The fact about diamonds is that they hold a lot of value while being quite easy to secure. This is what makes them a very good idea for investment. Of course, it is crucial that you constantly follow the changes and trends on the market because that is how you are going to decide which diamonds you should buy. They are very volatile, and some may end up significantly dropping in value for an extended period of time. On the other hand, there are such diamonds that have a limited supply, which makes the demand on them extremely high.
You can find a wide variety of diamonds all around the world, but it is those that are large, colorless, and flawless that are rare and therefore the ones that you need to go after. The best solution is to consider rare rocks which are determined by their color, clarity, carat, and cut.
What are the basic requirements for such an investment?
While investing in diamonds is a great choice, there are certain minimum requirements that you need to meet. These include:
- Market access
- Price transparency
- Resale liquidity
- Quality certification
- Guidance from an expert
Basically, you need to purchase diamonds that you can then sell for a price that is sensibly close to the original one. If you decide to buy at retail and then sell the diamonds at wholesale, you won’t get anywhere. You need to get info on what the international dealer markets are like and what their prices are.
How profitable such an investment is?
The main question that you will be asking is- how profitable it is to invest in diamonds in the long-term? Are you surely going to profit from such an expenditure? Look at it from this perspective – a diamond is a product of nature, which means that it is expendable. You’ve got big mines all over the world, such as in Russia, Canada, Botswana, and so on. But the big question is – how long is all that going to last?
Basically, you need to be aware of the fact that at some moment, the mines will no longer be a source of diamonds. When this happens, the very value of every kind of diamond will change. Generally, it is going to grow due to scarcity.
What kind of emotional value do diamonds have?
Next to their price, diamonds, of course, have an immense emotional value to people. They have become very well known as a symbol of love. Due to this fact, there came to be a strong connection between engagement rings and beautiful diamonds. Just as the diamonds’ monetary worth, their emotional value is only going to grow, which just makes them even better investments.
How inflation-proof are diamonds?
What is also incredibly important about making diamonds your investment is the fact that they are pretty much inflation-proof, just like pretty much most physical assets, such as gold, silver, real estate, and the like. What makes them truly a good choice is how sturdy and movable they are. Even if you do not plan to make diamonds your full investment, you can decide to purchase some as an alternate way of putting some money aside.
Why is it important to diversify?
According to experts, such as those at Diamond Portfolio, when deciding to invest in diamonds, it is very important that you diversify. Basically, you need to have a kind of “portfolio” and make sure that not all of your investments are the same. Let’s say that you have a diamond in mind that costs $30,000. Perhaps, it would be a much better idea to purchase three diamonds for the price of $10,000. Also, when it comes to type, you should never focus on just one. Let’s say that you really want to get a red or pink diamond, both of which are quite rare. That is fine, but make sure that your other investments are, let’s say, blue, green, or yellow.
This is all due to the fact that you have no idea which of these diamonds’ prices are going to rise more and how profitable your sales are going to be. Furthermore, if you find yourself in the situation where you have to distribute some of your funds that you have dedicated to diamond investment, you can liquidate a part of the portfolio.
Which diamonds should you invest in?
On one hand, you will become aware that wealthy collectors most commonly get their hands on big and fancifully colored diamonds. However, the fact is that such diamonds are not traded as often, their price isn’t transparent, and you most probably won’t have the ability of a prompt resale liquidity. Basically, if you are not super rich or a great expert in the field, you should forget about such diamonds, as you won’t have a clear idea about how much you will be able to resell them for, and whether you are going to be able to do that at all.
Generally, in terms of the aforementioned qualities, the best kind of diamonds you should get is defined by excellent to very good cut, D-H color, round, 1.01 to 1.49 carat, and IF-VS2 clarity. Such diamonds are traded all the time, because their price is fully transparent, and it’s quite easy to buy and resell them.
Of course, according to what your budget, objectives, and needs in terms of diversification are, you can also get diamonds in other sizes, such as those known as one-half caraters, or aim for two carat and five caraters. So, as we have ascertained, it is great to have a diversified diamond portfolio, but it is the best idea to invest in diamonds that are standardized and properly defined investments.
In the end, it is, of course, essential that you have a great relationship with a diamond investment advisor who can tell you everything you need to know about what is going on with the international market, which diamonds’ prices are rising and which are falling, and also be extremely knowledgeable when it comes to their quality.
In order to make the best decisions, you need to be able to tap into global diamond markets and know what fair market values are in terms of pricing and bidding.