More Than Bling: Are Diamonds A Good Investment?
Although man’s obsession with gold goes back thousands of years, diamonds are a relatively new one. In just less of a century, diamonds effectively became the symbol of affluence and romance. On top of that, this gem has been used as an investment and financial hedging tool in the last few years, making it the next fad in the investment world.
Ever wondered how this scintillating gem became a rising investment star amongst other commodities? Here’s a breakdown.
Diamonds As A Financial Investment
Investing in a diamond is, admittedly, not a new concept. Back when a woman’s financial independence is tied to that of their husband’s, a classic diamond ring was their highly sought-after item. Aside from its beauty, diamonds are also seen as a financial investment to secure themselves with should the marriage fall apart.
Things have changed today and people choose to invest in diamonds as they can retain value over time. And not only do they have a high intrinsic value, but they’re also always in high demand. Plus, they’re small, portable and easy to store.
To determine whether they are a good investment, we will first need to understand how these gems are priced.
Their price points are heavily dependent on the quality of the said gem, mainly their 4C attributes: colour, clarity, cut and carat. Each of these attributes determines the brilliance, scintillation, fire and design of the diamond, amongst many other things.
Cut: Arguably the most important feature, cut refers to how the gem is designed and cut by a masterful craftsman, which determines how it interacts with light to produce the sparkle and shine.
Clarity: The presence of imperfections that exist in the diamond.
Colour: The colour of the gem.
Carat: The diamond’s weight.
What Makes Diamonds More Valuable Than The Other
As mentioned prior, diamonds have a slightly tricky investment potential – they have to be valued on its individual merits. There is no metric or price index to go by, and on top of these individual qualities, the prices are heavily reliant on the pull and push of the supply and demand in the market.
Thus, you cannot simply invest in diamonds without doing your due diligence. Whilst there is a general market rate that determines the price set for each gem, there are several other variables that need consideration.
One thing you’d want to take note of when investing in diamonds in their liquidity. With its nature, diamonds don’t share the same liquidity as other commodities. If you thought buying them was tricky enough, selling these beautiful stones is just as complex.
Out of the numerous types of diamonds in the market, a traditional white diamond may be easier to sell as there is a huge demand for it. But this would mean you’d be competing with several others who are doing the same thing as you are since the product isn’t exactly rare. Since the market is susceptible to supply and demand, this will affect the price point you’re intending to set it at. On the flip side, it’ll be a different story if you have a natural coloured diamond. Whilst it’s be harder to find a buyer, but you’re able to command a higher price and thus, make a sizable return on your investments.
To make the most of your investment, consider striking a balance on both the rarity and liquidity. Unlike most commodities that change with time, the durability of a diamond allows it to stay the same as when you first purchase it. This means you can enjoy it whilst it’s still amongst your possession, without having to worry about its resale value.
Beyond The Dollars And Cents
Apart from the financial value, diamonds hold another form of value that most commodities don’t: sentimental value. To many, a diamond represents eternal love between two individuals alongside meaning and history should the jewellery become a family heirloom.
Diamond jewellery isn’t just beautiful, but it is also timeless. This fact alone can give a competitive advantage against other commodities and warrant a big investment.
Values With Time
Rather than commodity investments, it would be more appropriate to liken diamonds to equity investments. Similar to how equity offers dividends to shareholders over time, the ownership of the gem offers a sentimental value that isn’t tangible but just as important. The longer you hold onto the diamond, the more returns you’d get. Even if you were to sell it at a financial loss, the time you’ve spent wearing the jewellery easily makes up for it, thus making it a ‘good’ investment.
With that said, you will need to pay special attention to the market as more time passes. With large economies developing and growing bigger, the appetite of diamond jewellery follows suit. This is supposed to bear you with good news since more are willing to pay a higher price if they find a diamond they like.
However, now with lab grown diamonds becoming a new contender for a spot in the investing world, no one can truly predict how the market is going to swing.
Whilst the origins may have come from a controlled environment, lab grown diamonds are not that different from their mined counterparts. In fact, they are physically, chemically and optically identical and similar to mined diamonds, so no two lab grown diamonds are the same.
At Star Carat Shop, we aim to give you only the very best. Our lab grown diamonds are not only the scintillating beauties that they are, but they are also vouched for. All our diamond jewellery, from brilliant engagement rings to beautiful diamond necklaces, are certified by IGI and are considered as Type IIA diamonds. Only 2% of the world’s diamonds belong to this category based on their quality.
Furthermore, our extensive range of designs allows you to scour for the jewellery that fits your preferences. We house timeless solitaire classics such as the Star Carat Classic 4 Claw Diamond Ring for those who wish for simplicity and elegance. For those who love a dramatic flair and an affinity for opulence, we have the Star Carat Classic Cushion Diamond Ring to adorn your finger.
Whether you wish to hop into the investment market or otherwise, a diamond ring is no doubt an excellent investment. The sentimental and non-financial value alone is priceless. To find a lab grown diamond jewellery that is worth your investment, book an appointment with us and head down to our showroom to start on your journey!