Investing in postage stamps

Investing in postage stamps can give the opportunity of a good return for little outlay. To obtain the best results,however, it is best to follow a few basic,but important rules.
1) Always buy the best quality that you can afford. There are four main conditions in which stamps are traded or collected.
Unmounted mint. Perfect, as issued by the post office. This is the best quality available.Stamps of this quality should always be possible to sell and due to the scarcity of earlier issues,should appreciate in value more quickly than poorer examples.Please note that it is unrealistic to find stamps issued before 1887 in such quality unless at very high prices.
Mounted mint. These stamps have marks on gum where stamp hinge has been used to mount stamp in album. As long as there are are not too many marks on the gum these are still good quality specimens for higher priced stamps. In earlier years most collectors used stamp hinges to mount the stamps in their album. During the 1970's a mount was introduced that was gummed to the album page and the stamp was inserted into the mount leaving no mark on gum.Stamps issued after mid 1960's are usually of low value in this condition and would therefore not make a good investment.
Used. These stamps have been through the postal system and have postmarks on their front. Always try to find light postmarks that cover less than half of the stamp.
Used on cover. As suggested these stamps have been used but have not been removed from their envelope or cover.Most of the interest in these items are for pre 1920. The key to a good investment here is to have an interesting postmark or scarce stamp on cover eg in 1841 the usual postmark was black but green,blue,red and yellow colours exist. These are worth considerably more and will increase in value quicker than the standard black cancellation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

         A Victorian cover with mixed printing method stamps is both scarce and highly collectable.
2) Check overall condition
eg are there any perforations missing? Missing perforations,especially at corners,can devalue stamps considerably.
Are there any creases or tears on the stamp?
Is there any disolouration to the gum on mint stamps? Many stamps from "tropical" countries suffer from yellowing or,in severe cases,browning of the gum.Avoid such stamps.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    Heavy cancel                Heavy cancel/bad centering      Left stamp has green washed
3)Choose popular stamps.
Stamps that are wanted by most collectors will always be in demand. The number of these stamps are finite as they are no longer being printed. A small increase in demand from new collectors,or from collectors returning to the hobby can increase the price quickly. There are many collectors who stopped collecting in their teens who are now returning to the hobby and are looking to continue their schoolboy collections. The difference is that they have more money to spend on their hobby and are buying better quality and higher value stamps.This decreases the amount left available for other collectors pushing up demand and price. Popular stamps may be by country or topic.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            Redcoss,scouts and Europa stamps are popular topics.

4) Scarcity. Many people believe that a rare stamp must be a valuable stamp. What if there is no demand by collectors for such a stamp? Buy scarce stamps by all means but be sure there is a market for resale.
5)Special issues. One of the most profitable markets for the post office is first day covers. They are sold at a premium to the face value of the stamps and are postmarked with a special handstamp on the day of issue. These are sold in such large quantities that they will never be of value. First day covers before the mid 1960's can have a value but the cover must be illustrated,in good condition and preferably a typed,not handwritten,address.
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
6) Cheap stamps will always be cheap stamps! A packet of 100 stamps for £1 will never contain any stamps that will increase in value. These packets are for beginner collectors,not for investment.
So after these few rules the question is:what do I buy?
Firstly, you do not have to spend a fortune on a stamp to make money. Four years ago a £1 brown stamp issued in Great Britain in 1939 could be bought for £5 in unmounted mint condition. Today dealers are charging £16. This is an increase of over 300% in 4 years. Obviously not all stamps have increased at such a rate,but it shows what sort of returns can be made.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
Before you rush into buying any material do a bit of research first. Look at dealer's price lists,attend stamp fairs and obtain auction catalogues. Auction catalogues will give an idea of what is available in the market,what sells and at what price. You will also see how condition affects the price of stamps.
There is no guarantee of which stamps will give the best returns but look for good quality and popular stamps and you could get a good return.