As an investor looking to grow your net worth, it’s a smart idea to diversify your portfolio. A mix of investment options helps you mitigate risk and reward, not to mention reduce exposure to any one type of asset. You can invest in real estate, stocks or even in index funds.
One asset that is growing in its popularity is rare, precious jewelry. Over the course of the last 10 years, jewelry assets have outperformed New York real estate and US equities. Within the jewelry assets class, some types of jewelry have even outperformed gold.
If you plan to invest in jewelry assets, it’s a good idea to take a long-term approach and be in it for the long haul. Treat it as you would if you were investing in art; its value appreciates with time.
1. Keep An Eye On Jewelry Asset News
Building your knowledge around the jewelry asset market is a valuable investment of time. You can subscribe to various investor platforms, financial online dailies, and other credible sources.
Staying abreast will help you build an understanding of why some jewelry assets are expected to perform better than others.
For example, the value of red spinels from Tanzania has shot up in the last five years. While they are used in designer collections worn by several celebrities, another reason is that red spinel is now rarer to find.
Other types of jewelry assets that have been appreciated in their value include rare vintage rings, antique Cartier clips, natural saltwater pearls, art deco engagement rings, Kashmir Sapphires, unheated Burma rubies, gold and platinum, and Type II diamonds.
The appreciation of jewelry assets in the Asian markets has also impacted its value in the US markets. For instance, the CTF Pink Star, pink diamond, became the most expensive gemstone in the world in 2017 when it sold at a Hong Kong auction for $71.2 m.
Of course, not all jewelry is out of reach for jewelry investors on a budget. You can explore options based on the size of your investment portfolio.
2. Do Your Research Before Investing In Jewelry
Investing in jewelry is not a risk-free journey. Certain hazards come with the territory, and a degree of savviness will help you make the best choices.
For example, if you do not do your homework, then you could end up paying a premium for a jewelry asset that is much lower in its value.
Certain guidelines can help mitigate the risks. For example, diamonds that weigh more than 1 carat have a much higher resale value. Secondly, diamonds with a classic cut outperform those, which are cut to follow a designer trend.
It is also equally critical to ensure that every piece you purchase comes with the necessary documentation and certifications. This is needed for the purposes of authentication at the time of buying it, especially if you are a novice to this asset class.
However, documentation is even more important at the time you plan to put it on the market in order to sell it.
3. Don’t Be Lured By The Aesthetics
Rare jewelry also has a cosmetic and aesthetic appeal, unlike other investment instruments. Hence, many novice investors tend to get mesmerized by the sheer beauty of a jewel.
Alternatively, they may be caught up in emotion when deciding to invest in a piece of jewelry. Many of these pieces often tend to be accompanied by sentimental stories, as well as flashy newspaper coverage that drives up prices.
Thus, it’s important to understand the authenticity of such narratives before making a purchase. A good, smart investor will always keep a good head on their shoulders and not be lured by the sheer beauty of a piece.
One thumb rule that can serve you well is to never make any impulse purchases, no matter how persuasive the seller can be. Ensure that the piece comes from a reputable dealer and that all the paperwork is in order.
Those investors who are in the very nascent stages of their investment journeys can also read this Acorns investment review to expand their knowledge on investment and make a steady start.
4. Make Sure Your Jewelry Asset Is Insured
Safety is a major – and valid – concern when it comes to owning any type of valuable jewelry. Theft and damage are potential hazards.
However, when it comes to insuring your jewelry asset collection, getting each piece insured is even more important. This is a standardized and advisable practice.
Most insurance companies offer policies to protect jewelry against theft and damage. However, since these jewelry pieces are investment assets, it’s a good idea to explore the market for insurance companies that specialize in this area.
This is because the value of jewelry assets has the potential to appreciate over time, and this aspect must be considered in the policy. You can also lease a safety deposit box as your jewelry asset collection keeps growing to ensure its safety.
5. Get The Right Financial Advice
The stakes when investing in jewelry assets are much higher due to the sheer value of the asset. Hence, it is advisable to seek guidance from a professional financial services company.
When choosing a professional financial services company, make sure that the reviews are good. You may start with a United Consumer Financial Services review to ensure the company has a stellar reputation. Word of mouth is one way to determine credibility.
Another aspect to explore is whether the company has expertise in other investment areas, too. Ideally, a portfolio must be a diverse one, and a company that only has one specialty can be limiting in its ability to help you grow your portfolio.
Hence, going in for a service that has a 360-degree view of the markets is the best bet.
The Takeaway
It’s never too early or too late to consider investing in rare, precious jewelry as an asset.
The key to success in jewelry investment is to understand how this asset class is differentiated from an instrument like, say, stocks or art. This will help you approach this new journey with the right mindset and build your jewelry asset collection accordingly!