Monday, April 23, 2012

Malaysian Collector Investment mistake

Many Malaysian who want to collect coins and banknotes for investment make a mistakes that will cost them money later. Many young investor contact me and asking me what they should collect, in my opinion, if you want to invest in something, you need to do your own research. Numismatic collecting is not something you can just join and invest, you need to learn what it is all about first. You need to learn about grading, some investor don't even know what is "Uncirculated". They just collect anything that they can find and only realize they're making a big mistake when they want to sell their collection later. Many Malaysian investor believe a shinning coins are brilliant uncirculated coins and can get high price among collectors, without knowing that those are cleaned coins and a real collector will only buy them at a very low price. Some investor learn their mistake, move on and do the right thing, while some investor stop collecting. 

Before you read the rest of this article, make sure you read this first: Investor or Collector?

Investment

Here are list of mistake by Malaysian collector:

1. Believe what Dealer said what to invest.
Many Malaysian collector just believe what any of their trusted dealer said to them what they should collect. For example, I had seen so many times dealer advising collector to collect new replacement notes and claimed it to be rare item. The price will be going up sky high and one day, a bunch of the replacement notes going into the market and the price will be dropping fast. Don't believe your dealer 100%, do your own research before you start investing your money in any collection. Some dealer told you to invest into that particular banknotes and coins just because of profit or they have stock to sell.

2. Don't buy any book for guidance.
In Numismatic collecting, books are the most important thing to collect. You can understand many thing about your investment if you have coins and banknotes books as a guide. For Malaysia collectors, try to get at least Steven Tan or KN Boon books to help you learn about collecting and guide you about the market price. Many collector don't care to invest in numismatic books and start collecting, a mistake that can be avoided for just few ringgit.

3. Don't know when to let go their investment (small/short time investor).
I think this is happened to any small time investor who want to gain some money in collecting. For example, when the New Malaysia banknote Premier set has just been released, many of these small time investor buying the sets because they heard the price are almost double from the release price. They don't know that in Malaysia, the price of the newly released item will be going high for a short period of time since everyone afraid they cannot get it. After certain period of time, the price will be dropping after many other people offering the same items at the same time. You need to know, do you collect it for long term or short term investment. Many newbies who mistakenly bought a lot of the Premier sets feel frustrated and some even sell their sets below their cost.

4. Don't know market value of their investment.
In Numismatic, market value is not just about the item price, you also need to know the grading of the items. The higher the grading/condition of the coins or banknotes, the higher the value. Some collectors don't study market value of their item and make a mistake by buying the items higher then market value. When they want  to sell their collection, it took them longer time to sell because of the high cost. Some collector end up selling their collection below cost because they need the money.

5. They forget about grading, they just collect what they can find.
Many new collector mistakenly buy any rare coins or banknotes that they can find even if the item in Very Good condition and the price are very high. If you want to make sure your investment worth it, only buy Uncirculated condition items or at least Very Fine condition. You can buy item below that condition if the sell price really cheap and will not cost you much. Yes.., it is cool to flash your rare items even though its conditions are just Fine but when you want to sell them later on, it will be difficult because not many people want to buy low grading items at a very high price.

6. Collect what their friends are collecting.
They're also people who want to invest but they just follow what their friends collect. You need to remember, in numismatic, they're always collector and investor. Collector normally collect that items because in their eyes, the coins or banknotes are beautiful not because their value will be going up one day. Some new investor who don't realize that just follow collecting what their friends collect. In the end, they will be wasting their money investing on something that only their friends collect not what other collectors out of their league are collecting. If you want to invest, do some research, what items are worth to invest. Make your friends as a guide, don't just copy what they're collecting.

7. They want rare item but don't want to learn how to check for counterfeit.
In Numismatic, rare items meant they will be counterfeit or fake out there. Many new collectors don't want to invest their time to learn and understand about counterfeit but want to invest in rare items. Some of the items worth thousands of ringgit and it will be a waste of money investing in fake items. Before you start investing in rare coins or banknotes, learn how to check for fake items first. Don't start buying if you still don't understand about counterfeit rare items. It will be cool to show the rare items to newbies but your reputation will be going down to drain if real collector show your "fake" collection. If you mistakenly bought a fake items, don't show it, keep it in a drawer some where.

8. They buy expensive item but don't care where they put it. 
Many collectors don't care where they put their investment. For them, buying the most expensive item in the market already give them save investment. They just put their coins and banknotes in a drawer, on a wall or on their desk. Some Malaysian even laminate their banknotes just to make sure it stay new and looking good. They don't know laminating most of the time will damage the banknotes. If you have investing a lot of money on a banknotes or coins, why don't you invest on a quality coin capsules, coin holder, plastic sleeve for banknote or album for your precious collection? Make sure you invest on a high quality items to protect your investment.

9. Cleaning their coins and banknotes.
Many Malaysian new collectors like to clean their coins and banknotes. If you like your investment, please don't clean them! It will only damage your collection. They maybe look dirty for you today but when you have gain some knowledge in collecting, you will be adoring that dirty coins later. Collecting is not about collecting beautiful shinny coins, cleaned items will lowered your item price. Again, please stop cleaning your coins.

10. Buying cheap item online.
If you're newbies on online buying, please avoid buying rare items at a very cheap price. They're scammer and fraudster out there who are luring buyer with cheap rare item in Mudah.my, Lelong.com or Facebook. Many newbies who look at the cheap price quickly paid the scammer, they only realize it is a scam after few weeks they don't received the items. Buy from a reputable sellers, you can read my post about Top 20 Facebook sellers and Genuine Mudah dealers list as a guide.

Have you done any of the mistake above?