In times of economic crisis is saving money the popular thing to do. We keep, however, saving by putting money in our savings account, which is no longer viable. Because of the low interest rates, the already meagre profit is reduced to next to nothing. But what can you do with your financial surplus? Investing in diamonds? But how to start?
1. Savings buffer
Investing your money means you can potentially lose it. It is therefore important to consider which amount you can spare. How high can this figure be? This is different for everybody, making it difficult to set a general rule. How expensive is your lifestyle? Which expenses are you willing to give up when your investment is not paying off and which expenses are unavoidable? The things you cannot or will not concede will determine what your saving reserve will be. There will always be unexpected costs and thus a reserve of approximately 4 months wages is suitable.
2. Long term
When investing, it is essential to limit the risks as much as possible, while keeping maximum profitability. This is why long term investments are interesting. The longer your investment continues, the higher the chance of profit. Diamonds are an example of a long term investment. Investing in diamonds is only productive when you resell the diamond after a number of years. Then, your capital gain would be high. Keep in mind, however, that such investments (it being diamonds, shares or something else) cannot be sold at a favourable rate at any given time. When you have to resell your investment unexpectedly because, for example, you savings buffer is insufficient, the likelihood of financial loss is real.
3. Risk spreading
We have mentioned this a couple of times already, but it’s highly recommendable to choose for a diversified stock portfolio. This means that your investment in diamonds should be part of a broader investment plan, in which share, obligations and other alternatives are included as well. This way, you can lower the risk you are taking, because every investment product is affected by different factors. Thus, the worth of your investment will rise or fall at different times.
When you start out, information regarding investments may be hard to interpret and understand. It is, however, highly important to familiarise yourself with the materials and to research the terminology regarding investing in diamonds. You yourself have to be able to make a realistic assessment of the possible risks and gains. In any case, the experts at BAUNAT DIAMONDS are willing to offer you a helping hand.