting to identify undervalued pieces with potential for appreciation. It’s about blending passion with practicality,” Piazza said.
“Have debt on [a] credit card with a 20% interest rate? Paying that off is like getting a guaranteed return on your investment,” Rose pointed out. “[Are] your retirement funds lagging? Time to max out that Roth IRA or add more to your 401(k).”
Figure Out Your ‘Why’
“Define the reasons why you would pull the trigger and buy, and also when you would be willing to sell,” Shafer cautioned. “Whatever metric you’re using, be consistent and firm in your buy/sell discipline [so] that you can avoid emotional factors, as well as the timing trap to both the upside and downside.”
“Investing the earnings from selling rare coins wisely can safeguard and grow your wealth over time,” Piazza echoed. “It’s about striking the right balance between pursuing your passions and adhering to sound financial principles.”
Be the Opposite of Greedy
“Don’t be afraid to average into the investment when sensible,” Shafer recommended. “If the value declines and you’re still confident in the above practices, use it as a potential buying opportunity rather than a reason to sell.”
Rose concluded that after selling a rare coin, much like cashing in on any large investment, “the key is to make your money work for you in the most effective way possible, aligning with your financial goals and personal interests.”
Get Professional Assistance
You might think you know the in’s and out’s of what to do with your money, but there is a risk level to buying, selling and investing in any market, coin or not.
“Before making significant investment decisions, consulting with a financial advisor can provide personalized insights tailored to your financial situation and goals,” Piazza suggested.
“A tailored investment strategy can significantly enhance the potential for wealth accumulation and financial security,” said Piazza. “This is especially important for unique situations like investing the proceeds from selling rare items, where tax implications and investment opportunities might differ from more conventional income sources.”
That two cents can be golden in this case.
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This article originally appeared on GOBankingRates.com: 6 Best Things To Do After Cashing in Your Rare Coins
