Mistakes to Avoid When Buying Diamonds

Loose Diamond
Diamond Buying Tips

No matter how beautiful and precious diamonds are, even experts agree that investing in them is risky when you are new to the game. Many even go so far as to recommend waiting years before buying a mounted or loose diamond, as well as spending that time learning all you can about the various aspects of the diamond industry. The logic driving this is easy to understand when you consider that unlike gold, diamonds lack a consistent price point.

Unless you chose a stone, which is superior based on individual characteristics, there would be no guarantee of the investment panning out. For that reason, it is vital to ensure that you do end up picking the right diamond. A lot of people are eager to invest in diamonds, but most of them fail to stay clear of the following mistakes.

Paying Too Much

Just like when buying anything else, buying low and selling high is the way to go here too; but the diamond market just makes that harder to do. First off, you would need to pay tax unless you were getting something from a jeweler in a non-vat area, or else via a VAT-registered company. Of the bat, you would be waving goodbye to a fifth of the investment this way. In other words, just to break even on this, you would need your diamond to appreciate by 25%.

Then there is the markup from the retailer, which can be a chaotic variable if you do not have a selection of stores to which your restrict purchases. Luckily, these days you also have online retailers who have done much to bring in market changes that are useful for the end consumer. These work on exceptionally low margins when it comes to selling mounted and loose diamonds, allowing the customer to obtain comparable products at much lower prices than at a physical jewelry store.

Thirdly, you need to beware hidden costs, which are a dime a dozen, pun intended. Most people want their diamond mounted on a beautiful ring, instead of locked up in a safe and taken out rarely. When it comes time to selling though, a setting is not worth much more than the metal it is made out of. Lastly, there is the matter of insurance, which costs extra.

Expecting Too Much

Buying a diamond is among the least smart ways to get rich, assuming you do not have the kind of rare genius, which Harry Winston and Laurence Graff exhibited throughout their careers. Diamonds are not an investment that you can count on to net highly lucrative short-term results. Like any commodity, they can either appreciate or depreciate in value.

Past performance may give a higher chance for the former, but it happens very slowly, if at all. Basically, you cannot expect to turn a neat profit on a stone five years after buying it, especially if you did nothing to bring up its market worth during that time, like get it cut into a more popular shape, for example.

What you should expect is for your money to stay locked up, although in the meantime you would get to capitalize on the beauty of the rock in a variety of ways. It bears ensuring that you actually want to invest in something like this, and more importantly, that you can afford to. If you ever faced the need to sell shortly after buying, you would be looking at a significant loss. That is one reason to make sure you only buy something you truly like.

Buying the Wrong Kind of Diamond

The last mistake people make in this area – and far from the smallest – is getting a diamond of lower investment value. Some stones are simply harder to resell, and this can be easily understood by checking out the demand trends. Others go more easily on the market; for example, certified diamonds are much easier to resell because of the guarantee they come with, after being graded by a reputed laboratory such as the GIA or AGS. Keep the grading report at hand, and you will have something that a lot more people would prefer buying in the near as well as far future.

Some diamond shapes always stay in demand, while others rise and fall in popularity over the years. A Round Brilliant stone would open up access to a much wider resale market than, say, an Asscher cut diamond. You could also buy something in the Princess cut, which has always been a highly favored choice among women. Just be sure the cut grade is Excellent or at least Very Good. As long as you get a high-quality stone, which has characteristics that appeal not just to a few discerning buyers, but also to the wider diamond consumer market, you would be making a smart investment.

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