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Rare Money Investment 101

rare money investmentDo you prefer chocolate coins in a traditional Chinese candy box? Do you like to hold a stack of banknotes in your hands while playing Monopoly? Many people are obsessed with the aesthetic appeal of money. Collecting banknotes and coins is not just a hobby, but indeed can yield a profit if you have the right judgment and enough patience.

Earlier this year, the 150th Anniversary Banknote launched by HSBC was enthusiastically received, though ultimately the resale price was not as good as predicted. Without much reference to judge its investment potential, it’s just pure speculation. But for long-term investment in rare coins and notes, the return has more to do with its historical value, quality and rarity.

invest in rare coins

Historical Value

When it comes to collecting rare money, its investment value rises in accordance with its historical meaning. Take the 1868 British coins featuring Queen Victoria’s profile as an example. The rare coin set comprises denominations of 5-cent, 10-cent, 20-cent, 50-cent and one dollar. It is the first of its kind produced in Hong Kong during the colonial period. The auction price started at $1.76 million. As for paper money, The Millennium 2000 Dragon Banknote Set released by China enjoys high potential value due to its millennium year, which overlapped with the Year of the Dragon.

Quality

Collecting rare currencies in Hong Kong needs to be handled with care due to high humidity. For two notes with the same denomination, their difference in values can be attributed to their quality — if one is in good condition and the other in bad. Avoid folding the notes and getting them dirty. Store them in a clean, dry place

Rarity

For Marco Kaster, investment director with the Hong Kong office of London-based Stanley Gibbons Investment, “Rare investment grade coins have demonstrated a complete lack of volatility and no correlation, and price increases are driven by the passion of high-end collectors,” he says. “Historically, rare coins have seen average compound annual growth rates of around the 10 percent per annum mark, but it is important to note that these markets don’t go up in a straight line but in steps, which is one of the reasons why we recommend the minimum five-year holding period.”

For cultural reason, Chinese people love the number 8, which signifies wealth. So a banknote including an 8, a double 8 or even a triple 8 will be more likely to demand a better price.