Investing in Diamond Engagement Rings

It’s the million dollar question (although you are most likely hoping to spend far less than a million): how do I invest in a diamond engagement ring? Or better yet: What can I do to make the right financial decision on a diamond engagement ring? If and when the time comes to either sell or upgrade your diamond, how do you ensure that you won’t “lose” on the trade or resale value? One of the first things to keep in mind is that a diamond, like all fine jewelry, is a luxury good, and as is true with all luxury goods, the resale value of a diamond ring will most likely be lower than your purchase price. That being said, there are steps you can take as a buyer to ensure that you are making the wisest possible financial decision when you make your purchase. Right off the bat I want to clarify that investing in diamonds as a means to fund a retirement or to turn around after a certain number of years to make a major profit is just not realistic! I’m absolutely not suggesting you view the purchase of a diamond as an investment decision! Someone purchases a diamond out of love for someone else. You rarely - if ever - want to focus on the “investment” side of it. However, an engagement ring can be a major financial commitment for someone who is also about to commit to a spouse for life! My goal for you, my savvy and wise reader, is for you to set yourself up for success, both with the initial purchase and then down the road when the time comes to sell or trade your diamond.

Diamonds are forever

While diamonds for the most part show little to no wear through the years, they aren’t completely indestructible. It is true that diamonds are the hardest gemstone on the earth, but they can still scratch, chip, and fracture. So unless any of this damage happens to your diamond while in your possession, you’re in good shape and you can expect to get the most when you go to sell or trade. Some may ask: what if my diamond is chipped? My first question here would be whether or not you have insurance on your diamond? If you do, you can file a claim and you could potentially replace your diamond. If you have a diamond with no wear and tear, however, you can move forward.

One must understand the concept that diamonds are forever when selling or trading their diamond. Regardless of when it was first purchased or for how long it was owned, any diamond can enter back into the system and be recirculated. I do not know the statistical percentage of recirculated diamonds in our market vs. “freshly mined” diamonds. I do know that recirculated diamonds exist and they are being sold every day. This leads to a side thought regarding ethics I’ve had throughout my years of experience in the diamond industry: How much of a record should be kept on the recirculating status of a diamond? If you the consumer are buying a diamond wouldn’t you want to know if your diamond is a recirculated diamond vs. a newly-mined, not preowned diamond? I’m writing this not to cause any upset my industry, but to rather shed light on what often seems like a grey area. Honest diamond dealers and jewelers will tell you everything they know about a particular stone. Keep this knowledge in your pocket as you continue reading.

Finding the right diamond ring

So let’s move on to how it is you are going to find an investable diamond. You may ask yourself; How do I find a diamond I can invest in? What do I need to look for in a diamond to make it more desirable when I go to sell or trade it later? These are awesome questions my friend, and you are on your way to be a savvy diamond buyer.

The GIA standard

Let’s start by looking at the diamond grading certification. In my recent blogpost titled “A crash course on diamonds” (you can read by clicking HERE), I stated the importance of the aesthetic appearance of a diamond, regardless of its grade or the laboratory that certifies it - and there are many different certification laboratories out there! If a diamond is poorly cut or has distracting and obvious inclusions or blemishes, there is no certificate that will make the diamond look better. However, when comparing diamonds certified by different laboratories, wouldn’t you want to go with the best? Across the diamond industry, the gold standard for grading and certification is always the Gemological Institute of America (G.I.A.). Why does a diamond need to be certified by G.I.A. to be a good investment? Well, ask the industry and the end consumer. G.I.A. tends to be much more scrupulous in their grading measurements and are the most trust-worthy grading lab for not just the United States, but for the diamond trade around the world. If a diamond you are considering is not already graded by G.I.A, I would highly recommend that you seek out a professional, like myself, that can help to facilitate the process of getting it graded and certified by G.I.A. This right off the bat can add value to your purchase and help with resale.

