We have heard a common saying, “Diamonds are a girl’s best friend.” This has given birth to the psychology that every diamond is precious. People have been considering them precious, so much so that many even invest in them thinking that their price will increase over time, not to mention that they are expensive too.
But what if we tell you that you can purchase diamonds at 70-80% cheaper price? You can buy lab-grown diamonds and elevate your jewellery collection without spending heftily.
But you will say that they are not good options for investment. Guess what, neither are diamonds unless you buy the rarest of the rare and not studded in any metal. Did you know that India is the second-largest producer of lab-grown diamonds in the world? When Prime Minister Narendra Modi recently visited the US, he gifted a 7.5-carat eco-friendly lab-grown diamond to President Joe Biden and First Lady Jill Biden.
There might be some advantages to it. Therefore, for our HZ Women of the Month session, we connect with Himani Chowdhary, a finance influencer on Instagram, who is making investment jargon easy to understand. She helped us understand why it is a good idea to buy lab-grown diamonds over mined ones.
Lab-Grown Diamonds Are Eco-Friendly And Cheap
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Speaking to us about lab-grown diamonds, Chowdhary explained that people assumed that since diamonds are made in a lab, they are synthetic compared to the mined ones. However, they forget that the process of preparation remains the same, only one kind takes years to form, and the other is prepared in the lab by creating natural conditions.
She also added that Indians lack awareness about it. She said that most people in India do not buy diamonds for investment, they buy to enter the elite club. However, a point to be noted here is that lab-grown diamonds are eco-friendly, and they can help us eradicate the poor, illegal, and unhealthy work conditions in which men, women, and kids are involved to find the sparkling stones.
Sharing her experience, Chowdhary added that she has seen lab-grown diamonds herself. She said that no one can tell the difference. The finance influencer pointed out that the exploration from India has seen a growth of 50% in just a year. It means that people living abroad are buying them, but Indians need to be more aware of the subject.
Lab-Grown Diamonds Are 80% Cheaper Than Mined Diamonds
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Apart from being eco-friendly, Chowdhary shared with us that lab-grown diamonds are 80% cheaper than mined ones. Initially, they were available at half the price of mined ones.
However, we can expect the price to fall even more in future because the demand is expected to increase. We are creating more labs and increasing the supply as well.
Investment In Gold Jewellery Vs Gold Sovereign Bonds And Gold ETFs
In Indian culture, we often see gold jewellery as an option for investment. We say that it might come in handy on a rainy day. Chowdhary explained that the cost of gold jewellery includes making charges. Moreover, when you design a set, the jewellery has to add impurities so that the metal can hold the shape. They also add cuts for design. Moreover, we will have to pay an annual fee for bank lockers in which we will store the jewellery in future.
The finance influencer advised rather to invest in digital gold - Gold Mutual Fund, Gold ETF, and Gold Sovereign Bonds. She puts Gold ETFs and Gold Mutual Funds in the same category, where 1 unit of it is equivalent to 1 gm of physical gold. You do not need a lock to keep them secured. In ETFs and Mutual Funds, you will have to pay brokerage, expense ratio, and tax.
Sovereign gold bonds are the best options among these. You can buy bonds from the Reserve Bank of India (RBI), which assures purity. You earn interest of 2.5% on it annually, and you do not have to pay tax on the profit upon maturity. You just have to pay brokerage. If you sell them before maturity, you will have to pay tax on the profitable amount.
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Diamonds Are Not For Investment
Breaking the myth that diamonds are for investment, Himani said that hardly 5% of people in India buy diamonds. Therefore, if anyone says that their value will increase in some years, they are fooling you.
Moreover, most people buy common diamonds. She added that if you buy a big diamond or one which is naturally yellow, blue or pink, and keep it in a bag, as we see in Bollywood films, then we can expect the prices to spike. She advised against investing in diamonds that are studded in jewellery.
You should note that diamond has no index in the market, other metals have. It is also because a diamond is nothing but carbon at its core.
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Instead Of Gold Jewellery, What Are Other Low-Risk Investment Options
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Instead of gold jewellery, Chaowdhary suggested a few low-risk investment options. This includes:
- Saving schemes by the Government of India
- Fixed Deposits (FD)
- Gold Bonds
- Post Office Schemes
- Government Bonds
- Corporate Bonds
- Debt Mutual Funds
Chowdhary suggested keeping a diverse portfolio. It should be a mix of gold, equity, FDs, bonds, etc. She added that until 40 years of age, people should invest in the stock market. Since India is a developing market, the stock market is also going to see a similar kind of elevation.
Stay tuned to HerZindagi for more suggestions on investment.