What should you collect as a hobby; coins, paper money, or stamps? Which is the best investment?

It's strange that some people who collect coins, paper money, or stamps, always want some kind of return on their investment. These are the same people who think nothing of buying a new car and then selling it a few years later for a fraction of what they paid for it. A new car loses value as soon as you drive it on the road!

As for investing in paper money, if someone is buying notes and thinking how much will they be able to get when they sell them again, this person has the wrong hobby. Enjoy collecting for the pleasure and for the fun of it.

Coins and stamps are tangible reminders of years gone by. Yet, while coin collecting is flourishing as a hobby, stamp collecting is decreasing in popularity. Many families who inherit stamp collections are more interested in getting the collection appraised than continuing the collection. You can't collect something if you don't know what it is.

Stamp collecting dates back to 1840, when the first stamp was issued in England. One of the earliest indications of stamp collecting is an advertisement from an English newspaper in which a young woman wanted used stamps to wallpaper her room. Soon, post offices discovered stamp collectors as a good source of revenue. From there, stamp collecting took off.

There are no rules about stamp collecting. Some people collect stamps from a certain country while others focus on a particular theme, such as flowers, or ships, or buildings.

Unfortunately, stamp collecting has simply lost its appeal to younger people.

Coin collecting, on the other hand, is at its peak in popularity. Rare or modern coins offer history that collectors can hold in their hand, and every period from the past 2,500 years is reflected in coinage.

Stamps disappear and become part of the ground. A coin can be dug up and, while new varieties of stamps are not really being discovered, new types of coins from all over the world are still being found. How many stamps or bank notes do you think you'll find while out exploring with a metal detector?

Whilst improperly stored coins can degrade and lessen in value, paper money can be damaged by handling, sunlight, or water. All are subject to flood, fire, or other natural catastrophes.

A stock certificate with half of it burned away is just as good as a mint one in terms of its value on the exchange. In fact, as long as ownership can be proven, it often doesn't even matter if the physical certificate exists. The same can't be said for paper money.

You can insure against these problems, and go to great lengths to maintain proper storage conditions, but all of this costs money and adds to the cost of the investment, often for many years before there is any return at all.

Today, coin collecting is one of the world's most popular hobbies. Amateur collectors enjoy coins for their beauty and rarity. Added to this is the excitement of searching for and finding specific coins and the challenge of identifying new ones.

Why is coin collecting thriving and stamp collecting dying? Coins are still being used and are still fascinating. It is an investment as well as a hobby. Coins continue to go up in value while many stamps are at the peak value they will ever receive. Furthermore, many are going down in value.

Enjoy your hobby, and consider whatever you invest in it to be pleasure money, the same way you would count money you spent going to ball games, or dining out, or buying new clothes. Then, whatever you or your family get out of your collection is pure profit, whether it is more or less than what you originally paid.

After all, if you spend $20 a week going to the movies, you don't expect to get anything back for your $1,000 a year collection of ticket stubs, do you?

I believe there is room in both the collecting of coins and paper money for both collectors and investors.

The important thing to remember in investing in coins or banknotes is rarity and desirability.