14 replies to this topic

[junebride]

Hi!

My fiance and I are in this diamond buying thing together. No surprises in little black boxes here! haha

We are trying to figure out what our budget should be for the ring. My mom says to buy as much as we can afford, but I don't really know right now what we can afford.

Does any one know how much a diamond usually appreciates over time? That might help us decide whether to treat this as an investment or as a one time huge outlay of cash.

We want to buy in the next month or so. Should we wait until Christmas? Do diamonds usually go on sale much at Christimas?

Thanks anyone!

June

[nightmare]

Hi June,

Interesting question.....and one which has to be mostly personal opinion rather than anything else!

re: 'what should you spend' - in the UK it is/was a tradition for the groom to be to spend around 2 months salary no an engagement ring - not sure why its this amount but there you go. Personally I believe thats a bit outdated...there are too many calls on our money these days. I think that you and your fiance should look at this from a 'what you want' standpoint, rather than a 'how much is it worth'. I would be looking for something which I erally wanted, and was gorgeous and spcial to me. Whether that is a small diamond solitaire, or 3 2-carat stones is entirely dependent on your personal taste!

Diamond appreciation is a very tricky one to answer. Historically they've never really decreased in value...though this is aprtly to do with the very controlled marketing and trade control of DeBeers et al. However...whilst a diamond is less volatile investment than, say, stocks and shares, like all things in life there is no guaramtee of the future...also you will never get back what you pay retail for something like a diamond......

these are just personal musings!

cheers
Night

[highfly]

Quote

That might help us decide whether to treat this as an investment or as a one time huge outlay of cash.

This is your engagement ring. Do you plan to sell it in the future?

If not, whatever amount it appreciates or depreciates is irrelevant. Buy a diamond engagement ring that appropriately symbolizes your relationship, and that you can afford.

[jan]

On Average since 1964-1989 diamonds have gone up about 10% per year. I have a chart from a while back that showed the increases on diamonds. Haven't seen it updated for a while but I can tell you they have had about 2-3 increases this year already and I've been told we can look forward to another one before Christmas.

Also you might want to check the policies of where you purchase your diamond. We do a 100% upgrade on our diamonds in the future and if they wanted to sell it, we will broker the stone for a small brokerage fee.




Jan
www.dbof.com

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[junebride]

Well, I don't PLAN to sell it, lol! I was asking mostly because I was wondering if it appreciated a lot, then maybe it would be something to put our cash into. But if it didn't much, then we maybe would put our cash into somethig else, but still get a nice ring.

Thanks for all your comments.

June

[sparkllvr]

June:

I agree with nightmare. Don't worry about any formula's for spending. Decide what YOU guys can spend and then go shopping! Maybe you'll find something you love for less. Or maybe you'll find something for a little more, but will decide it's worth it because you love it.

Believe me, your love will appreciate far faster than a diamond will!

[jan]

I've been selling diamonds for 20 years and I've never seen them go down in value. Especially if you buy a nice one. I would stay in a SI1 clarity and I color and above. Also the better cut the diamond is the more valuable. I wish I would have had more money 20 years ago put into diamonds. They definitely have been going up in the last 20 years. In fact overall I've seen them pretty much quadruple in value. Of course so has real estate. I don't think putting money in a diamond is a bad investment. I told my father years ago, put money in things that go up in value not depreciate. Ask your grandma what she paid for a diamond years ago. You will be amazed how little they spent.

BTW noone ever plans on selling their diamond ring when they purchase it, however many do for various reasons they couldn't forsee.



Jan
www.dbof.com

[TheRock]

This might make me a little unpopular on this site but here goes;

Telling a retail customer that a diamond is a good "investment" is, in my humble opinion, bad advice unless they can buy a diamond at the same price level as a dealer or retailer.

Most gem quality diamonds have gone up as Jan quite rightly points out but to call it an investment is ludicrous and here's why;

If you go in to a jewelery store and buy a loose diamond, you are paying the wholesale price plus whatever margin that jeweler works on. Some are 10%, some 20% and some 100%. For the sake of this post, we'll say 30%.