Shape

Let’s talk about the diamond industry a little bit, and in particular market trends. Diamonds come in many different shapes, sizes, colors, and clarity grades. In this portion of the blog I would love to give my two cents as to what I believe will hold value through the years you have this diamond. Let’s start with the big decision maker, and that is the SHAPE. Now I now and understand everyone has a shape they absolutely love. I’m not here to convince you to change your style, I’m simply trying to point out that, as is the case for all “fashion”, some popular shapes come and go. For example; marquise cut diamonds were all the rage around the 1970’s. Nowadays, if you take a look at new engagement rings, they rarely are set with a marquise cut diamond. So, you may ask; what is the best diamond shape to purchase to weather the volatility of the fashion market? Well, here’s what I can say from my experience buying and selling diamonds in 2022: round-shaped diamonds are still the quintessential engagement ring. Round diamonds have been in our market for a very long time, they are also the only cut diamond that G.I.A. has produced a cut-scaled grade for. Demand for round diamonds has been and is still great and therefore purchasing a round diamond as apposed to a marquise is a smart financial decision. Currently, elongated shaped diamonds are also in high demand (radiants, long cushions, and pears). While these shapes are in fashion today, who’s to say they will withstand the test of time. I’m absolutely not suggesting to stay away from these shapes - especially if your fiance has her heart set on one! If, however, a preference for a specific shape is not a priority, I would recommend going with a shape that has remained in high demand through out the decades and even centuries ; the round cut diamond.

Cut

So Now that you have an idea what shape will be a good investment in years to come, let’s focus on the CUT of a diamond. the cut is a different category than the shape of the diamond. In the diamond industry these days, a triple excellent cut diamond (3X) is the way to go. Diamond cutting has become such a precise art form, that consumers are demanding the best when they purchase a stone. Don’t settle for anything less than a diamond with Excellent cut, Excellent polish, and Excellent Symmetry. This will ensure that not only are you getting a beautifully crafted stone, but that the resale value with be higher than if it were a lower grade cut. Now of course just because you have a 3x diamond doesn’t make it the best. There are many angles and percentages to look for but an excellent cut is a good starting point. Read more about cut in my crash course on diamonds blog Here!

Color

Let’s move on to popular diamond COLORS to maximize your investment. Again, just because I’m suggesting these colors are the most sought after in our industry doesn’t mean they are the best. Color is characteristic of diamonds that is very much open to the preference of the consumer. Beauty is in the eye of the beholder, after-all. However, when it comes to pure investment value, what diamond color is best to maximize a diamond’s resale value? Diamonds in the colorless and near colorless range are most common. More specifically colors F,G, and H are the three most common and sought after diamond colors. Now, I have seen plenty of interest I and J colored diamonds as well. As with all characteristics of diamonds, the grade scale in color will change the price of a diamond rather drastically. Keep your budget in mind, and aim for the highest graded color that you can, without sacrificing the other aspects of the diamond that are important to you. Read more about color in my crash course on diamonds blog Here!

Clarity

Next let’s focus on CLARITY and how it will have a significant impact on your ability to sell or trade your diamond. If you have already read through my recent blogpost “Crash Course on Diamonds” HERE , you are well informed on diamond clarity, and what to look for in a diamond. When it comes to making the best investment choice, as with all other aspects of a diamond, its important to know what it is that the majority of the diamond market desires. In other words, what is the average consumer is asking for? When it comes to clarity, grades ranging from VS1, VS2, SI1, and nice SI2’s are the most sought after. You may ask well you left out VVS diamonds. While many stones with this clarity grade can be super clean with no inclusions and very beautiful, they are actually not in as much demand. Same with Included diamonds i1, i2, and i3. These diamonds although sometimes can borderline look good, a savvy buyer can see the inclusions to the unaided eye and won’t purchase something they can visually see. The best case for a diamonds clarity is in the SI1, and sometime SI2 ranges. That’s where you will see some good investment value.

Weight

Finally we get to the last of the 4 characteristics of a diamond: carat WEIGHT. Carat weight is a major factor in determining the price of a diamond and today in the diamond industry, we are seeing a shift to larger diamonds. The most common diamond weight used to be around 1.00 ct. and now we are seeing a demand for diamonds closer to 2.00 ct. So you may ask; what is the best weight to make this a decent investment? My first piece of advice is to never stretch yourself too far past your budget and financially place yourself in a bad position. My wife and father-in-law are financial advisors, so I am in the business of helping my clients make wise financial decisions too - and not go into debt for a luxury product! However, to simply answer the question of what is the most popular: at the moment 2.00 ct. diamonds are in high demand and the market has been leaning towards even larger. But, again typically in our industry we see many 1.00 ct. through 1.49 ct. to be in demand as well.

