Diamonds hold their value, making them an attractive option for investors. Before you do invest, though, here are 8 things you should know.
01. There Are Several Ways to Invest
You may buy stock in a diamond-related business, like a mining company, or you can actually buy diamonds from merchants and jewellers.
02. The Average Rate of Return on Diamonds is the Rate of Inflation
There may, however, be instances when the rate of return grows faster, but this is usually due to the diamonds history, for example is a famous person owned it or there were changes in mining and the stone becomes less available and therefore more valuable.
03. Diamonds Are Not Liquid
This means you should determine ways to come up with cash while you look for a buyer. You can’t simply walk into a diamond buyer’s store and get the going rate for the stone like you can with gold. Rather, the diamond’s value is determined by an array of factors, such as its quality and how much the buyer is willing to spend. Consult Diamond Brokers Queensland to learn more.
04. Money Is Made on the Buy Side of the Investment
Diamonds only increase around the value of inflation, which means it can be challenging to get a return that is worth your risk. So, you need to try and buy diamonds below retail by finding a primary wholesaler or even a secondary wholesaler.
05. You’ll Probably Need Professional Help
You need to know what you are looking for before you invest. That can be daunting if you are inexperienced. Are you able to recognize a fake diamond? Do you know the difference in quality?
06. Fraudsters Exist
In such a specialized and valuable industry, there is room for fraud. If a seller comes across as too pushy, go elsewhere. Listen out for terms that relate to the quality of the stone and not a broad description.
07. Selling Diamonds Can Be as Hard as Buying Them
When you want to sell your gems, keep in mind that you won’t get the retail prices unless you actually own a store. So, you will land up selling to other buyers, stores, or auction houses, and you will need to find the buyer and handle the logistics and negotiations.
08. The Tax Man Will Want His Cut
Each time you make a profit, capital gains tax may apply, so be sure to track your expenses and even hire an accountant.
While investing in diamonds seems like a fantastic way to diversify your portfolio, it is full of potholes that could trip you up if you are inexperienced. So, do your research to understand more about diamonds and acquire a great deal of liquidity, patients, and the determination to do the legwork both for selling and buying. Investing in diamonds seems more like running a business than actually investing in a financial portfolio, so you need to be prepared to do the work!