Diamonds might be a successful investment for you as an investor because of the volatile market and rising inflation. The price of diamonds is more constant than the price of other jewels. Diamonds referred to as “eternal diamonds” by De Beers are valued as an investment regardless of market volatility.
Also, you may buy high-quality diamonds in jewellery or expensive jewellery and gift it to your relative or pass it to your heir, this can also be regarded as an investment. However, Dave believes that informing potential diamond investors about the pros and cons is the best approach to avoid costly mistakes. So whether you’re intending to invest in diamond jewellery or loose diamonds, Dave is in charge of the blog…
Investing in Diamonds?
Diamonds appear to be an excellent investment on paper. Since they have a long shelf life and a high monetary worth, as well as being lightweight, portable, and easy to store, they’re an excellent investment (unlike that priceless Ming vase you just had to have at auction). And, as with most valuable stones and metals, history suggests that their value will rise in the future.
Diamonds, on the other hand, are a poor investment. For one thing, diamonds come in a quite cumbersome box. Diamonds do not have a universal price per gramme, in contrast to gold, which is valued by weight because, let’s face it, one block of gold is about the same as every other block of gold. Because no two diamonds are the same, their value must be determined based on their unique characteristics of each. As a result, picking a diamond can be the most difficult part of the process, as there are so many options.
Despite this, a growing number of investors are turning to diamonds as a viable alternative to more traditional investment options. Diamonds appear to be a viable investment option in light of low-interest rates and declining stock markets. When investing in diamonds, though, how can you be certain that your money will make a profit?
Are There Any Drawbacks to Purchasing Diamond Jewelry?
Despite all of the advantages, diamond jewellery is not without its drawbacks and hazards as an investment. The lack of price transparency is the first issue. Diamonds don’t have a price index like gold, so you can’t keep track of their value. The price of diamonds is determined completely by supply and demand. Investing in diamonds entails a second danger: gems’ inability to be traded. Selling diamonds is a lot more difficult than buying them. However, the amount they are willing to give to them is smaller than the one you paid for them.
Long-term benefits: Can you guess which of the disadvantages of purchasing diamond jewellery is the most trying? To enjoy its rewards, you must be patient. In terms of short-term investments, diamonds aren’t the best option. As long as you’re patient, you can include them in your long-term investing plan.
If you want to know how we feel about investing in lab-grown diamonds, you may read about it in error number three…!
Too Much Money Spent
The adage “Buy low, sell high” is a wise one to live by while investing. For diamonds, ‘buying low’ is more difficult than it appears. It all begins with taxes. You’ll lose 20% of your money unless you buy from a non-VAT area or through a VAT-registered corporation (or whatever the tax rate is in your territory). For you to break even, your diamond will need to rise in value by 20%.
The retailer’s markup comes in second. Shopping around and getting the best deal is critical because this might vary greatly from store to store. If you’ve ever tried to sell your ‘investment’ diamonds back to the trade, you’ll know how frustrating it can be to discover that you’ve been ripped off on the original purchase price. Even though online sellers have revolutionised the diamond market, you may purchase a magnificent diamond for near to wholesale pricing from respected jewellers such as (cough, cough) Quality Diamonds.
As a third consideration, there are unaddressed expenses, such as the cost of the setting. It would be great to have a safe full of loose diamonds hidden behind an elegant artwork, but most people prefer to wear their diamonds in a setting. If you decide to sell, you’ll likely only get scrap metal rates for the setting. What about protection from loss? You’ll have to repay the cost of insurance if your diamond jewellery is expensive enough to be considered an investment.
If you’re looking for a way to get rich fast, diamond investing is the worst. There is no evidence to support Del Boy buying five boxes of diamonds to sell at The Nag’s Head for a rapid profit. Many diamond investors are dissatisfied when they don’t receive immediate returns on their investments because of the long period it takes for diamonds to appreciate.
In the same way that the price of gold can rise or fall, the price of diamonds can rise or fall. In general, the prior performance suggests that they will rise, although at a glacial pace. Buying a diamond with the expectation of reselling it for a profit in five years isn’t just feasible; it’s impossible.
This means that if you decide to put your money into genuine diamonds, it will be locked up for a time (although in a gorgeous sparkly package), so be certain that you both want to and can afford to do so. To recover your money back, you’ll have to sell early, which means you’ll likely get a lot less than you paid for the item in the first place.
Mistakes in Diamond Selection
To make a successful investment in a diamond, the last and most difficult hurdle is figuring out which diamonds are worth purchasing in the first place. Investment in one of these diamonds will make your job easier in the future because they are easier to sell and more likely to fetch a higher price.
For the most part, buying certified is the most crucial factor. It’s also important to note that, when we say “certified,” we don’t mean one of those questionable certificates issued by the shop you are purchasing from (rant over!). Even if you acquire a diamond for investment or engagement purposes, this is true. There are so many reasons. If a diamond has been independently verified, it will be significantly easier to resell and more attractive – especially if it has been certified by one of the most reputable labs (GIA and AGS are best). Just in case, keep the certificate separate from the diamond and store it someplace safe.
If the diamond’s shape matters, so do its colour. As the most popular diamond form, a round brilliant diamond will provide you access to the largest possible resale market should you decide to sell it. Round diamonds are the most common shape, but if you don’t like the look of a round diamond, you may always go with the Princess cut.
A diamond with an Excellent cut grade and above-average colour and clarity should always be your first choice. However, don’t let yourself be misled into believing that you must purchase the world’s largest and finest diamond. Quite the contrary. Because of its rarity, an exceptionally rare diamond will only appeal to a restricted group of purchasers and will be more difficult to sell. You should instead strive to buy a high-quality diamond that appeals to both trade customers and the general public.
Investing in diamonds is one of the safest bets. What’s great about this is that it keeps prices stable regardless of economic conditions. When you invest in diamonds, you are protected against market collapses and inflation.
In a down economy, investors are more prone to liquidate other assets than diamonds. An overstock of diamonds is not expected to exist on the market.
Jonathan Herrod is a content writer who enjoys writing about technology, video games, and other topics. The author of informative articles that are well-researched and written with attention to detail has been writing professionally for nearly three years and specializes in the creation of well-researched and written attention to detail articles.