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Investing in rare coins involves buying and selling old, uncommon, scarce, historic, or otherwise notable coins in the hope that they will appreciate over time and can be sold for a profit.

Rare coins are a type of collectible, and as such are considered a type of alternative asset. Some alternative investments may offer potential returns or diversification (like most alternate assets, coin values don’t move in sync with traditional markets). But coins can be subject to fraud and forgery, as well as the whims of the market, and as such investing in coins is not without risk.

Understanding Rare Coin Investing

Rare coins are a type of collectible, meaning that investors might consider investing in rare coins as a form of alternative investments, which can also include other collectibles, such as vintage wines or antique books, or assets like commodities and real estate.

(Note that SoFi offers alternative investments including a number of different asset types, including real estate, commodities, private credit, hedge funds, and more. It does not offer rare coins, however.)

Alternative investments tend not to be correlated with traditional assets like stocks and bonds. Thus collecting and investing in coins can be a way to diversify your portfolio, but as with any new type of investment there can be a steep learning curve.

Prospective investors may not have a background in coin collecting or numismatics (a term that refers to the formal study of currency, but can apply to hobbyists), and thus may not know how to assess various types of currency.

While collectibles can have value, coins may not rank near the top of the list of the most valuable types of collectibles.

So, before investors get started in rare coin investing, it’s a good idea to learn the ins and outs of rare coins, and even dip into an alt investment guide to see where they stand in the greater ecosystem of alternative investments. At this time, SoFi does not offer rare coins or investment products focused on rare coins.

What Are Rare Coins?

Rare coins are what they sound like: Coins or currencies that are limited by mint location, nation of origin, year, condition, and other variables. Some collectible coins are unusually beautiful, or historically significant.

As an example, you could pick up a dime minted in 2023 in Philadelphia, which would be the opposite of a rare coin. In fact, more than 791 million dimes were minted in Philadelphia during 2023.

But if you were to stumble across a 1969 Lincoln penny minted in San Francisco which features a specific double-die error — that’s an extremely rare coin that might fetch as much as $25,000 at auction (assuming it was authentic).

Recommended: Why Invest in Alternative Assets?

A Brief History of Coin Collecting and Investing

People have been collecting and investing in coins, both common and rare, for thousands of years — perhaps for as long as there have been coins used as currency. In fact, Roman emperors were interested in coin collecting, as were the aristocracy during subsequent eras, and even some of the first U.S. presidents.

Owing to their design and relative rarity, the coins of antiquity were valued as something akin to works of art. But being small and portable, coins were easier to exchange and collect.

While collecting coins was reserved for those with the wealth to obtain exotic coins in the first place, coin collecting as a hobby became more widespread as coins became more common as a basic currency. For example, in the 17th and 18th centuries, when the study of coins and currency became more formalized, the growing base of knowledge also fueled collectors’ interest.

Then, as the minting process became more automated, and the use of various metal alloys made coin manufacturing cheaper in the 19th and 20th centuries, coin collecting continued to gain popularity. Trade shows and organizations emerged, and the first international convention for coin collectors was held in Detroit, in 1962.

Today, the advent of the internet has supported online forums for discussion and networking. In addition, alternative platforms for buying, selling and trading coins have emerged.

Sophisticated collectors may also become de facto investors hoping to see a profit from their collections. However, as with most types of alternative investments, especially collectibles, there are risks involved in coin collecting, owing to the rise of forgeries, fraud, and various scams. In addition, the market for a type of coin may wax and wane, taking a collector’s coin values with it.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

How to Get Started in Rare Coin Investing

For enterprising investors curious about rare coin investing, some initial research is paramount. That includes learning about the different types of rare coins, how to evaluate them, and more. But for someone who wanted to start a simple collection or portfolio of coins, they could always start with commonly used U.S. currency, which is relatively easy to verify and obtain. U.S. coins also have a long and storied history.

However, if you want to start adding rare or high-end coins to your portfolio, one way to do so is to consider buying coin sets. There are hundreds of such sets from all over the world, and from different time periods.

Once you start learning about the different types of coins that comprise sets, you should be able to build up your knowledge and pursue other rare coins. But again, this all depends on an investor’s resources and risk tolerance.

Rare coins are relatively high-risk investments, and there’s no guarantee that there’ll be a return when investors look to sell.

Types of Rare Coins

As discussed, there are many types of rare coins. As a collector or investor, you may want to narrow your focus to a specific subset of coins. Some examples:

•   Ancient coins: Ancient coins date back hundreds or even thousands of years. They may be made from gold, silver, copper, or other metals. They may be sourced from ancient empires such as the Greeks or Romans, and since they’re quite rare, they tend to be valuable.

•   Rare U.S. coins: The U.S. has minted a lot of coins over the past 250 years, and some are exceedingly rare, making them valuable. These coins may be valuable because they date from specific periods of U.S. history (e.g. the Civil War), have errors, or just have limited mintage.

