Naturally Colored Diamond Blog

A Blueprint for Alternative Investments in Diamonds

Posted by Tony Cathaway on 2/23/16 8:00 AM

Playing the long game in investing is not for those who obsessively watch the markets, attuned to every twitch, and prone to freaking out at a case of the hiccups. Long term investing is for the “set it and forget it” types, who are a little more secure and confident. In the simplest terms, long term investments are those that you intend to hold for more than a year, but that’s only part of the story.

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Alternative Investments

You see, long-term investments never need to be sold at all. The can be sold, they may be sold, but the “flipping” mentality that’s turned traditional investments into a frenzied game of broker whack-a-mole is absent. If it helps, think of long term investments as long-term assets – something to be held onto, and recorded at the purchase price instead of market value.

Foundations of Investing in Diamonds

Don’t invest in what you don’t understand. Investing in fancy colored diamonds and colored stones comes with a learning curve. You need to learn the language and how to buy the best stones that you can afford, or you’re going to get hosed buying a pink sapphire thinking it’s a pink diamond, or a spinel as a ruby. Learn why a 1.05 carat Fancy Vivid Yellow SI2 is worth more than an equally sized and cut D-color white VVS1 stone.

Invest as soon as possible. Colored stones and fancy color diamonds are being snapped up as investments by billionaires and investment funds. The sooner you buy, the sooner you’re going to be able to watch that investment grow and appreciate in value.

Plan your purchases. Budget and buy with a plan, not just splashing cash for a stone you just have to have right now. You can be sitting on six figures in diamonds, but still be eating ramen noodles if you don’t have a plan and stick to it. Selling diamonds is not like selling stocks, it takes longer a longer view if you want to get a good price for your investment.

Don’t get emotional. As with other investments, there can be price fluctuations and plateaus. Remember, you are in this for the long haul. Remember back when gold was $400 an ounce? That was back in the mid-90s. It’s now over $1,300. This is the same kind of long term buy and hold strategy as people who were buying gold then are enjoying now.

Revisit your investments. Your investments should never sit on the shelf so long that they gather dust. Revisit your stones, and look at current offerings. It might be time to let go of some and invest in others.

You can buy diamonds, but you can’t flip them and expect to turn a profit. It is much the same with other tangible investments such as art, wine, or watches. Time, not fast flips and frenetic trading will allow your investment to appreciate in value, so that when the time comes to sell, the wait will have been worth it.

For more reading on alternative investments, click the links below: 

Naturally Colored Diamonds

Topics: Alternative Investments

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