Diamond Investment 101: Getting Started to Invest in Diamond

Diamond Investment

Diamond investment is relatively less popular compared to other investment vehicles like stocks, properties or even gold. While the real reason of why it does not get as much attention as the rest of the mainstream investments is largely unknown, most people feel that diamond investment is some kind of ‘rich men’s game’ and stay away from it. It is true that diamonds are very expensive, nevertheless, as with other investments, you can start small.

Diamond Investment

Diamond Investment

As with any other investment, it is important to set your expectation right to avoid any regrets in the future. First of all, diamond falls under the category of collectibles, like paintings. Hence, the price is not linear as with commodities like gold. For example, the price of two 100 grams gold bar with be the same as a 200 grams one, if all other attributes remains equal (purity, etc.). However, it is very unlikely that you can exchange two 0.5 carat diamonds for a 1 carat diamond, even they are of equal quality. In short, try to aim for quality instead of quantities.

Another factor that you should consider before investing in diamond is liquidity. Unlike gold and stocks, diamond exchange is not readily available. That translates to longer time for you to liquidate your diamond if you need some cash. The lack of exchange also means that you may not be able to sell your diamond at a fair price since you have access to very few buyers who are mostly retail stores. So, a rule of thumb is only invest with the excess money that you have.

With such limitations, it seems that investing in diamond is not a very wise choice. Nevertheless, bear in mind that diamonds have very high value per unit weight. This makes it a viable choice as a emergency disaster fund, as it is very easy to carry around. Also, unlike stocks that have very volatile price, diamonds are less sensitive to economy crisis. And as with other collectibles, you get to admire the beauty of diamond from time to time.

Once you have your expectation and budget set right, the rest is relatively easy. While we try to keep our cost low as an investor, it is strongly recommended that you buy your diamonds from reputable source. That almost translate to reputable retail stores. Unlike buying a diamond as a gift, tell them that you are after quality. It is nice to state your budget to help you narrow down your choices faster.

Diamond Chart

Diamond Chart

Once you decided on your diamond, make sure it is certified. There are different grading laboratories, with the more prominent being the International Gemological Institute (IGI) ; the Gemological Institute of America (GIA); the American Gem Society (AGS); the European Gemological Laboratories (EGL) and GemEx Systems. It is one of the best ways to protect your investment by letting the experts verify your investments.

As you keep adding more diamonds to your collections, remember to learn more about it. Do not rely on the Internet alone. There are books and seminars that cover different topics in a more systematical manners. If you do that, you will become and more knowledgeable person; and with some luck, possibly a richer one.