Is jewelry is a good investment? I don't think so.

'I buy jewelry because it’s a good investment, it appreciates in value.'

Today I’m going to irritate people who buy jewelry with this reason. For the average person, jewelry is not an investment.

Jewelry is almost always 'mispriced'. What does this mean? When you want to buy jewelry for example for a wedding, from a jewelry store, or jeweler, you almost always buy it more expensive than what it’s worth. Why? Because of the jeweler's 'patong' and design.

What happens when you want to sell it? As a general rule, people don't sell their jewelry unless they need money fast. Why? Because of the emotional attachment people have with their jewelry. Either it’s a family heirloom or gift or you love the design. You just can't sell it! So when you do need to sell it or pawn it, it is for a price that is heavily discounted.

So unless you own a pawnshop or a jewelry store, jewelry is really one of the worst 'investments' you can buy.

Jewelry is also very hard to value. Have you ever tried to buy a diamond ring and try to decipher what quality the diamond is? VS, VVS? Do you know the corresponding value? What about the size? How many karats? Most people don't.

How do you know if the gold jewelry you bought is really 24k? What about the proliferation of fake diamonds?

What's more, there is no official market for buying and selling jewelry like the stockmarket for stocks hence the huge price differences.

Finally, I'm a great believer that if an asset doesn't generate income it's not an asset. And as far as I know you can't generate income from jewelry. Stocks generate dividends, bonds generate interest, property generates rent. Maybe you can rent your jewelry out! So what happens? The jewelry sits in your drawer or safe, not doing anything productive like other assets.

Don't get me wrong. I love a nice watch (which I got from my in-laws) and my wife has a small jewelry collection but it’s not part of our asset list and it’s not something we depend on for our retirement.

For more information on how I can help you email me on hoover@barongroup.com.ph.