When you invest in gemstones, you’re not only investing in a beautiful piece of jewelry. You’re also investing in something that can appreciate significantly over time.
And while it may be tempting to buy an expensive ring or necklace just because it looks pretty, remember that the price tag is only part of what makes the investment worthwhile. Below are some of the top benefits of investing in gemstones and jewelry from financial PoV.
Asset and Wealth Protection
According to the Allianz Global Wealth Report 2022, financial assets are set to decline by over 2% in 2022, the first significant destruction of financial wealth since the Global Financial Crisis (GFC) in 2008. One of the benefits of investing in gems and jewelry is that they are tangible assets.
This means you can sell them in an emergency if you need to liquidate your holdings. Also, it’s not easy for someone to steal your jewelry because it’s small and easily hidden away, unlike money or other valuables, usually kept in a bank vault.
Finally, there is another reason why people choose to invest in gemstones: they offer protection against inflation. Unlike currencies that fluctuate with global market forces, gemstones have been considered good hedges against inflation for centuries because their intrinsic properties don’t change over time.
According to the U.S. Bureau of Labor Statistics, the yearly inflation rate in the US slowed down for the third month running to 8.2% in September 2022, the lowest in seven months. As a hedge against inflation, gemstones and jewelry can be excellent investments.
Gemstone prices are usually not affected by inflation because they are mainly composed of diamonds and other precious stones that have been mined since ancient times. These gems have a value determined by their rarity and beauty rather than by the movements of the stock market or other economic factors.
Jewelry is also an excellent investment to protect yourself against market volatility. Jewelry might lose some of its value during volatile periods in the stock market, but it is not as susceptible to sudden drops in price as other assets like stocks and bonds would be during such times.
Potential for Profit
Investing in gemstones and jewelry can be an attractive investment for high-net-worth individuals. The profit potential is certainly there. For example, if you purchase a ring for $10,000 today after checking out over 30 red diamond rings online, you could sell it later for more than $10,000.
In fact, with the right market conditions and buyer demand, your red diamond ring could sell for more than double what you paid for it.
As far as jewelry goes, should the market crash and your investment value plummet to zero? Unlike stocks or bonds, which are considered assets because they have intrinsic value, gems don’t have any underlying use except as an object of beauty. It means their value will always depend entirely on how much others will pay for them.
Diversification is an investment strategy designed to help you manage your risk. By investing in multiple investments, you reduce the impact of volatility on any one particular asset.
The Nasdaq has drastically declined by more than 20% year-to-date in 2022, while the S&P 500 has just hit that level. Investors are increasingly looking for alternatives due to this and the general bleak macro environment created by high inflation and rising interest rates.
When it comes to investing, diversification can help you reach your financial goals and manage risk. The most common way to diversify a portfolio is through asset allocation, that is, choosing how much money you want to invest in each asset class type. Another popular method is by buying individual securities within different industries or sectors.
Increase in Value
If you are looking at investing in something, you want to be sure that it will increase in value over time. The good news is that gemstones and jewelry do just that. The value of a gem is based on how rare it is and how much demand there is for it.
Quality is the second factor determining the value of gemstones and jewelry pieces. Even though many people may want your emerald necklace because they are attracted to its beauty (and other qualities), if your piece does not meet specific standards, then there won’t be any interest from buyers willing to pay what you’d like them to.
Investing in Gemstones and Jewellery Has Benefits When It Comes to Financial Portfolio Management
Investing in gemstones and jewelry is an excellent way to diversify your portfolio. The value of these assets tends to go up over time, which means they can be used as a hedge against inflation. Over long periods, this can reap significant benefits for your overall financial health.
In addition, investing in gems can help protect your assets from sudden losses caused by economic downturns or other factors outside your control. Plus, it allows you to diversify into something unrelated to the stock market. Economic fluctuations or other factors affecting financial markets worldwide will not affect your investment.
The above are some of the main benefits of investing in gemstones and jewelry from a financial point of view. There are many more benefits, which we have not discussed here. However, it’s important to note that you should weigh these potential benefits against the risks associated with investing in gemstones and jewelry, especially if you’re new to this type of investment.
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