Additional Characteristics

While the 4 characteristics are super important to making a diamond purchase, there are a few other tips to keep in mind. The first is having an actual laminated copy of your G.I.A. certificate. Your diamond is worth more with it, so don’t lose it and always ask for it when you make a purchase. Most diamond certificates get sent 30 days after the sale, so make sure you receive yours. Another importance aspect of your diamonds certification is the origin reports which are sometimes included in your G.I.A. certificate. Now I must state that these origin reports are not always seen on certificates, but when they are they are worth a little more when trading in or reselling your diamond. Our world is getting crazier and crazier, the sourcing of diamonds is of upmost importance and consumers care where the diamond they are purchasing is from. So, if you have a diamond with origin reports, it’s worth more, and therefore a good investment. Lastly, one additional “characteristic” of diamonds that doesn’t always make it to the top of the official grading report is fluorescence. Long story short, I would stick to no fluorescence. In our diamond industry it’s always best to purchase a diamond without fluorescence. I know in my blog I said faint and even sometime medium blue is okay, and don’t get me wrong they are okay if you are buying this without ever wanting to sell it. But, if you ever want to sell it, it will be just a little harder to sell a diamond with fluorescence. For more information on what to look for in a diamond please read my blog on Crash Course on Diamonds HERE.

The Engagement ring setting

I don’t talk about setting too often because it is such a personal choice. The setting is what can truly set an engagement ring apart and where you can truly incorporate your loved one’s style. This can actually be the most difficult aspect of purchasing the engagement ring…how do you find out what style of setting they want?! If they haven’t outright told you, or left hints, you can always ask her close friends (but don’t ruin the surprise!) or you can snoop around on her Pinterest page or any social media pages and get some ideas. If that doesn’t help, observe her everyday style. Does she stick to classic designs, or does she like to make a statement with bold pieces? There are so many amazing jewelry designers out there! I have worked with many of them and have access to their semi mounting lines. What you will want to make sure is that the diamond you purchase can go into the setting you choose. If you don’t have a clue what type of setting to choose it’s always a safe idea to go with a solitaire - a simple setting with just one center gemstone. This is the least expensive setting option - even if you go with platinum as your precious metal of choice (which is always my personal recommendation.) You can always reset the diamond later. When it comes to the actual resale value of your ring, the only real value in a setting is basically the weight of the melted metal. A jeweler or diamond trader looking to buy or trade for your used ring is really looking at the diamonds, not the setting. It’s far easier to put a diamond back into circulation that a used setting. Again please don’t get me wrong here, the setting is still a very important aspect to your engagement ring decision - it is actually the most personal aspect of the decision. Personally, I custom CAD designed my wife’s setting with hand engraving all over because I knew that’s what she wanted and I wanted to give her something she would love and cherish forever.

As I said earlier diamonds are forever, but not all settings or mountings are. With the exception of a rare or vintage design from a famous jeweler (a 1920’s Tiffany’s ring will definitely hold its value!), settings for the most part have a life span depending on how they are worn throughout the years. Think of it this way metals scratch, and prongs wear down causing the ring to be worn. That being said they are rarely a large part of the reselling or trading up process. So, while it’s important to get the setting your significant other loves, It may be best to lean on the simpler side if you truly want your diamond to be an investment.

Where to find the right diamond

So now you are finally asking; Where can I go to save money on an engagement ring? While ultimately this boils down to who has what you are looking for available, there are places I would recommend that will make the process easier for you and later on ultimately better when you are ready to sell or trade in. The first thing you should do is to take your time and do the research. Ask your friends where they purchased their ring and if they had a pleasant experience. Perform a google search of different local jewelers and read through reviews. I’m sure wherever you are you have some fantastic craftsmen and diamond dealers around you.

So what is my recommendation? Where should you go to find the right diamond engagement ring? Just as everyone has a different style, I think there are a number of different diamond buying experiences that customers are seeking. Some may love the experience of a large jewelry store with an extensive inventory of diamonds and settings available to touch and feel right when you walk in. Others may have done extensive research already and feel confident in making a purchase from an online distributor. In my years of experience in the industry, however, I have found that most of my own customers fall somewhere in-between these two descriptions. Perhaps this is where you fall: you have an idea of what you’re looking for, but you still want the guidance of an expert to help you feel confident in your final decision. You either don’t want to be inundated with thousands of options in a display case, or you would rather have access to an online database and then choose from a smaller sample. This is exactly how I have crafted my own business in Little Rock. I saw over the years more and more need for a personalized diamond buying experience for my customers. Because I don’t have a huge storefront or many overhead costs associated with a brick-and-mortar jewelry store, I can keep costs low for my clients too, while still offering them access to virtually every diamond and setting style available on the market! If you live close to the Little Rock area, I would love to sit down with you and help you find the perfect engagement ring, and if you are further away, I am always available for video chat or a phone call!

In conclusion

Thank you for taking the time out of your day to read through this blog. I love writing these posts because I get to answer real questions I’ve received throughout the course of my career. If you have any questions on this post, or if you’re interested in working together to find the perfect diamond, please reach out! Thank you again for reading, and I wish you all the best in your diamond engagement ring endeavors.