An engagement ring and wedding band should be first and foremost a reflection of your personality and taste. Naturally, there’s no problem with people deciding they don’t want a diamond ring for personal reasons.
However, recently I’ve been seeing a fair amount of articles and blog posts out there about diamonds being a waste of money, a bad investment, and so on. Sure, diamonds aren’t for everyone, but claiming they don’t have investment value is just untrue. In this post I’ll be providing 7 reasons why diamonds are not a waste of money, especially in today’s market.
1. Demand for diamonds is higher than supply – and will be for the foreseeable future.
Growing middle classes around the world – especially in China and India – have reenergized the diamond market and created an interesting phenomenon. Diamond engagement rings are becoming more and more popular with young Chinese couples, causing a spike in the demand for diamonds. This is creating a demand that outpaces diamond supply and mining capabilities. However, the US is still the largest country for certified diamonds. Demand in the US and Europe has also been fairly consistent over the past 5 years. As demand continues to outstrip supply, diamonds will of course become far more rare, which also makes them more valuable.
2. Diamond prices have rebounded since the recession.
Diamonds were slow to be affected by the most recent recession, so it took longer for their prices to rebound. In general, the market recovered in 2010-2011. For diamonds, that rebound didn’t happen until about 2012. Unlike some key housing markets, though, diamonds are now fully recovered and maintaining their value post-recession. You can see the dip, recovery, and rise represented on this handy graph from Pricescope:
3. Diamonds are tangible assets that will not diminish in value over time.
As far as tangible investments go, diamonds are an excellent choice. Let’s say you’re holding the keys to a $10,000 boat in one hand and a diamond worth $10,000 in the other. First of all – lucky hypothetical you. Second – imagine how valuable the boat and the diamond will be in 10-20 years’ time. The boat will have diminished in value, due to changes in the market and product offerings, wear and tear, and consumer preferences. The diamond, however, will have retained its worth.
4. Reputable retailers offer programs and policies that will protect your investment.
Like I mentioned in my diamond engraving post, there is a well-known myth that trying to resell or trade in a diamond will always be a bust. Not true, especially if you go to a well-respected retailer. Getting your diamond certified and acquiring insurance for it will go a long way in protecting your investment for resale. Additionally, many trusted diamond sellers have trade-up policies that are put in place to ensure you won’t lose money on your initial investment if you trade up for a more valuable diamond.
5. Diamonds have become more popular than gold.
That’s right, diamonds are pulling ahead of the gold standard. This is also due to the rise of the Asian middle class. Gold purchases per capita in India are at an all-time low, and the Chinese middle class just plain prefers diamonds to gold. As a result of this preference, diamonds have surpassed gold in terms of investment value.
6. Fancy diamonds are a unique investment opportunity.
Purchasing colorful fancy diamonds as investments is also on the rise. This article from the New York Times provides an excellent overview of the recent rise in high-value fancy diamond purchases by the mega rich. There are several reasons for this new investment strategy. Fancy diamonds are extremely rare and have a limited supply, they offer an excellent return on investment as their prices continue to rise, and they are a great opportunity for diversifying a portfolio with a tangible asset.
For example, this 14.82-carat diamond – called “the Orange” – sold at a Christie’s auction for $35.5 million.
7. Diamonds are a valuable and long-lasting representation of your love.
Everyone knows this last reason, but my previous points make it much more practical. Forget the common misconception that you are assigning a specific price to your significant other with your engagement ring. What you’re really giving her is an eternal, high value, rare, and tangible investment that she can keep for the rest of her life.
There are also plenty of sentimental and stylistic explanations for buying diamonds, but I stuck to the financial reasons in this post. With demand rising rapidly, diamonds have an exciting and interesting future ahead of them.
Why do you love your diamond? Share your story and pictures in the comments below!