Diamonds are generally not considered strong investments, since, like new cars, they typically lose value at the date of purchase.² That's because when you buy a diamond from a retailer, you're usually paying for more than the cost of the diamond itself. (The price of jewelry is usually marked up to cover the retailer’s expenses and to ensure a profit). And depending on the appeal and exclusivity of the retailer, the markup amount can be quite high.

Do lab-grown diamonds appreciate in value?

Buyers are increasingly becoming more concerned with sustainability and how precious gems and metals are sourced. This concern has led to the increased popularity of lab-grown diamonds, which are usually more cost-efficient than naturally occurring, mined diamonds. Unfortunately, just like natural diamonds, lab-grown diamonds start losing value at the date of purchase, so they tend to be weak investments.

Prioritize quality

Keep in mind that it's the high-end, fine jewelry you'll want for investments, since this is more likely to hold or increase in value over time. Pieces with imitation stones and gems won't hold up as well as luxury items.

Financial professionals also generally recommend investing in jewelry with a fineness stamp to indicate the purity of the materials. For example, an item that contains 85% pure gold will be labeled “850 fine.” Also consider investing in pieces signed by the manufacturer.

Types of jewelry that appreciate in value

When it comes to jewelry, there are countless end products, such as rings, watches, and bracelets. Generally, no one type of jewelry is more likely to appreciate in value than others. However, heirloom pieces that have been in your family for generations may hold significant value due to their age—especially if they were made by a notable brand or craftsman.

Watches that appreciate in value

Watches are one of the most collected types of jewelry. Because of this, certain watches may be in high demand at certain times, driving high resale prices. Brand recognition, heritage and exclusivity all play a role in the resale value of watches. Watches made by well-known high-end brands like Rolex and Patek Philippe are more likely to appreciate in value than lesser-known brands.

However, there can still be volatility in the secondary market with brands such as Rolex and Patek Philippe. We're currently seeing the secondary market soften from the highs we were seeing in demand from the pandemic.

What is my jewelry worth?

Each potential buyer will value your jewelry differently, especially if it has specialty cuts and designs. The goal for most jewelers is to purchase these items to resell or melt down to create new designs.

When you're ready to sell, help set yourself up for success by working with a reputable appraiser. You can also use an online site to calculate your item’s gold scrap value by providing the weight and purity of the metal. Keep in mind that the IRS (Internal Revenue Service) considers metals and gems to be collectibles, which means you will typically owe a 28% capital gain tax on your investment gold and jewelry.

The bottom line

Jewelry can be a good investment and a fun part of a diversified portfolio. Just keep in mind that unless you have a lot of high-quality pieces, or one or two very valuable items, it's not likely to bring in mind-blowing returns.

That doesn't mean it's not worth collecting, though. One thing about jewelry is that if it doesn't hold much resale value, you can always choose to wear it instead. That's one thing you'll never be able to do with stocks and bonds.