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Diamonds – Are they really worth your money?

March 20, 2014

There are 4 Cs to consider when purchasing a diamond; its Carat size, its Clarity chart, its Colour chart and lastly its Cut.

FEATURE

diamondsBy Michelle Brohier

There are so many popular verses dedicated to this particular shiny piece of rock. “Diamonds are forever”, “Diamonds are a girl’s best friend”, “Shine bright like a diamond”; there’s no doubt that diamonds have remained the gemstone of choice in today’s popular culture. It has become a symbol of love, excellence and purity and because of its hardness and clarity, it has also symbolised power, strength, brilliance and unparalleled beauty.

This is also why a diamond ring is a popular choice for engagement rings. Since the 1930s, it has become a culture: the best way for a man to profess his love is through an impressive enough diamond for his lover. With all the hype over diamonds, and the high cost involved, it’s easy to believe that diamonds truly are worth it. But if you’re looking at a diamond in the form of an investment, you may need to rethink its value.

Shine bright like a diamond

diamond-engagement-ring2There’s no set price for a diamond as it highly depends on the quality and size of the diamond. There are 4 Cs to consider when purchasing a diamond; its Carat size, its Clarity chart, its Colour chart and lastly its Cut. There’s also the shape of the diamond which will also add on to the cost, depending on how big the diamond you’re choosing. While it’s hard to come up with a proper figure, buying even a 1 carat diamond can cost up to RM6,000 but again, it heavily depends on the 4 Cs and its shape. There are even 2 carat diamonds that cost more than RM20,000! Which is why some believe in order for a man to purchase a diamond ring, it would cost him three years of his salary.

Diamonds are incredibly expensive, which may seem like it makes sense due to its popularity as being known as one of the most valuable stones in the world. Yet despite its high price, diamonds actually have no intrinsic value to those who purchase it. In fact, the moment you purchase a diamond from the jeweller, it loses 50% of its value straight off. A diamond is actually a depreciating asset that looks like an investment due to its high cost of purchase and the belief that jewellery and precious metals are assets that can store value.

It is true that metals such as gold and silver can be purchased on financial markets and they can appreciate and hold value in times of inflation. The market for diamonds, however, is neither liquid nor can they be replaced with similar items. A lot of jewellery items, especially diamonds, go through a 100% to 200% mark-up when bought at retail, which is why if you wish to sell off the diamond ring eventually, you’re lucky to even get a return of 30% of how much you paid for it initially.

And even if there are diamonds that are investment grade, appraisers at Empire Diamonds claim they have examined thousands of diamonds a month and it’s rare to find one that is of extraordinary quality. They’re always slightly flawed, off-colour, commercial grade diamonds because many are more concerned about the size of the diamond than its quality. The chief appraiser has also pointed out that no jewellery store will ever sell a flawless, investment-grade diamond which makes it even more impossible to see a diamond as nothing more than a pretty rock with little monetary value.

Diamonds are a girl’s best friend

diamondThe reason why diamond rings became a “tradition” when it comes to engagement is due to a smart marketing gimmick that began in the late 1930s. Diamonds were once rare and very expensive, but after diamond mines were discovered in South Africa in the late 1800s, diamonds began to lose its value. De Beers, the leading diamond company, then created a marketing gimmick, which included having Hollywood place diamonds in romance movies. They suggested stories and society photographs to selected magazines and newspapers, with them stressing on the size of the diamonds and how they glitter on the hand of a celebrity. Fashion designers would even talk on radio programmes about the diamond trend and with the right marketing materials De Beers convinced men to use up to a month’s salary to purchase a diamond ring.

This worked so well that De Beers increased the suggestion to two month’s salary. And with the increase of demand, its price has blown up beyond its actual worth. Think of all those popular songs, of women wanting nothing more than a diamond ring if a man wants to marry her, of men wanting only the best for the love of their life, and you’ll realise that this is the reason why diamonds cost so much today.

Diamonds are forever

But just because diamonds cost so much, that doesn’t mean it isn’t worth buying. One of the main reasons why diamonds are great especially as an engagement ring is because diamonds are the hardest gems around, and can only be cut by another diamond. This makes it the ideal stone to have if you want something to last for many years, as it will continue to have the same shine and brilliance as the moment you bought it, even after 50 to even 100 years. This is why diamonds are ideal as a symbol of everlasting love.

In fact, rather than see diamonds as a form of investment, perhaps the best way to look at a diamond is to see and use it as a symbol; of status, of worth, of value, of love. If people are willing to buy premium cars or its brand and status, the same can also be said for those who see a diamond in the same manner. In the end, a diamond’s beauty and worth remains in the eyes of the beholder, though not in the eyes of those conducting business. And whether a person is willing to part with their money for such beauty, regardless of its value, is solely up to them.

This was brought you by Michelle Brohier from RinggitPlus.com. RinggitPlus compares credit cards, personal loans and home loans to help Malaysians get more for their money.

 


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