When most people think about investing, they usually think of stocks, bonds, and mutual funds. But there are other options to consider as well, and one of those is diamonds.
Diamonds have been around for centuries and are often seen as a symbol of wealth and luxury. So should you invest in them? Here’s what you need to know.
The Pros of Investing in Diamonds
There are a few reasons why diamonds could be a good investment.
Diamonds have a very high resale value
This means that if you ever need to sell your diamonds, you can expect to get a good price for them. Believe it or not, there are now new forms of investing in these precious gems such as buying NFT Diamonds! These are ‘investment grade’ diamonds stored on a tokenized, secure blockchain network (much like cryptocurrency) that can be redeemed or sold whenever you wish. Read up more on this before you invest!
They are portable and easy to store
This makes them a good option for people who travel often or who don’t have a lot of space to store their investments.
Related: Why Women Need to Invest
Diamonds are a finite resource
This means that there will only ever be a certain amount of them in the world, which could make them more valuable over time.
A diamond is durable and will not corrode
Diamonds are so strong because they are made of one of the strongest materials on Earth, carbon.
They are a global commodity
Unlike currencies, the value of a diamond is not tied to any one country so if an economy in an area crashes, your investment is more secure.
The Cons of Investing in Diamonds
However, before you invest your money in diamonds, it’s important to be aware of the potential risks. Here are a few things to keep in mind:
Diamonds can be overpriced
Since diamonds are often sold at a premium, there’s a risk that you could end up paying more for them than they’re worth.
They may not appreciate in value
Unlike other investments, such as stocks or real estate, diamonds may not appreciate in value over time. Their value could potentially decline if the demand for diamonds decreases.
Diamonds can be difficult to sell
If you need to sell your diamonds in a hurry, you may not be able to get the full value for them if you cannot find a buyer.
They can be stolen
Because diamonds are valuable and portable, they’re an attractive target for thieves. If you invest in diamonds, it’s important to keep them secure.
Imitation stones can be hard to spot
While synthetic diamonds may look like the real thing, they’re not as valuable and can be difficult to tell apart.
How to invest in diamonds
If you have decided that investing in diamonds is right for you, there are a few things you should keep in mind.
When it comes to investing in diamonds, research is key. You need to understand historical diamond prices, the different types of diamonds, as well as the different ways to invest in them.
Many different factors go into the price of a diamond, so you need to be sure you are getting the best value for your money.
Do diamonds depreciate?
There is always a possibility that diamonds can depreciate. This means that their value can go down over time. In some cases a diamond can drop in value from the second you walk out of the jewelry store. Although retail prices for diamonds can be high, the resale market is typically lower.
Truly rare diamonds like fancy colored diamonds in shades of red, blue, or pink however are more likely to appreciate in value. Prices for naturally colored diamonds have gradually and consistently risen over the past few years, but there is still a chance that you could lose money depending on the profit margins diamond sellers work with.
Which type of diamonds should I invest in?
The first step is to decide what type of diamond you want to invest in. Two of the most popular types of diamonds are rough diamonds and polished diamonds.
Rough diamonds are those that have not been cut or polished, and they are often used in industrial applications. Polished diamonds, on the other hand, have been cut and polished into beautiful gemstones.
If you are looking to invest in diamonds for their beauty, then polished diamonds are probably the way to go. Keep in mind, however, that because they have been cut and polished, they will be more expensive than rough diamonds.
Rough diamonds may not be as flashy as polished diamonds, but they are still a good investment. They are often used in industrial applications, so their demand is usually high. This means that you can get a good return on your investment if you sell them later on.
How can investors buy diamonds?
Once you have done your research, you need to decide if you want to invest directly in diamonds, purchase shares in diamond mining companies, or invest in diamond funds and other tax-efficient investments. Let’s take a closer look at these options.
Buying diamonds directly
When looking to buy diamonds, it is important to do your research to find a reputable and reliable jeweler. The first and most common way is to buy them from a jewelry store. Another option is to buy them online from a reputable website or dealer. Accordingly, speaking to a team of diamond experts can help you to plan your next steps.
It is also important to find out what type of diamond you are looking for, as well as the Four Cs (carat, color, clarity, and cut). Once you have determined these factors, you can begin to shop around for the best price. Diamonds can cost anywhere from $2500 for a 1.0-carat diamond, to $100 million for a record-breaking discovery such as the Centenary Diamond.
Purchasing shares in diamond mining companies
There are a few things to keep in mind when purchasing diamond shares. One is that it is important to make sure you are investing in a reputable company. Like any other investment, it is important to be aware of the risks involved and to only invest what you can afford to lose.
Investing in diamond funds
Specialist diamond funds are an alternative asset class that has seen increased interest from emerging markets. These funds are niche and harder to track down, but if you have a large sum of money to invest, it is well worth considering a diamond fund.
An alternative way to access diamonds is via actively managed commodities funds. These types of funds are usually dominated by gold, oil, and copper, but more and more precious stones have started to emerge. Moreover, investing in funds can diversify risk and help to avoid any major fluctuations in diamond prices.
Is investing in diamonds right for me?
It’s no secret that diamonds are a girl’s best friend, but what about as an investment? Are diamonds a good investment? The answer to this question is more complicated than a simple yes or no.
In general, diamond prices over time have risen. However, there have been some downturns in the market, and it’s important to be aware of the risks involved in investing in diamonds.