3 Things You Should Know About Before Investing In Diamonds
Diamonds are forever. We’ve all heard that statement before about these precious gems but now they are starting to be perceived in a much different manner: Growing wealth.
When most people think of investments, they usually think of the usual assets such as real estate, stocks, bonds and even gold. But for the first time, an exchange-traded fund (ETF) was debuted by PureFunds that focuses solely on diamonds and gemstones.
More diamond based funds are currently in the works, and it was only a matter of time. In October of last year, the U.S. consumer price index (CPI) marked a 12 percent year on year increase making a record high of 182.6 points.
These are definitely strong indicators of the value of investing in diamonds and gemstones with the trend likely to continue. However, as with all investments there, are risks involved. The following are three things that you should know before considering a diamond investment.
1. Educate yourself about the basics
Not all diamonds are created equal. Prices vary based on a number of factors including quality, color and cut. Before investing, there are certain requirements that need to be met first. The first is being aware of resale liquidity and having your investment confirmed by a specialist.
Establishing relationships with a diamond specialist will also help to give you access to dealer prices and will keep you involved in the entire process.
2. Invest in certain types of diamonds
It’s important to make investments that make the most sense for you. Having a budget and doing some research can help you decide how much money you would like to invest, and where you would to invest it. Never go into investing without a plan or without being knowledgeable about what you’re investing in.
Initial investments can start with those as recommended by the Rapaport Group: 1.01 to 1.49 carats, D-H color, IF-VS2 clarity and with Excellent cuts. These are simply guidelines as your investment objectives will vary.
3. Keep yourself protected
All diamond investments need to be thoroughly inspected for its quality and to ensure that you are getting what you are paying for. The Gemological Institute of America (GIA) is an authority for grading gems and includes detailed reports of all characteristics of the diamond including its color, clarity, cut and carat weight.
It’s important that your diamonds are always graded by the GIA. These measures ensure the quality of your investment. If you are serious about diversifying your investments with diamonds, be prepared to do your due diligence. You should always be 100% certain of what you are investing in.
Chuck Stevens is an avid blogger always looking to share his experiences and recommendations. He has been a financial advisor for over 10 years. You can follow him on Twitter @chuckstevens12.
Tags: diamonds, economy, financial planning, investments, money
