This pamphlet is published as a public service by the ASDA as a guide to those who might desire infonnation on investing in philatelic properties. While every effort has been made to be thorough and informative, no claim is made for its completeness or accuracy, and no present or future liability shall be incurred by the ASDA as a result of publishing and/or distributing this pamphlet.

It is the sole responsibility of each investor to make his or her own decisions, and this pamphlet is designed to inform and aid such investors to make such decisions.

It is the stamp dealer's obligation to provide as much pertinent information as possible to the prospective investor. This information should be current and include the dealer's qualifications, the role of stamps in meeting the investor's goals, risks in philatelic investing, the purchase, storage, and disposition of philatelic material and other pertinent data.

Qualifications To Sell Stamps As An
Investment Or To Act In The Capacity
Of A Stamp Investment Counselor

The stamp dealer should provide to all prospective investors information indicating his or her qualifications. The investor should ask for the following information:

A. Investment knowledge.

1. Courses related in Economics, Investments,

Finance, and Accounting.

2. Experience related in Economics, Investments, Finance, and Accounting.

2. Philatelic Experience and Employment.

1. Dealer? Part-time? Full-time? Firms? How long?

2. Philatelic Society Memberships - (good reference to check).

a. Dealer organizations - how many continuous years?

2. Collector organizations - how many continuous years?

C. Business status.

1. Form of business you are dealing with: partnership, corporation, sole proprietor. Who are the principal parties from whom you are buying?

2. Bank references.

3. D & B report, if possible.

2. A statement of licenses, bonds, and insurance (if you consign material to a dealer)

   D. Personal Background.

   1. Ever been convicted of a felony? Fraud?

   2. Ever filed for bankruptcy or Chapter eleven?

3. Ever been expelled from a philatelic society?

Determining the Goals and Aims of the Investor

The dealer has an obligation to an investor to help him or her achieve the goals they desire. Your investment goals should take the following into consideration.

A. Purpose and duration of the investment.

1. Retirement.

2. Children's education.

   3. Other.

3. Time plan - three years, five years, twenty years.

2. Desired compound rate of return on investment.

C. Degree of soundness.

1. Investment.

2. Speculation

D. Liquidity of philatelic investments.

(National or international marketing.)

E. Diversification of stamps as related to the overall investment program.

1. What percentage of your total net worth?

2. What percentage of new investment moneys?

F. Tax Treatment (Accountants and Attorneys' advice should be sought.)

1. Income vs. Capital gains.

2. Corporate tax structures.

3. IRA plans, Keogh plans.... etc.

4. Estate taxes.

2. Sales taxes or VAT (other countries.)

G. Control of material.

1. Individual.

2. Corporate.
3. Trust.

   H. Timing of investments.

   1. Lump sum.

   2. Sporadic.

4. Periodic.

Hazards and Risks

Philatelic prices are determined by supply and demand; they will go up and down with the demand to purchase items. The dealer has a responsibility to reveal and discuss with a prospective investor that there are various hazards and risks in philatelic investing. The following factors should be included in such a discussion:

1. Influence of time on risk, both short and long term.

B. Influence of the age of stamp on risk.

1. Classic issues.

2. Intermediate issues.

2. New Issues.

C. Stamp production.

1. There are countries and firms that print stamps and covers which have little or no relationship to that nation's postal system. Many stamp issues are demonetized shortly after issue.

2. There are fakes, forgeries, and altered items in the market place.

D. Political and economic influences of the collecting country.

1. Short or long term.

2. National or international.

Investing

Investment in philatelic material requires decisions as to where to buy, quality, and what to invest in. It is the obligation of the dealer to educate and discuss with the prospective investor all these facets, including but not necessarily limited to the various considerations listed below.

What To Look For From Your Dealer

1. Does the dealer guarantee the items for description and authenticity?
2. Be aware that the dealer must make a profit to provide his services.

C. Ask the dealers questions. Let them teach you.

D. Don't expect a dealer to have all the answers. No one person knows everything in this business.

E. Communication between you and the dealer is very important. Let him know exactly what you want.

F. Learn the roles of the collector, investor, and the dealer in the philatelic market place.

G. Most stamp dealers are not considered experts in legal and tax matters. Investors should seek advice of their own accountants and attorneys on specific arrangements.

Things you should know about what you are investing in.

1. How many of an item were printed, what is the ease of availability and salability?

2. What do they catalog for, sell for, or postal value?

3. Recommendations of what items to purchase are subjective. Is it what you want?

2. Is there a demand for this country of issue. Are there future buyers?

1. Philatelic Investment Fields

1. Commemoratives, definitives, semi-postals, and airtnail stamps.

2. "Back of the book" stamps.

3. Postal history and covers.

2. Proofs and essays.
3. Errors.

D. Philatelic areas.

1. Country or regional

2. Topical.

2. Specialized area within a country or topic.

1. Types of investment stamps.

1. Individual rarities.

2. Medium priced stamps in limited quantities.

3. Less expensive stamps in large quantities.

4. Build a one-of-a-kind fine collection in a chosen area.

2. Manipulation-possibility of obtaining market control of an item.

E. Diversification.

1. Well balanced portfolio.

2. Need for periodic review.

F. Condition criteria, quality desired for investment purposes. Prices vary according to these criteria.

1. Centering.

2. Freshness.
3. Blemishes
4. Damage.

   5. Altered.

   *Revenues, tax, documentary, permit stamp etc.

   G. Sources to obtain stamps.

   1. Auction sales (Read terms of sale.)

   2. Private treaty.

   3. Dealers stock.

5. Other collectors (all sales probably final, no recourse.)

H. Fees.

1. An arrangement on consultation fees should be agreed upon prior to seeking detailed investment advice.

2. When there are brokerage or agent fees for the purchase of material for the investor's account, these should be agreed upon prior to the initial purchase of stamps as an investment.

2. Prior arrangement of consultation and/or brokerage fees should be made before including the stamp dealer in any testamentary instructions.

   Maintenance of Philatelic Investment Properties

   Proper care in preservation is necessary to reach investment objectives. This is the investor's responsibility with the help and advice of the dealer.

   A. How to store material.

   1. Mounts, stock books, albums, etc.

   2. Private safes, bank vaults, etc.

3. Temperature and humidity control.

B. Insurance coverage and types.

1. Fire, casualty, and theft.

2. How and where to obtain philatelic insurance.

1. Term life insurance for prospective investors to guarantee completion of their goals. Disability income insurance for prospective investor to guarantee continuity of any planned regular periodic investments.

Disposition of Philatelic Investment Properties.

The proper disposition of philatelic investments is just as important as the acquisition. The dealer has a responsibility to discuss the various methods and timing of such disposition with the advice and counsel of the client's accountants and attorney.

1. *Certificates - Currently it takes several months to get a certificate; therefore, it is suggested certificates be obtained as soon as possible. This could speed up the sale and payment of your material.
2. Timing factor relative to goals and market forces.

1. Keep up with the market so you will have an idea what the current values are.

2. The dealer who sold you the stamps can usually help you decide an advantageous time to sell.

   C. Methods of sale.

   1. Public auctions.

   2. Private treaty.

   3. Sale to dealer.

3. Sale to collector.

   D. Gift or gifts.

   1. To a relative.

   2. To a charity.

4. Tax consequences.

5. Possible Estate Disposal.

1. Will of prospective investor to include detailed provisions for disposition.

2. Testamentary trusts.

*An up-to-date list of where to obtain opinions of genuineness certificates will be gladly sent by the ASDA office upon request.