Looking for a new investment? Try jewelry

ABS-CBN News

Posted at Nov 04 2013 12:54 PM | Updated as of Nov 05 2013 08:58 PM

MANILA, Philippines - Jewelry as your investment? Its glitter, portability, and tangibility have made it an easy choice among those looking for investment vehicles for many years now.

Women, in particular, are attracted to the thought that a fashion accessory or a family heirloom can be an investment piece as well. The surge in gold prices in recent years has also led many to consider investments in gold jewelry.

Despite the wide acceptance of jewelry as a form of investment—bolstered by traditions where people use jewelry as a currency or wedding dowry—financial advisors urge caution in investing in jewelry. In fact, jewelry specialists advise people not to buy jewelry because they are investment pieces, but because they like these in the first place.

While jewelry is regarded as a safe store of value, experts point out that one needs a long investment horizon when dealing in valuable pieces of jewelry. Unlike other investment vehicles with quicker turnaround times, one cannot expect to make a fortune quickly by buying and selling jewelry.

The price of jewelry is also affected by a number of factors such as the price of gemstones and commodities, market preferences, quality and workmanship, among others.

“Buying important jewelry is not like investing in shares in the stock market. Jewelry and gemstones inspire emotions and are usually associated with special moments and events in people lives. Acquiring important jewelry, under professional guidance, allows the buyer to enjoy the object of desire while keeping an eye on investing, but it is definitely not a short term investment vehicle,” says Karen Cua-Lerma, president of Salcedo Auctions, an auction house that specializes in the sale of fine art, jewelry, decorative arts and collectible accessories by local and international artists and artisans.

Most luxury consumer products such as cars, gadgets and personal accessories, including commercialized jewelry pieces, drop in value the moment one walks out of the shop with them. On the other hand, important diamonds and gemstones keep their value. Not only are they durable, they are also one of the most concentrated form value known to man in terms of physical size, she adds.

However, not all types of jewelry increase in value at the same rate. While a perfect diamond can appreciate in value, a clunky, uninspired piece might not. Therefore, it is necessary to carefully study the factors that will determine whether your jewelry will keep its value or turn out to be a mere expensive adornment.

If you want to invest in jewelry, remember that it should be just one part of your financial portfolio, which should ideally be a balanced mix of long-term and short-term investments vehicles chosen to meet your security and wealth preservation goals. Investing in jewelry may be a diversification strategy to complement your investments in traditional vehicles that are more liquid and have a shorter investment horizon. However, it should not be your only investment vehicle.

Choosing the right pieces of jewelry to invest in is key. The source of the jewelry is critical. For those who would like to invest in jewelry, it is important to buy from a professional and trustworthy source. “ There are many sellers of jewelry but only a selection are knowledgeable and will offer you good value for money,” says Ms. Lerma.

Some things to remember before you start shopping:

To ensure the authenticity of diamonds and other gemstones you might purchase, request for a certificate from an internationally recognized gemological institute or laboratory.

Look at the workmanship and the quality of the gemstones, as these have a definite effect on the piece’s appreciation potential

Another element that may add to the value of jewelry include the name or the designer behind it. Vintage and period pieces of good quality may also fetch good prices.

Pieces by contemporary artists may have the potential to appreciate in value. If you find someone you really like, start to buy his or her work early on in the designer’s career.

Significant stones – for example, a diamond more than five carats in size – also have the potential to increase dramatically in value.

For guidance on the pricing of jewelry, approach reputable sources who can determine the approximate value of a jewelry piece based on its quality and rarity.

Similarly, if you are selling some pieces you might have inherited, and you need a buyer, you need a trusted source for buyers. Do your homework and contact reputable jewelers as well as auction houses to help you make an informed decision.

---

Grow Your Money is an editorial partnership between ABS-CBNnews.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.

Visit www.citibank.com.ph for more information.