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What is that Valentine's diamond really worth? Not as much as you might think

PUBLISHED: 14:48 02 February 2015 | UPDATED: 14:49 02 February 2015

A single stone diamond ring

A single stone diamond ring

Finance expert Julie Wilson thinks jewellery and gold are poor investments

I’m often asked if gold and jewellery are good investments. And I always answer the same way. So if you’re thinking of buying jewellery as an investment for a loved one this Valentine’s day – read on. Generally speaking, physical gold and jewellery are never a good investment. I always end up in arguments on this one. Someone who’s made a killing in gold investing usually tries to prove me wrong. But here’s why I’m right:

When you buy physical gold and jewellery, the seller marks up the price for his profit. And that can be up to 800 per cent. Well someone’s got to pay for the shiny High Street shop with its high security and dazzling lighting to set off those diamonds nicely. Unfortunately, that someone is you.

Holding and storing jewellery can be expensive – there’s insurance, storage and risk of loss to consider.

Demand for gold and jewellery goes in cycles – what’s ‘in’ this year is ‘pants’ next year. You can’t control that.

Gold and jewellery doesn’t pay an income or dividends, so the only profit can come when it’s sold. And often that’s when you need money fast. And so will take a low price. That’s why pawn brokers generally do so well.

A better investment is one that pays a good and rising income with the prospect of capital growth over time.

So if you do buy jewellery for your Valentine don’t expect to make a profit on it. But if it helps to bag you the right partner for life it might just be the best investment you ever made.

Julie Wilson is a director of Pen-Life Associates, independent financial advisers in York, Sheffield and Leeds

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