“I invest in diamonds”

Do you hear this often? Chances are, you don’t. Diamonds – with all of the attached symbolism and ornamental roles in royal families and yes, unsolved mysteries – have intrigued us for ages. Like it or not, diamonds are perceived as valuable.

Some people say diamonds are a waste of money. They say that the price tag is not representative of its actual value. To be fair, there is some truth in that statement. The resale value of diamond jewellery is usually lower than the amount paid for it. Weissman, an expert in the diamond industry said that ‘most people would be lucky to get half of what they paid if they tried to sell a ring the day after they bought it’.

Still, you and I know that demand for diamond is not going away anytime soon. Diamond jewellery is still one of the most popular types of jewellery, bought to celebrate milestones in life (the most obvious is, of course, for engagements). So what can a financially savvy, diamond-loving girl do to take advantage of this situation?

How Diamonds Can Be A (Financially Savvy) Girl’s Best Friend

Invest in Diamond Companies

So if diamond jewellery are a bad deal, and make poor investments due to its poor resale value, why not take a step back and invest in diamond companies instead?

Here’s a well-kept secret: There are 6 key retail sectors in the Singapore Exchange (SGX), and Jewellery & Watches is one of it. As of end 2015, there are 5 jewellery and watches companies listed in SGX under this sub-sector. Effectively, you can take advantage of the diamond (and jewellery) demand by purchasing stocks in these companies. This is how you can invest in diamonds in a safer and more financially savvy way.

What jewellery companies are available in SGX?

Out of the 5 companies listed under Jewellery and Watches sub-sector, 3 of them are major groups with strong jewellery focus. They operate tens of retail outlets for not just Singaporeans, but also for worldwide consumers all around the globe. These groups are:

Aspial Corporation. Operates Lee Hwa Jewellery, Aspial, Goldheart Jewellery and Citigems brands. Also a residential property developer and delves in the financial services business. To find out more information before you start investing in this company, check out its financial information and annual report here.

Soo Kee Group. Has 60 retail outlets in Singapore and Malaysia, with brands including Soo Kee Jewellery, SK Jewellery and Love & Co. To find out more information before you start investing in this company, check out its financial information and annual report, available here.

TLV Holdings. Has 20 retail outlets including Taka Jewellery and Lovis Diamonds brands. Participates in international exhibitions and trade fairs, and sells jewellery in the US, Europe, the Middle East, East Asia and Southeast Asia. To find out more information before you start investing in this company, check out its corporate information and summary of financial information, available here.

Which one should you pick? Well, we believe in the powerful drive of consumer demand. You probably know the answer, but here are some questions that may help guide you:

  • Which shops do you frequent?
  • Which shops do your partner, friends and family members frequent?
  • Which shops do you believe have the potential to grow for years to come?
  • Which income bracket has disposable income and appetite for luxury products such as diamond jewellery?

If you are new to the stock market, learn the basics with this video created by SGX.

Advantages and Disadvantages of Buying Stocks Instead of Buying Actual Jewellery

Let’s get the disadvantage out of the way first. Unfortunately, if you own stocks instead of baubles, there is no way you can wear them! Unless, of course, if you buy the jewellery for yourself, or receive it as a gift. Also, remember the cartoons where treasure chests are filled with shiny, sparkly jewellery? Yeah, forget about it, no more treasure chest fantasies for you, sorry.

But on the upside, investing in jewellery stocks offers a tonne of advantages.

Safer. Holding stocks is much safer than holding valuable physical items. Singapore is fairly safe, but robberies and theft are not uncommon. Stolen jewellery can be easily made into new ones, so the chances of recovering stolen jewellery are fairly slim.

Higher liquidity. Stocks that are traded under SGX are much easier to sell than used jewellery, which is usually re-sold at pawn shops.

Higher growth potential. If the company(ies) you picked did well, the stock market will reflect that – generating better annual returns for you.

Lower loss potential. Even if the company(ies) did not do well, it is unlikely that your stock value will be worse than the diamond jewellery’s resell value (lucky to get half you paid for, remember?).

Lower entry barrier. Jewellery can be expensive. Good-quality diamonds in particular – especially the ones that satisfy the stringent ‘4Cs’ standard – can easily cost thousands of dollars. In contrast, you can start holding jewellery company stocks with just hundreds to begin with.

How Diamonds Can Be A (Financially Savvy) Girl’s Best Friend

Conclusion

Investing is an important aspect of personal finance, and the key to a successful financial life and a secure retirement. In this article, we explained about how women can invest in diamonds and in the jewellery sector within Singapore. Jewellery is something that many women enjoy. The market research process (including window-shopping) can be a very satisfying process to boot.

The jewellery market is a unique market disproportionately geared towards women. We receive it as gifts from loved ones, but we also buy them by the droves. It’s not uncommon for women to buy themselves a pair of basic diamond studs or a gorgeous minimalist bangle to add to her collection. We say, if you’re already spending your money in it, might as well learn how to invest in it as well!

This article was written in collaboration with SGX. To stay up to date with the latest news on Singapore stocks, you can like the SGX My Gateway Facebook Page.

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).