Licking it: how to hunt down value in stamps
As an investment only gold and vintage cars have performed better over the past decade
IF YOU missed out on Royal Mail shares, you could always consider "an alternative return" in stamps, said Charlotte Beugge in the Daily Telegraph. Far from being just the preserve of hobbyists, they've proved consistent performers as an asset class over the decades: the Stanley Gibbons GB30 index, which tracks prices globally, shows an average annual return of 10 per cent over 50 years.
And prices of late have been soaring. "Without question, the banking crisis increased demand for stamps" as investors sought diversification from stock markets, says Keith Heddle of Stanley Gibbons. In fact, according to Knight Frank's latest update on luxury investments, stamps have outperformed virtually every other asset, bar gold and vintage cars, over the past decade, returning a juicy 273 per cent.
Some warn that the shift in investment sentiment back to equities could spell the end of the stamp boom. Indeed, many financial experts (as well as some stamp dealers) maintain they shouldn't be treated as investments at all. As Patrick Connolly, a financial planner at Chase de Vere, has pointed out: the market is unregulated, often illiquid and stamps won't give you an income. There are also no tax advantages.
Nonetheless, Stanley Gibbons reports a brisk trade in its investment packages, even though the minimum punt is £10,000. For that, the firm will compile you a small portfolio of investment-grade stamps, and store and insure them. When you come to sell, it will claim 20 per cent of the growth in value.
"Sadly, treasured collections inherited from relatives are unlikely to be worth a fortune," says Beugge. Even the famous Penny Black is not a guarantee of a big return: millions were printed and they can change hands for as little as £20 – although a perfect one might sell for £30,000 or more.
Adrian Roose of Paul Fraser Collectibles, advises clients to think big. "Historically, one £5,000 stamp will outperform ten £500 stamps purely because of the rarity factor."
Perhaps the easiest way to hunt down rarity is to look for printing errors, which can turn even the most prosaic stamps into a nice little nest egg. "Age is no guide to value," says Roose. A 1988 13p Christmas stamp, for instance, could fetch several thousand pounds (they should have read 14p and most were pulped).
One particularly rare example, the Swedish Treskilling Yellow – which should have been green – fetched £1.6m in 2010. It's hardly the prettiest stamp in the album, but is said to be "the most valuable thing in existence by weight and volume".
The way to find value, says Cash in the Attic's stamp expert Gary Ashburn, is to think "obliquely". He explains: "Stamps from last year's London Olympics are not valuable. But those issued for the Paralympics now command three times their face value – they are no longer being printed and they were overshadowed by the Olympics issues."
A version of this article appears in the 12 October 2013 issue of The Week ·