How Much Should I Invest?

Seeking out Professionals Advice

We have all read somewhere in the financial newspapers, or heard through the financial channels that we need to be divesting our portfolios. More recently than ever before, there has been a whole lot of talk on the topic of investing in diamonds. Some have heard about record setting diamond prices in the millions and concluded that this investment was not for them. But many of us wonder if diamond investments should be something for us to consider. We ask ourselves how do we go about selling it when the time comes, what makes an investment grade diamond, or how much do I have to invest in order to include such a diamond in my investment portfolio, among many other related questions.

Leibish viewing a remarkable stone

Leibish viewing a remarkable stone for a customer

We all seek professional help in our lives, from doctors for health, lawyers for law, and financial advisers for our investments. Why is it that my financial adviser had never discussed diamond investments with me? Why has it never been a part of my personal financial plan until now? How much should I invest? How do I go about it? These are all valid questions that should be answered, (and we have a team of investment strategists happy to help). Similar to how you would address a professional of his field, so to I would like to take the liberty to help you better understand the topic of diamond investments.

Should I Invest in a Fancy Color Diamond or Shouldn’t I, that is the Question!

Every average investor has asked himself this question on many occasions. Some may have even brought up the idea with their investment advisor or financial planner, just to be told, that this was not for them, that this is too risky, that they don’t have enough money… why is that? It turns out that most investment advisors get paid when you buy a financial product from them, and only them. The exception to the rule are those financial planners that get paid a flat fee for their advice, or those that get paid based on total assets under management. Also, since diamond investments among the general public are still quite new, many experienced advisors don’t know enough data to provide a subjective answer.

Once investors see all of the 236 different fancy color diamonds in the World Of Colors (shapes, colors, hues), they tend to take a step back, take a deep breath, and wonder where to start.

 Fancy Colors

Some of the rarest colors of the fancy color diamond collection

What Quantifies as an Investible Stone

Not all colors and sizes are considered investible fancy color diamonds. So what is?

In white diamonds, it is quite clear what is and what is not. Most people who deal with colorless stones will agree that a 1-5 carat in size, D-F color and IF-VVS clarity would be considered an investment, because it can be easily sold on the market, also known as liquidity. That there is price transparency and there is a price list on the market. Only, there is very little appreciation with these stones.

Pink vs colorless

A vivid pink vs a round brilliant colorless diamond

We consider a fancy color diamond investment based on color, intensity, and market demand. Historical figures show that both Yellow diamonds between 2.00- 5.00 carats with extremely high diamond qualities along with 100% natural pink diamonds fromm 0.50 carats and over have had the most significant price appreciation. Other extremely rare colors such as blue and red diamonds are priced so high that they essentially maxed out their potential based on current market conditions, and will, at some point, will start to appreciate in value in the near future.. Sizes will differ per color, but after monitoring the color diamond market very closely, the healthiest appreciation up to 350% over a 10 year period for yellows and well over 443% during that same period for intense pinks cannot be missed.

History Says it All!

If we look back, maybe 10, 15 and even 20 years, we can clearly see that fancy color diamonds have outperformed every single hard asset, and every index out there. A 0.50 carat colorless diamond in the 2000-2012 period has appreciated only 10% on average while a 0.50 carat fancy intense pink argyle diamond has appreciated 375%. If we just take inflation into account, we will see that the colorless diamond has in fact lost value during this period.  Fancy color diamonds account for only 0.01% of all diamonds in the world, which also contributes to the strong demand and increase in value.

How Much to Invest?

An investor should be ready to invest as little as $10,000 for an investment grade Fancy yellow diamond. On the other hand, an investor can also be in a position to invest over $350,000 for a 1.01 carat round Fancy Intense Argyle Pink tender stone, which is quite rare, but very much desirable. An investor also has to take into consideration that his investment should also be in the position to sell in the market, meaning that enough demand for his investment should exist. Obviously, a fancy color diamond would take longer to sell than white stones due to the nature and overall rarity of fancy color diamonds. The investor should be patient for the right buyer to come along.

What did the Doctor say?

Diamonds, whether you are only financially focused or not, have a strong emotional attachment.  People are different from one another and as a doctor would prescribe the most fitting drug, your financial advisor should recommend the most appropriate diamond.

Diamonds should not be selected based on what is hot and trendy. Rather, it should be according to your financial resources and objectives. We recommend diamonds based on our education and over 35 years of experience. We recommend a vision.

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