Collecting for Fun and Profit

Collecting for Fun and Profit

Collecting has been around forever. People like to save things. The wealthy have been collecting antique paintings, porcelains, and furniture for generations. Today, however, collecting isn't limited to the rich. It seems that everyone—young and old, rich and poor—is getting into the act.

As with putting money into a bank or investing in the stock market, collecting has become another way for some people to increase their wealth. In this way, collecting is a form of investing. The idea is to buy an object today and hold onto it long enough until it appreciates in value.

Collecting is multifaceted. For kids, collecting can offer several benefits:

• Fun. There's the enjoyment of pursuing collecting as a hobby. Instead of sitting in front of the TV or playing video games, your child can be looking through pocket change to start a coin collection.
• Educational. Collecting can be a learning experience. Kids who collect stamps, for example, learn all about countries throughout the world. One boy who loved Godzilla toys got so into collecting Japanese toys of that ilk that he eventually pursued Japanese studies as his college major; he plans to work for an international company doing business in Japan when he graduates.
• Low-cost. Collecting can be an inexpensive way to start a high-priced collection. Kids can collect things they like for little or even no money and then can watch how the value of things changes over the years. For example, premiums from McDonalds and Burger King that cost a kid nothing can be worth a lot in the future (maybe even the near future). McDonalds gave away special Beanie Babies as part of their Happy Meals for kids; as you may know, Beanie Babies have become a division of collectibles unto themselves. Recently, the complete McDonalds Beanie Babies collection was valued at more than $100 (remember they cost nothing above the regular cost of the Happy Meals).
• High-return potential. While there's no guarantees with collecting, baby boomers who had saved their baseball cards or D.C. comics from the 1950s would be sitting with quite a valuable collection today. A 40-year-old Barbie in mint condition in the original box is worth about $10,000 today!

Getting Started on Collecting

You may not have to suggest collecting to your child: She may already be a collector of Barbie dolls, costume jewelry, or coins. Kids love to save things—no great news to a parent who has complained of piles of stuff in the child's room. But you may want to offer direction and support for your child. Here are just some of the things you should point out to your child before she becomes addicted to collecting:

• Know what she's getting into. As with the stock market, your child should know about what she's buying before she puts her money down. Learning about collecting is explained in Build a Collection Without Going Broke.
• Understand the responsibility that comes with collecting. If she's investing her allowance or wages in her collection that she hopes will increase in value, she had better learn to take care of it properly. Most collectibles lose value very quickly if damaged in the slightest.
• Put limits on how much money to put into a collection. It's easy to get carried away, but collecting, like saving, should be an item that's budgeted for. Having only a set amount to spend at an antiques show will certainly mean that some things are beyond her grasp, but it's a bad financial habit to start spending beyond the budget for items and then falling short of cash to pay expenses.