Pancake Analytics LLC

Investing

Investing in trading cards means buying cards with the intention of holding them long-term, hoping they will appreciate in value over time due to factors like player performance, rarity, and demand.

Example :

Purchasing a rookie card of a promising young athlete and holding it for several years, expecting it to rise in value as the player’s career progresses.

Investing can overlap with collecting, especially when a collector buys cards they also believe will appreciate in value.

Collecting

Collecting trading cards involves acquiring cards for personal enjoyment, historical interest, or completing sets, often without a primary focus on future resale value.

Example :

A collector might try to complete a full set of a particular series, such as all the cards from a specific year of a sports league or a particular Pokémon series.

Collecting can overlap with investing when the collector also considers the potential future value of the cards they collect.

Flipping

Flipping trading cards refers to the practice of buying cards with the intention of quickly reselling them for a profit. This often involves taking advantage of short-term trends or market inefficiencies.

Example :

Purchasing a card at a low price from an online auction and immediately reselling it at a higher price on another platform where it is in higher demand.

Flipping can overlap with investing when the timeframe for holding the cards is short, but the goal is still profit. It can also intersect with collecting if the flipper initially buys cards for their collection and later decides to sell them.

Analytics

Analytics can be supplementary to trading card investing when using data and statistical methods to evaluate the market, forecast trends, and make informed buying and selling decisions.

Example :

Analyzing past sales data, player performance statistics, and market trends to predict which cards will increase in value and when to buy or sell.

Analytics supports both investing and flipping by providing data-driven insights to inform decisions. Collectors might also use analytics to enhance their collections strategically.

Why use Acorns for this Pro Forma?

For a trading card collector, Acorns provides an easy and automated way to turn your passion for trading cards into a significant financial goal. By linking your eBay sales to Acorns, you can effortlessly invest the profits from your card sales into a diversified portfolio. This helps you take advantage of compound interest, steadily growing your investment over time without needing to manage it actively. Acorns simplifies the investment process, allowing you to focus on collecting and selling cards while ensuring your earnings work towards building a substantial future nest egg.

Why use eBay for this Pro Forma?

For a trading card collector, eBay is an ideal platform to turn your collection into consistent income. eBay provides a vast marketplace with millions of potential buyers, ensuring high visibility for your trading cards. It offers tools to track sales, manage inventory, and understand market trends, making it easier to sell cards at optimal prices. By leveraging eBay’s extensive reach and user-friendly features, you can efficiently monetize your collection, generating the profits needed to invest regularly into Acorns and work towards your $200,000 financial goal.

Assumption on a $30 Average Sold Price

In this pro forma, I assume an average sold price of $30 per trading card. This figure is based on current market trends and historical data indicating that many collectible cards fall within this price range. For trading card collectors, this average provides a realistic and attainable benchmark for sales, considering various factors such as card condition, rarity, and player popularity. Using a $30 average sold price helps ensure the projections are grounded in market realities, making the financial goals achievable through consistent sales performance.

Assumption on the $2,000 Monthly Investment

The pro forma assumes a monthly investment of $2,000 dedicated to acquiring inventory. This budget includes purchasing a mix of individual trading cards and sealed boxes or cases. Sealed boxes can offer the potential for higher returns as they may contain rare or valuable cards, while individual cards allow for more targeted acquisitions. By investing in both singles and sealed boxes, trading card collectors can diversify their inventory, increasing the likelihood of profitable sales and ensuring a steady supply of attractive items for eBay listings. This balanced approach maximizes opportunities to meet monthly sales targets and supports sustainable growth.

Assumption on the $8,000 Monthly Grading Cost

In this pro forma, I assume an $8,000 monthly cost allocated to grading trading cards. Grading cards through professional services like PSA, BGS, or SGC enhances their market value by providing a certified assessment of their condition and authenticity. For trading card collectors, this investment in grading can significantly increase the resale value of individual cards, making them more attractive to buyers on platforms like eBay.

