Who would have thought that that giant jar of pennies may actually have something in it that is worth much more than one cent. Remember that coin collection that was given to you by your grandfather who simply said, “Hold on to these. They will be worth something some day.” In part two of the elementary-finance.com alternative investing series, we’re going to look at coin collecting for dummies.

We know that stocks, bonds, and other paper based investments are the main vehicle for acquiring wealth through investing but we are looking to answer the question, can we make money with other types of investments.

There are many types of coins that can be found. There are those extremely old, rare coins that have more historical value. That 1909-s Lincoln penny has historical value and much like the baseball cards we looked at yesterday, they can be collected, bought, sold, and traded.

Like baseball cards, it takes a specialized knowledge of rare coins to know their value and an inroad to the coin collecting community to buy and sell your coins at a price that is fair and doesn’t result in you getting ripped off simply because your knowledge of the industry is lower than others.

If you have no prior knowledge of coins and are looking to these simply as an investment, there are other investments that will be more lucrative with less of a learning curve. Many people agree that rare coin collecting is best left to the hobbyist instead of the investor.

Continuing our coin collecting for dummies article, we’ll look at the other type of coin collecting. It is based on a precious metal. Gold coins, silver coins, or others that are purchased more for what they are made of instead of historical value work much better as an investment.

The simplest way to invest in gold coins is to look at the bullion coins. These are normally sold in denominations of troy ounces and are priced a little higher than the market price of gold due to the manufacturing costs of making the coin.

Buying bullion coins is an easy way to have an investment in gold that is manageable rather than buying gold bars. Coins can be stored at the home where the larger bars are often stored in a safe deposit box.

There are also gold and silver coins with historical significance but these types of investments get even more complicated.

So what is the bottom line in our coin collecting for dummies series? If you are looking for those rare Lincoln coins, remain a hobbyist. If you are going to buy gold and silver coins, that can make for a very lucrative investment.