Are Diamonds a Good Investment? Myths and Truths

The diamond industry is a complicated one that few people not directly involved in it understand. There is equally as much information on the web telling you that investing in diamonds is smart and stupid. So what’s the truth? Here are some of the most common myths and truths about diamond investing.

Myth: Diamonds are rare and therefore a good investment.

Truth: Yes and no. Mostly no. The fact that nearly every engaged or married girl you know has a diamond on their finger should be enough to tell you that they’re not that rare. Although the supply of diamonds in the earth’s crust is pretty much finite, there is still plenty for everyone to enjoy for at least another couple of generations. After that, there’s always lab grown diamonds. So no, sorry, diamonds aren’t that rare.

Myth: Diamonds increase in value over time.

However, diamonds do increase in value over time – albeit very slowly. Diamonds appreciate at roughly the same rate as inflation does, so you could be waiting quite awhile for it to be worth significantly more than when you bought it. Also, this really only applies to excellent quality or unique diamonds – i.e. flawless diamonds with a big carat number or fancy colour diamonds (Which are genuinely rare). The standard diamond most brides will have will either maintain its value over time or drop.

calibrating-mixed-parcel-of-colored-diamonds

Myth: Diamonds are valuable.

Truth: Sure they are, but not as much as you may think. Any piece of jewellery comes with a significant mark-up; especially one that comes from a bricks and mortar store. The costs of maintaining the building, the labour needed to create the ring, the materials and the profit is all passed on to you. That’s why buying an engagement ring online or buying a diamond wholesale is much, much cheaper than the traditional route most people take.

Myth: Diamonds have a great resale value.

Truth: We have no idea where this one came from, because it’s simply not true. Diamonds, especially ones that are already set in an engagement ring, will not sell for more than they were originally worth the first time around. Second hand engagement rings (unless they’re beautiful antiques, of course) are often viewed as tainted. Unless a diamond picks up a fascinating story along the way; e.g. it was owned by a celebrity or involved in some historical event, don’t hold out much hope.

So, should you invest in diamonds?

In short, no. There are much better investment opportunities out there if that’s what you’re looking for. However if all you want is to make a commitment to someone and honour a centuries old tradition, and give the person you love a beautiful romantic gift to cherish forever, then diamonds are the way to go! That said, if you have the means to buy a large carat, flawless or fancy diamond, it’s worth a shot. Just seek some expert advice first, as always!