Naturally Colored Diamond Blog

Alternative Investments - Investing Outside the Box

Posted by Tony Cathaway on 11/9/15 9:26 AM

Alternative investments are for investors thinking outside the box and are worlds apart from stocks, bonds and cash. Typically, alternative investments have been held by institutions or very wealthy individuals. Their complex nature, limited regulation and lack of liquidity tend to keep alternative investments in the realm of the wealthy or in the hands of institutions with the liquidity and experience to handle these high-stake outlays. While some alternative investments should be handled by professionals such as hedge funds, REITs, or derivatives, there are others that an informed investor may find pleasure in handling on their own. alternative_investments

A Choice in Alternative Investments

Real assets are tangible, physical items that have value. These investments can include real estate, gold, art, wine, jewelry and gemstones, and even rare baseball cards. Investors can, with some knowledge, invest and acquire directly from the market at large. Diamonds, especially pink diamonds, are making the grade as an asset class all their own, with some very high worth individuals even tucking away their children’s inheritance in the rare pink stones.

Fancy colored diamonds have realized substantial returns since the economic downturn of 2008. This meteoric rise has not been lost on those seeking to maximize their investment returns. These returns have had a great appeal in pulling more investors toward these alternative investments, which in turn has served to increase demand.

Another appeal of investing in diamonds is the ability to purchase the loose stones from a reputable appraiser or broker. Working with reputable resources is a critical step in planning your investment strategy.

For those that do not want to deal with individual stones, there are investment funds managed by professionals that invest client monies in rare colored diamonds. These stones are the property of a group of investors as a whole, rather than belonging to just one person.

A Fortune in Your Pocket

Diamonds as investments have advantages that more than make up for their lack of liquidity.

  • Diamonds are portable wealth. You can wear one on your finger, tuck it in a pocket and carry it with you wherever you go – just remember to insure it first!
  • Diamonds are the hardest substance on earth. They can’t be torn, broken or wear out. Instead, they must instead be cut by a skilled professional.
  • Diamonds are beautiful. When was the last time you tried to wear 100 shares of Google?
  • Diamond ownership is psychologically satisfying. You own it, you can hold it, touch it, see it. With so many intangible investments that have gone so horribly wrong such as the derivatives market, holding your investments in your hands, and being able to see them is immensely reassuring.

Rare and Getting Rarer

While there are very active and productive mines operating currently, other mines are being taken out of production. Because the resources and investment required to open and operate a diamond mine are so considerable, very few will be coming online in the next 10 years at current levels of technology. India, China and even Canada are looking to develop their own resources for diamonds to satisfy growing demand worldwide.

Opening up and diversifying your investments with colored diamonds could potentially yield long-term results that many investors seek. While prices for your colored diamond may not shoot up 30 percent in one year, colored diamonds have risen steadily in price per carat year after year.

For more reading on alternative investments, click the link below: 

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Topics: Alternative Investments

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