After publishing 3 Reasons You Should Consider Fancy Colored Diamonds, the logical progression would be to share tips and tricks for those who wish to begin investing in colored diamonds. Thus we've compiled a list of 6 diamond investing tips every beginner should know.
In this article we will be going over the 6 essentials for investing in fancy colored diamonds, including:
- Portfolio Diversification
- Diamond quality and rarity
- Market demand for the specific diamond
- Diamond Certification
- The importance of asking questions
1. Educate Yourself on Alternative Investments
This may seem like common sense but it is very important and needs to be said, especially for high value, long-term investment assets such as colored diamonds. Be sure to educate yourself on the terminology used by vendors, auction houses, and gemologists. Most importantly, make it a point to fully comprehend what each of the 4C's of a diamond stands for and how they contribute to the stone’s value.
If you are interested in learning more about how the 4C's and how they can affect investment decisions, read our guide on “What to Look for When Investing In Colored Diamonds.”
2. Diversify Your Diamond Portfolio
Whenever it comes to investing, experts always stress the importance of diversifying your portfolio. This is also the case when investing in diamonds. While it may be tempting to spend the entirety of your budget on one beautiful stone, it is often wiser to split it, buying 2 or maybe even 3 diamonds.
Furthermore, make sure that the diamonds you are investing in belong to different color categories. For instance, let's assume you have a budget of $30,000. Instead of purchasing one $30,000 diamond, consider investing in a $15,000 blue diamond, a $10,000 pink diamond, and a $5,000 yellow diamond.
Portfolio diversification is a smart move as it allows for greater flexibility. Demand and value for certain colored diamonds may increase in the future, also increasing your chances of heightened ROI. Further, if you ever need to allocate investment funds, a portion of your diamond portfolio can be liquidated (instead of needing to liquidate the entirety or your investment.)
Bonus note: The value of pink diamonds has been showing exponential growth during the past decade, with pink diamond prices experiencing the largest appreciation among all other colored diamond categories.
3. Invest In Colored Diamonds With Rare Attributes
If you want your investment to have value, (especially if you are planning on liquidating or selling your stone later on,) make sure that you are buying something rare that has unique characteristics. You want a stone that cannot easily be found by others in the market. A pink diamond with decent clarity will gain significantly more attention from buyers than a colorless or yellow diamond of the same caliber. Moreover, an internally flawless fancy vivid yellow stone will undoubtedly warrant higher demand (and price tags) than a yellow diamond with inclusions. Pay close attention to the 4C's and focus on obtaining a stone that will capture the attention of others.
Image Source: Rio Tinto
4. Your Alternative Investment Should Be Desired By Others
Don’t invest in a diamond just for the sake of having it. If you plan on liquidating your asset in the future, you will have to make sure it is desired by others. For example, a blue diamond, while rare, may not gather much attention if it has unfavorable undertones (e.g. grey) or an undesirable shape (cut). Do some research about each diamond type, find out which cuts are most popular and understand how modifiers and undertones affect their desirability and value.
5. Only Buy Diamonds That Are Certified
Oftentimes the untrained eye or improper lighting can lead to deceit. Diamonds are a high-value investment with minor details that can significantly affect their price. For this reason, it is highly advised to always ask for the stone’s certification before buying. More specifically, choose diamonds with GIA certificates.
Image Source: GIA
Apart from ensuring you of the quality of your investment, it will also ensure the future buyer that the diamond they are buying is legitimate (if you ever choose to sell it.)
6. Ask A Lot Of Questions
Before making your final decision, do some extra research. Visit diamond forums to see what stones are in great demand, how the market is moving, and read stories of people who have recently made investments. What kind of stone did they invest in and why? If possible, even try finding and reaching out to diamond experts and investing consultants for further advice.
Diamonds are a significant investment, the more you know about investing the better equipped you will be to make a great decision.
Do you have any question? Is there anything you would like us to elaborate on? Let us know! And as always feel free to follow us on Twitter and LinkedIn.
If you are unsure about how to position your investments in fancy colored diamonds, Arpège Diamonds stands ready to help. With over 50 years of combined industry experience, we'll help you gather the most effective information and insights so that you can make educated decisions on your fancy colored diamond investing. You can contact us at 866-821-5508 for a personalized review.
For more reading on colored diamonds, see the links below:
- Why Colored Diamonds Are The Investment You're Looking For
- Need To Know: How To Invest In Colored Diamonds
- 29 Factors Every Investor Should Know: What Affects Diamond Price? Part 1
- The Arpège Tribute to the Breathtaking Pink Diamonds
- 3 Things You Need If You Want To Invest In Fancy Colored Diamonds