Monday, May 19, 2008

Averaging the Cost of Collecting Banknotes

My friends used to ask me about my hobby. I always answer them saying that collecting banknotes have been my hobby since many years ago. Some of them think that I must be a rich guy; they would rather spend the money to buy something they want instead of keeping them for viewing or have them to be a collection. Many of them think that collecting banknote is a very costly hobby as it requires a lot of capital.

I do admit that in the initial stage you do require some capital for you to collect the banknotes. But, I rather think that there should be better ways of collecting banknotes that can bring down the cost of collecting. One of the ways is to adopt the method of averaging down the cost of collecting.

I always collect or buy banknotes at least in pair or more. I believe that by doing so, it helps me to reduce the cost of collecting. Image that if I have bought two banknotes with $10 each. It costs me $20 for two. I would then wait for the appreciation of the note, say in 2 years and resell it at $12. Then the cost of keeping first note has been reduced to $8 instead of $10. What if I have bought 5 and resell four of them for RM12, my cost of holding the remaining note will be zero.

Of course many will ask how to get the buyers? There are plenty of internet tools such as online auction available as platform for collectors to sell or buy. I am pretty sure that you heard about ebay or http://www.ebay.com/. It is a pretty awesome tool for you to sell you collection at fair market value. If you are holding a piece of rare item, I am pretty sure you will get good return.

As a collector, you should plan and use the appropriate way of increasing your collection. Having all you money to buy the collection you want isn't a good ideal. Always think of cheapest way of increasing your collection as well as increasing your wealth.

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