Ask someone from the last generation this question and you will see them frown. How can you blame them? For several time, we have considered yellow golds of the highest purity, to be the best option we can invest. Jewelry encrusted with stones, such as diamond rings, gemstone earrings, etc., are usually made from gold of a lower karat, such as 18 karat or 14 karat gold.
Naturally, this never caught the attention of savvy investors. On the other hand, they found it unwise to put their money in anything other than gold. But people have changed; as well as your investment models.
Planning to turn precious jewelry into an investment option? If so, you can build diamonds into your investment portfolio. According to industry players, diamonds offer good returns. More importantly, they have seen a steady appreciation in prices in recent years. However, like other forms of investing, they have their advantages and disadvantages.
As an investor, you need to know them to get the most out of your investments. Here you will find everything you need to know about diamond jewelry before investing in it.
The benefits of buying diamond jewelry as an investment
In recent years, the use of diamond jewelry as an investment tool has grown rapidly. Several factors make it a good investment option over gold.
Size: The first and most obvious advantage it has over gold is its size. Unlike gold bars, diamonds don’t take up much space. These gemstones have been used for a long time as a great way to transfer money. Diamond jewelry, no matter how small, costs double or triple compared to gold jewelry of the same size. This means that diamond decorations, whether it’s diamond bracelets or necklaces, are good investment options.
Storage capacity – Small size means large storage capacity. In order to keep a diamond worth hundreds and thousands of currencies in a small safe. Plus, diamond jewelry is an investment that can be seen, held, and worn. As a result, many people find it a safer bet than stocks and other digital investments.
Durability: The durability of diamonds is another advantage that has been given to them naturally. It is the hardest thing on planet Earth. You can make sure that nothing will happen to you. You don’t have to worry about the wear and tear of diamond jewelry as long as you take good care of it. This means that you can use your investment and enjoy it for as long as you want.
And if you are worried about losing it, you can also insure it. Diamonds are also resistant to inflation, just like other physical commodities, such as gold, silver, and real estate. However, unlike other physical products, diamond jewelry is a more mobile and lasting investment. Apart from the physical and psychological aspects of diamond jewelry as an investment, it also has financial benefits.
What are the risks and disadvantages of investing in diamond jewelry?
All the advantages aside, there are also disadvantages and risks to having diamond jewelry as an investment.
It lacks price for transparency: The first thing to remember. While commodities like gold have a popular price index that you can follow, none of that exists for diamonds. The price of diamonds depends only on the market based on supply and demand.
Lack of marketability: The second risk associated with buying diamonds as an investment is lack of marketability. Buying diamond jewelry is much easier than selling it. Some companies buy them, but the price they are willing to pay will be less than the price you bought them for.
Long Term Benefits – guess what is the biggest proof of all the downsides of investing in diamond jewelry? You have to be patient to read its benefits. Diamond embellishments are not a great tool if you are looking for quick returns or a short term investment. If you are prepared to wait for returns, you can build them into your long-term investment portfolio.
Guidelines to consider before investing in diamonds
It goes without saying that diamond jewelry is a good investment option. However, it should only represent a small portion of your investment portfolio. This is a great option to include in your category of alternative investments. You can enjoy your benefits as long as you know the basics of investing in them.
Learn the Basics – The first thing you need to do is understand the Four Cs, namely Clarity, Cut, Carat, and Color. The smaller the imperfection of a diamond, the higher its degree of clarity. It is the cut of a diamond that controls its brilliance, which means that the better the cut, the more brilliance there is. Carat is the measure of the weight of a diamond. The last C is the color of the diamond, or rather the absence of it. White or colorless diamonds have the highest value.
Set a budget – Once you understand the basics of diamonds, set a budget that you want to invest. Remember, diamond jewelry should not be your only investment in your wallet, but be part of it. It is true that initially you will need a much larger amount. But make sure you don’t go over budget when deciding to invest in diamond jewelry.
Go shopping: Once you’ve set your budget, shop at different online retailers. The next step is to invest only in certified diamonds. GIA is a gemological laboratory that has strict certification standards. This makes GIA certified diamonds the most preferred gemstone. Having a certified diamond is important both when buying and selling.
Common mistakes to avoid when investing in diamond jewelry
The first mistake most investors make is to wait too long in the short term. Always remember that diamond jewelry is not a get-rich-quick scheme. Diamonds gain in value over time and do not offer short term results. In fact, like other physical products, the price of diamonds fluctuates from time to time.
The second mistake people often make is paying too much. The first rule of thumb for investing is to buy low and sell high. This also applies to diamonds. However, buying at a low price is rarely an option when it comes to diamonds. Does your due diligence to avoid paying too much?
The third mistake to avoid is buying the wrong diamond. This is where certification plays an important role. Whether you buy an engagement ring or a pendant, make sure you only get a certified diamond. There are plenty of opportunities in investment diamond jewelry as long as you do your homework.
These are great investment options as long as you don’t buy them for immediate resale. They diversify your investment portfolio and give you access to some of the best jewelry in the jewelry world. Consider the pros, cons, and guidelines for staying ahead of the game.
Read also: Diamonds: Varieties and Color Scale