Grading, however, takes time. Depending on the service and demand, it can take at least 3 months to upwards of a year to receive graded cards back. To maintain a steady flow of inventory for sale, it’s essential to have a rolling inventory system. This means continuously sending cards for grading while selling already graded cards. The $8,000 budget allows for a substantial number of cards to be graded each month, optimizing the inventory for higher sales prices and ensuring a consistent supply of graded cards ready for the market, thereby improving overall profitability.

Grading cards comes with a cost is it really needed?

Grading can introduce significant recurring costs, impacting the overall budget and profitability. To address this, I also will introduce a version of the pro forma that excludes grading costs. Without grading, cards may sell for lower prices, significantly increasing the total items sold monthly requirement to meet the investment goal.

In the version without grading :

No Monthly Grading Cost : Eliminates the 8K expense.

Increased Sales Volume : More cards need to be sold to achieve the same profit margin since ungraded cards typically sell for lower prices.

Higher Monthly Sales Requirement : The total number of items sold each month will need to increase substantially to compensate for the lower average sales price of ungraded cards.

How do I understand the average monthly growth?

When I refer to average monthly growth in the context of investments, I am discussing the average rate at which the value of an investment increases each month due to returns. For this pro forma, I assume an annual growth rate of 5%, which translates to an average monthly growth rate.

The monthly growth rate is derived from the annual growth rate. Given the annual growth rate is 5%, this means the investment grows by approximately 0.4167% each month.

The average monthly growth rate of 0.4167% might seem small, but due to the effect of compounding, it plays a crucial role in building significant wealth over a long period. This steady growth ensures that even modest monthly contributions, like $491.60, can accumulate to a substantial amount, like $200,000, given enough time and consistency in contributions.

Quick thoughts on the impact of monthly growth on investments and in this specific case. The power of monthly growth lies in compounding, where the investment earns returns on both the initial principal and the accumulated returns from previous periods. Each month, the investment grows slightly, and the next month’s growth builds on the new, higher balance.

Before consider tackling a similar approach, there will be challenges you need to consider.

The pro forma I’m going to show you is by no means meant to be taken as do this now, nor financial advice. The goal here is to illustrate what I feel it takes to actually “invest” in trading cards for the average individual, mostly likely the target audience of trading card investing content. I am making a huge assumption on the target audience, as in who the YouTube algorithm recommends this content to. I want to be clear I am not making a statement on who the individual content creator nor company of the individual content creator is targeting with their content.

Based on my own research and current data, the average personal saving rate in the U.S. is around 3.6% of disposable personal income, at the time of writing this article.

Source : https://www.bea.gov/data/income-saving/personal-saving-rate

While it is possible for some Americans to achieve this savings goal, it would require intentional financial management, possibly reducing other expenditures, and consistently prioritizing savings to meet the $492 monthly investment target.

There’s a couple of challenges specifically around financial feasibility.

Disposable Income : To comfortably save $492 per month, a household would need a significant portion of their income to remain after covering all expenses and taxes. For an individual making $50,000 annually, saving $492 monthly would require disciplined budgeting and prioritizing savings.

Savings Habits : The average American often struggles with saving enough for emergencies and retirement, indicating that setting aside $492 monthly could be difficult for many households without careful financial planning and adjustments to their spending habits​.

Consistency

Setting aside a specific amount each month ensures steady contributions to your investment, leveraging compound interest over time.

Simplicity

Managing a budget is straightforward compared to the complexities of buying, grading, and selling cards.

Hobby vs. Investment

Trading cards are primarily a hobby, with enjoyment and personal interest driving purchases. Relying on them for consistent profit introduces financial risk and unpredictability.

Market Volatility

Card values can fluctuate significantly based on trends and player performance, making it difficult to guarantee consistent profits.

Time and Effort

Selling cards involves considerable time and effort in managing inventory, listings, and transactions, which might not be feasible for everyone.