So hyperthetically you buy a diamond that costs the retailer $1000. You pay $1300. Diamonds go up 10% in value over 25 years. Your diamond is now worth $4550. Wow... but the dealer cost has also risen by the same margin. This means the dealer cost is now $3500.

So, who are you going to sell this $4550 diamond to? Ebay? I doubt it. You are going to have to take it in to a jeweler or someone who purchases diamonds. They are going to evaluate the diamond and offer you a price. Let's not be naive, they are not going to give you wholesale cost. Why would they? They can get a similar diamond at anytime, at their convenience and have 30 days to pay for it. The only way that they are going to but that diamond is by buying it for under wholesale cost. Even on the high side, you are only going to get $3150. So, after 25 years you are looking at a effective 30% loss. If you invested the same $1300 in a mutual fund for 25 years at a 5% compounded rate of return you would end up with almost $4500.

The bottom line? If you are going to buy a diamond for $1300 or whatever the cost, buy it because it means something to you. Buy it because it's special and unique. If you want an investment, consider a mutual fund!

Just my 2 cents...

[highfly]

Rock, you're right on the money!!

[jan]

The point is, for the most part, that diamonds do appreciate as history has proven, although most people do not buy diamonds as an investment.

For instance in less than a year, a 3.00 fancy shaped since December 2003 has gone up 6% on the world market. . 2.00 ct. SI H round brilliant has gone up 13% since January This means that everyone will be seeing increases both retail and wholesale, from the rough to the finished. Many other different grades and sizes have gone up as well.


Back in 1973 I bought a 1.00 ct. Fl pearshaped diamond for $1000. It was an H color. Even on the wholesale market that stone will sell well over that price. Today online $4728. You just have to know the right market to sell it in. If you are prone to sell it for $1000 today,then you didn't do your homework. It would be best for the consumer to sell in the retail market, rather than try and unload a diamond below wholesale. It makes better sense.


This is another reason we give a 100% upgrade on any diamond we sell. We have found that the quality diamonds we sell do maintain value.



Jan
www.dbof.com

[junebride]

wow Rock, you paint a pretty bleak picture regarding the investment value of diamonds. Dare I say, you sound kind of like my dad! Ouch. But I can totally see what you're talking about and I have to say, dad or not, I think you're right. At least it makes sense. So thanks! We'll buy a nice ring that we like and not worry about trying to get some future investment value fro it. If I need to sell it someday to pay for my kids college I'll keep my fingers crossed that there's some money there. Otherwise, I think a nice house with a picket fence...
LOL

June

[highfly]

There is another thread on this board (also started by Rock) that talks about diamonds found in Montana.

Now, with an increasing an abundance of diamonds in the marketplace, and the possibility of synthetics on the horizon, wouldn't that lead to an abundance in diamonds and therefore a decrease in price? Are we at another inflection point in the price of diamonds, similar to what happened in the 80's?

If you want to invest, stick to mutual funds and real estate...

If you want an everlasting symbol of a special person at a special time in your life, it's very hard to beat a diamond.

[nightmare]

well both Jan and Rock are right.....diamonds definitely DO appreciate, and always have done (and likely always will - they do get rarer year on year as we dig them out the ground!)...but unless your timescales really are 30 - 50 year increments then unless you're a trader like some of us, you'll never see a REAL profit....

real estate...hmm...I had some land in Florida until very recently...seems to have blown away!

[jan]

Where at? I doubt the land blew away, maybe the house. We got hit by 2 in a month ourselves. Unbelievable summer and fall.



Jan
www.dbof.com

[nightmare]

Hi Jan,

Some down at Fort Myers / Cape Coral area. Im sure its probably still there really! Dont think its likely to be worth quiet as much anymore though...boo hiss

Where you based then? Are you used to the odd hurriace?!

Night