If you have a rich investment portfolio, you may want to add diamonds to add an extra touch of diversification to it. Although there are other luxury goods you can put your money on, diamonds are wearable goods that go beyond adornment.
First, diamonds are light and small, meaning that you can store them anywhere and transport them easily. Therefore, securing diamonds is far easier than protection of other luxury goods. Besides, diamonds can be worn, used as a status symbol, and make your loved ones happy. Other than these obvious advantages, diamonds are also showing to be an amazing long-term investment.
Advantages of investing in diamonds
In addition to their emotional value, after all “Diamonds are girls’ best friends”, diamonds also have an investment value, and they seem to be crisis-proof. The good thing when it comes to investing in diamonds is that they are a very liquid asset to hold, and having a certified diamond gives you added confidence.
The Laws of Supply and Demand
As you can already understand, diamonds are in limited supply. Yes, there are several dozen currently active diamond mines, but this won’t be the case in the future. This is where the law of supply and demand comes into play – once supply ends, the price of diamonds are expected to increase. And if you have investment grade diamonds after supply is depleted, you should expect selling them with a profit – all this accomplished simply by being patient and holding on to your diamonds.
What is so attractive about diamonds above other long-term assets? They are crisis-proof. No matter what is happening globally, be it wars or global pandemics, diamonds tend to hold their value. Therefore, we can conclude that investing in diamonds is a safe investment. Above this, diamonds are liquid and tax friendly.
Differences between diamonds
Before buying diamonds, however, you need to understand what you are buying. Not every diamond is the same, and therefore not every diamond is worth the same. In the world of diamonds, there are the 4 Cs principle you’ll want to keep in mind – cut, carat, clarity, and color. Based on the 4 Cs, you can determine the value of your diamond.
Diamonds can come in a regular round shape, pear shape, or squares. However, the price of a diamond will be determined based on the clarity of cuts, and whether or not the diamond was shaped perfectly, or it has slight imperfections. Why is the cut so important? Because based on the cut, the diamond might have less light coming in, and it will be less sparkly as a result. According to GIA cut grades, round diamonds vary from excellent to poor.
The price also depends on the weight of your diamond. The heavier the diamond, the higher its value. Large diamonds are more rare, and therefore their value rises exponentially and as such, have better investment value.
The price also depends on the color. The standard color that diamonds come in is white (including slightly yellow). All of the other colors, such as red, blue, and pink, are considered fancy-colored diamonds. Colored diamonds are rarer, meaning that the price is higher.
The last of 4C is clarity. It is rarely visible to the naked eye, but you can see whether your diamond is clear inside or not under a magnifying glass. The highest clarity grade is FL, standing for flawless, which will be the most expensive category.
You know why, what’s next?
Now that you know how to pick the right diamond, you can find the one suitable for you. As mentioned, it’s a safe investment that can only bring you nice returns in the future!
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