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Money to lose :: How much is that?

I'll reiterate once again: Never invest more money than you can afford to loose! But what does these mean really, and what does it have to do with coin collecting?

Any investment can be looked at as a gamble in one way or another, and all gambles present a certain amount of risk. What makes an investment less of a gamble is how you manage your investment. From the amount of funds you set aside, the investment choice, how you manage your investment, and when you decide your investment has given you an appropriate yield for your risk.

If you invested in well performing blue chip stock, and a week later the company you just invested in reported it's quarterly earnings along with notice of bankruptcy filing. Well, this investment probably wasn't a very good choice, but if you did your research and found no indication of a company in trouble, you would probably be a bit upset at the outcome. Maybe even sweating a bit.

Now if you only invested an amount you could truly afford to lose, you'd likely shrug it off to a bad choice, since that's all it really was and everyone makes a bad choice from time to time. How much money could you afford to lose for the chance to profit from your investment? Your answer shouldn't change based on the way the question is asked. No matter the risk, the answer is still the same! The amount of money you can afford to lose on an investment is the same amount of money you can throw out of your car window while driving - without affecting the stability of your overall finances in any way whatsoever.

This is the reason why money makes more money. Say that you might like to invest in an ounce of gold. Maybe a new high relief St. Gaudens $20 gold issue at a premium price. Probably a good choice; gold is a mainstay, and as we can see by it price during these economic times, becomes popular as a safe haven. The high relief adds a collectors edge or numismatic premium to it's long term desirability.

For someone well established in their finances, the price of a single $20 St. Gaudens gold coin may represent one or two percent of their overall worth. A reasonable amount to risk. Another person that may be starting a new job after a period of unemployment, may find that a 20 dollar St. Gaudens gold would cost a double digit or greater percent of their total assets. Despite any positive outlook in gold, to this person the $20 gold coin could pose a significant loss that could not be shrugged off so easily. Clearly more than can be forgotten about.

Coin Collecting :: A Bridge.

Coin collecting bridges the gap between hobby and investment by offering a wide range in cost of entry to the hobby. From penny purchases to rare and high end specimens that might command a seven digit price tag. Coin collecting also relieves risk since first and foremost, coins are collected for fun and education, which puts numismatics into the entertainment bucket of your finances. Entertainment is a loss to begin with because no long term appreciation exists for most entertainment.

On top of a sound entertainment spend, fueling your numismatic hobby offers the the chance to learn about history, famous folk, art, science and culture - expanding your person as a whole. You'll also obtain a sense of achievement as your progress in your hobby. Gaining expert knowledge in your areas of interest, allowing you to further appreciate the depths of numismatics.

As always, learn everything about the coin before you buy it. Knowledge goes a long way in coin collecting.

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