Banknotes as investment

I was looking at the Dix Noonan Webb ad on the back of the most recent IBNS
Journal, admiring the two nice notes and thinking about the high prices they
fetched at auction.

One is a South African £1 note from 1891 that sold in 2004 for £2,760.

The other is an Irish £10 note from 1931 that sold in 2005 for £1,208.

At first blush, those seem like very nice returns, and I'd love to have
either note in my collection. But then I got to thinking, what is the real
rate of return for those notes? The answer is surprising.

According to this return rate calculator

http://www.moneychimp.com/calculator...calculator.htm

the first note enjoyed a compound annual growth rate of 7.26% and the second
note had an annual grown rate of 6.69%. Not nearly as impressive as the
large sums realized at auction would have you believe.

Just goes to show you the power of compounding interest!

That's a very useful link as I have a collection of UK banknote auction
catalogues including one that goes back to 1977, and I also have a lot of
dealer's list, I've often wondered if the returns on some notes were as good
as they look at first glance.

For example a note bought 20 years ago for £100 that's now worth £500 is a
return of 8.38% using the link, not as good as it first looks.

If the notes are sold at auction then once the seller's commission comes off
the returns are even worse.

All we need now is an inflation calculation link to see if £500 is a lot
more now than £100 was 20 years ago. Billy

"Owen W. Linzmayer" wrote in message
...
I was looking at the Dix Noonan Webb ad on the back of the most recent IBNS
Journal, admiring the two nice notes and thinking about the high prices
they
fetched at auction.

One is a South African £1 note from 1891 that sold in 2004 for £2,760.

The other is an Irish £10 note from 1931 that sold in 2005 for £1,208.

At first blush, those seem like very nice returns, and I'd love to have
either note in my collection. But then I got to thinking, what is the real
rate of return for those notes? The answer is surprising.

According to this return rate calculator

http://www.moneychimp.com/calculator...calculator.htm

the first note enjoyed a compound annual growth rate of 7.26% and the
second
note had an annual grown rate of 6.69%. Not nearly as impressive as the
large sums realized at auction would have you believe.

Just goes to show you the power of compounding interest!

Here's one for US dollars:

http://www.westegg.com/inflation/

There are some good links at the bottom of that page, too.


On 1/3/07 3:18 AM, in article ,
"note.boy" wrote:

That's a very useful link as I have a collection of UK banknote auction
catalogues including one that goes back to 1977, and I also have a lot of
dealer's list, I've often wondered if the returns on some notes were as good
as they look at first glance.

For example a note bought 20 years ago for £100 that's now worth £500 is a
return of 8.38% using the link, not as good as it first looks.

If the notes are sold at auction then once the seller's commission comes off
the returns are even worse.

All we need now is an inflation calculation link to see if £500 is a lot
more now than £100 was 20 years ago. Billy

"Owen W. Linzmayer" wrote in message
...
I was looking at the Dix Noonan Webb ad on the back of the most recent IBNS
Journal, admiring the two nice notes and thinking about the high prices
they
fetched at auction.

One is a South African £1 note from 1891 that sold in 2004 for £2,760.

The other is an Irish £10 note from 1931 that sold in 2005 for £1,208.

At first blush, those seem like very nice returns, and I'd love to have
either note in my collection. But then I got to thinking, what is the real
rate of return for those notes? The answer is surprising.

According to this return rate calculator

http://www.moneychimp.com/calculator...calculator.htm

the first note enjoyed a compound annual growth rate of 7.26% and the
second
note had an annual grown rate of 6.69%. Not nearly as impressive as the
large sums realized at auction would have you believe.

Just goes to show you the power of compounding interest!

Thanks for that. Billy

"Owen W. Linzmayer" wrote in message
...
Here's one for US dollars:

http://www.westegg.com/inflation/

There are some good links at the bottom of that page, too.


On 1/3/07 3:18 AM, in article ,
"note.boy" wrote:

That's a very useful link as I have a collection of UK banknote auction
catalogues including one that goes back to 1977, and I also have a lot of
dealer's list, I've often wondered if the returns on some notes were as
good
as they look at first glance.

For example a note bought 20 years ago for £100 that's now worth £500 is
a
return of 8.38% using the link, not as good as it first looks.

If the notes are sold at auction then once the seller's commission comes
off
the returns are even worse.

All we need now is an inflation calculation link to see if £500 is a lot
more now than £100 was 20 years ago. Billy

"Owen W. Linzmayer" wrote in message
...
I was looking at the Dix Noonan Webb ad on the back of the most recent
IBNS
Journal, admiring the two nice notes and thinking about the high prices
they
fetched at auction.

One is a South African £1 note from 1891 that sold in 2004 for £2,760.

The other is an Irish £10 note from 1931 that sold in 2005 for £1,208.

At first blush, those seem like very nice returns, and I'd love to have
either note in my collection. But then I got to thinking, what is the
real
rate of return for those notes? The answer is surprising.

According to this return rate calculator

http://www.moneychimp.com/calculator...calculator.htm

the first note enjoyed a compound annual growth rate of 7.26% and the
second
note had an annual grown rate of 6.69%. Not nearly as impressive as the
large sums realized at auction would have you believe.

Just goes to show you the power of compounding interest!