Emotional Investment: how much does it value?

When we talk about gems and jewelery, we often ask ourselves if these can be considered as investments and to what extent it is worth investing in them.

From a strictly financial standpoint, the answer can only be ‘No’. Specifically, a financial investment embeds the concept of "store of value" (to recall the international literature) and this is not generally applicable to the gems or jewelry space: these goods miss out the three pivotal requirements to form a financial investment, i.e. equitable measurability of value, ready liquidity and objective representation of purchasing power.

Nonetheless, we must ask ourselves what “investment” means in broader terms.

In a world mainly focused only on accumulation of money, the common belief identifies an investment as an allocation of capital - for the purchase of a good or service – aimed at generating a financial return or at preserving the invested capital over a certain period of time. However, this is not the only definition, nor necessarily the most appropriate!

The term investment derives from the Latin “in vestis”, which means to give investiture, “to give to another the possession of estates, benefits or alike”; hence a more precise and broader definition would become: an allocation of capital - for the purchase of a good or service - that leads to a lasting benefit over the years. Benefits can be of an economic/financial nature, but not only that! It can be, in fact, an emotional effect, the achievement of a sense of personal fulfillment and inner harmony: here we’re talking about "Emotional Investments".

And this take us to a turning point vis-à-vis the initial question: YES, gems and jewels can be investments as long as we talk of emotional investments!

Collecting perfectly exemplifies the emotional purpose of an investment: a collector purchases for passion, for pure pleasure of researching, to satisfy his/her taste and his/her desire to experience emotions. A true collection does not come to life following a financial asset diversification strategy or to pursue speculative transactions. Only over time and by acquiring the appropriate technical skills - gemological and about the market - the collector will be able to convert his emotional investment also into a piece of wealth with an economic value attached.

Be careful! We are not talking about conventional purchases. These respond to a traditional  habit (the classic gift for recurrence!) or to follow a temporary fashion trend or - again - to show a status symbol: these are not investment, not even emotional, but they usually turn into pure costs to perform a role.

Last but not least, seeking beauty and experiencing emotions allow people to enrich their wealth of knowledge and therefore their culture, benefiting from it in every angle of their daily life. Therefore, let’s resume a purchasing experience for the purpose of getting excited in front of beautiful things, to satisfy our personal desire for emotions ... "let’s put money at the service of our emotions" and let’s not allow money to take over and "govern" our heart!