Is your jewelry an investment?

The author’s holdings: some “real,” some not; some useful, some useless.

Is jewelry an investment or just an asset?

What about your jewelry? Is it just for personal enjoyment? Or is it also a legacy?

It depends on what you bought, when and where you bought it, and why you bought it.

The beginning of the year is the best time to review your jewelry holdings to see how (or if) they fit in with your life today.

Have you reviewed your jewelry insurance coverage in the last five or ten years? For most people, this only happens at a time of significant personal change, such as when they move from one home to another. Or someone dies and their heirs end up with jewelry.

Failing to review your policy may leave some items without coverage or underinsured. Or even the opposite: many insurance companies apply an automatic escalator annually that may end up overinsuring some pieces.

On the other hand, shopping for jewelry insurance can be frustrating. Underwriting this particular risk is not an important source of revenue for insurers (it’s even more prone to fraudulent claims). Often, their knowledge of how their own coverage works may be limited.

Here’s a link to a Forbes article that describes some of the most important features to know about and questions to ask.

If you own something you never wear but only keep locked away, it doesn’t necessarily mean you shouldn’t insure it. Although it’s a rare occurrence, objects have been known to disappear from safes, including bank vaults. And banks and homes can burn down. Secure facilities don’t always protect their contents perfectly.

What if it’s unused and forgotten? You may keep a piece of jewelry for sentimental reasons even if you never wear it. There’s nothing wrong with that. But if the feelings have dissipated, it’s time to ask yourself if an item might have a new life in a family member’s hands, would do more good as a donation to charity, or be of more benefit if it were sold to use the proceeds in any way you see fit.

Certainly, those aren’t the only ways to make use of old unwanted jewelry. You can remove gemstones and remount them into pieces that will give you enjoyment every day for their newfound beauty and as a way to preserve family memories.

Many people ask me if a piece of jewelry they own but no longer wear or want is “worth” selling. They are really asking how much value it has in the estate jewelry market. (Also called the “used” or “second-hand” jewelry market.) In other words, has it turned out to be an investment?

The answer depends on a lot of things. Age alone (100 years for antique or “vintage” if more recent but identifiable with a particular period) is not enough to create value. Is the item beautiful? Is it a good example of its era? Are the materials fine? Was the maker or seller (Tiffany or Cartier, for example) famous? Is the item in good condition? Is it wearable and in style?

In other words, is your jewelry desirable?

I address these questions all the time with owners who aren’t sure what they want to do with their jewelry.

Jewelry is not like a factory or an apartment house, which produces a regular stream of income. Some of it, though, may grow in value, rather than depreciate. Like most cars, clothes, or furniture, most jewelry is not collectible. All of these items lose all or almost all of their original value.

At the very high end, few objects compare with jewelry. When its various quality elements are remarkable; if this item is bought at a reasonably favorable price for current market conditions; and if this remarkable item is held long enough for the market to value its various characteristics; then its value may go up — that is, it can appreciate.

For the few high net-worth individuals in the world who pursue jewelry this way, it may fairly be called an investment of passion. For the rest of us, jewelry at least has some basic, cashable value that is easily transferred to others, and so it is a potential legacy.

For all of us, it is an emotional asset, acquired at many of life’s most vivid moments. Afterward, it elevates our time on this earth and expresses who we are. The start of the year is a good time to think about what your jewelry means to you.