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Collectibles: One Person’s Trash Is Another’s Treasure

Make sure your children appreciate the value of their inheritance.

Do you collect rare stamps?

If so, why don’t you collect rare coins instead? Or fine wine, baseball cards or old lithographs?

The answer is obvious: You like rare stamps.

Indeed, collectors tend to collect what they like, not necessarily what they think will make the most money. And collectors tend to become pretty good at their hobbies over the years.

If you’re a collector, you may well have a substantial amount of money tied up in your collection. Would you ever sell it? Probably not.

Some years ago, I asked a client how much his wine collection was worth. “About $40,000,” he replied.

“When do you plan to sell it?” I asked.

“Sell it? I’m going to drink it!” he said.

“Well, then it’s not worth 40 grand,” I explained. “You can’t consider it a financial asset if you’re going to consume it.”

But I’m sure that’s not your intention. You plan to hold on to your collection, perhaps add to it and eventually leave it to your children — true? Well, here’s something that may not have occurred to you: Your kids probably don’t share your passion.

According to Barron’s, two-thirds of people who inherit rare stamps sell them. They don’t want the stamps; they want the cash.

Why do I mention this? Because if you think your children will want to keep your stamps (or other items), you should know the odds are against it. Should they choose to sell, it’s doubtful they would get as much money for your collection as you would because they don’t know its value, don’t know the market and don’t know how to sell for maximum price. Despite good intentions, they might wind up dumping the stamps to get rid of them. You would almost certainly obtain a higher sale price than they would because of your knowledge — and the fact that you’ll devote the time to do it right.

Therefore, if you own collectibles as part of your overall investment portfolio and want your kids to get the maximum value, talk with your kids to find out what they might be inclined to do when the treasure you spent most of your life accumulating becomes theirs.

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