•   International coins: International coins, as a category, can include any coins sourced from around the world. These coins may be valuable due to low mintage, composition, or history, similar to U.S. coins.

•   Error coins: Coins with mintage errors can also be valuable. Minting errors may vary, and include double dies (duplicate images), missing markings, strike errors (the design is off-center), and more.

•   Bullion: Bullion coins are typically valuable for their composition, and don’t usually have an assigned dollar value. That is, a bullion coin might be one ounce of silver, and is valuable for its silver content. That said, bullion coins can also be minted or designed in rare or unusual ways, and some collectors may enjoy tracking them down as a way of investing in precious metals.

Evaluating Rare Coins

Evaluating rare coins can be difficult, and in many cases, it may be a good idea to take a rare coin to a numismatist or specialist. But in a general sense, investors can do some basic research and look into a coin’s history and origin, its design and features, and its weight and dimensions. There are numerous guides available for this exact purpose.

Would-be coin investors should also bear in mind that there are many fakes on the market. A coin may not actually be of its purported origin or metal composition (a “gold” coin may actually be gold-plated copper, for example). It may be incorrectly graded, too, and be in worse condition than it appears.

This is one of the reasons that investing in coins is rife with risk, and why it may be a good idea to speak with a specialist.

Buying and Selling Rare Coins

Buying and selling rare coins is fairly simple. There are coin and precious metal retail stores all over the world, and you can shop at those stores to find and select the rare coins you want.

There are also large and popular online retailers – an internet search will bring up many names — that you can use to make a purchase, or a sale.

The key, of course, is to try and make sure you’re not being taken advantage of or falling for a scam. So, read reviews, do some research on retailers, and frequent a dealer or retailer that you trust.

Market Trends and Price Factors

Forecasting or even wrapping your head around the market for rare coins can be difficult. But overall, it’s a nearly $10 billion market worldwide, one that’s expected to grow to nearly $20 billion by 2030. The market itself is often driven by passionate collectors and investors, and not economic or external forces like the stock market (though economic and geopolitical factors can have an effect, of course).

For example, the value of precious metals like gold and silver are often in flux. This would likely impact the value of certain coins. But other factors can come into play, like an archeological discovery or historical analysis that alters the perception of a powerful figure or era.

In other words, as with many types of assets it can be difficult to mark what, exactly, is going to increase or decrease the value of a specific coin, other than simple supply and demand. It’s a complex market, and one that will likely require some time and experience to get a handle on for investors.

Risks and Challenges

For investors, perhaps the biggest challenge or risk involved in investing in rare coins is that you may not know exactly what you’re looking at or investing in — especially if you’re inexperienced with coin collecting. You could pay too high of a premium on a coin, for instance, or misunderstand something related to mintage or strike errors. There are a lot of details you need to know, and it can be difficult to take everything into consideration.

Further, investors should be aware of the risks associated with generating returns. Coins don’t accrue value like stocks do, and it’s not easy to tell how much a coin can be worth. You also may need to find a buyer once you’re ready to sell — it’s not as liquid a market as the stock market.

Tax Implications of Rare Coin Investing

Since coins are a form of alternative investment — and collectibles, more specifically — a tax liability is generated once an investor sells it. If you realize a capital gain on that sale — that is, you sell it for more than you paid for it – then you owe capital gains tax, either short-term or long-term, depending on how long you owned it.

But because coins are collectible, a long-term capital gain from the sale of coins can be taxed as high as 28%, plus a potential 3.8% net investment income tax, depending on your adjusted gross income (AGI).

This is why it’s important to keep track of your purchases and sales, so that you can make an accurate tax record for the IRS. Note, too, that depending on where you live, you may not need to pay sales tax when you buy coins — that’s up to the states. As always, it may be best to consult with a tax professional if you have questions.

The Takeaway

Investing in rare coins can be a way to add alternative investments to your portfolio, but it’s an area that has risks. Investors will need to research what they’re buying and selling — which may require some experience in the market — and keep track of their investments to ensure they’re paying a proper amount in taxes.

Investing and collecting coins isn’t for everyone, but It may be a potentially fun and interesting way to add diversification to your portfolio.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.

FAQ

What factors determine the value of a rare coin?

Several variables can determine a coin’s value, including its age, mintage, mint location, potential minting errors, the coin’s metal composition, as well as its beauty or historical rarity, and more.

How do you authenticate rare coins before investing?

To authenticate rare coins, it may be best to rely on the expertise of a professional numismatist. Otherwise, you’ll be doing a lot of research on your own to validate dates, origins, mintage, and more.

Is it better to invest in graded or ungraded rare coins?

It may be a good idea to invest in graded rare coins, so that you know what, exactly, you’re investing in.

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