Investing in Colored Diamonds

Colored diamonds are a promising – not to mention fun – alternative form of investment. If you are uncomfortable with the risks that the stock market poses or tired of its ups and downs, then you might be interested in colored diamonds. They have historically been more stable than the stock market, and they offer promising returns.

Selecting Diamonds as an Investment

If you’re like most people, you’ve only selected diamonds based on what you like – or, if you’re smart, what your better half likes. While you and your significant other will both likely be pleased with any highly valued colored diamond, you should not just go picking out just any colored diamond as an investment. Although diamonds can be a great investment, not all diamonds appreciate in value. For instance, an engagement ring is rarely worth more on the secondhand market than it was worth new.

When selecting an investment diamond, you should look for a rare diamond. The four main characteristics that make a diamond rare are:

• Quality
• Size
• Color
• History

Thus, a great investment diamond will be of the highest quality, large and colored, which makes it unique from the vast majority of diamonds. If it has a history, that is a bonus.

Returns of Colored Diamonds

In general, rare colored diamonds appreciate 15 to 20 percent annually. They can appreciate even faster when the stock market tumbles. For example, in the 2008 stock market crash, the value of colored diamonds increased 50 percent. Because there are so few high quality, large colored diamonds, they virtually never fall in value.

Colored Diamonds for the Everyday Investor

Investing in colored diamonds is not just for the rich; it’s for you, the average working person. Values range from $15,000 to $35 million, so there is an investment diamond for every size nest egg. No one would advise investing all of your retirement savings in colored diamonds, but they can be a solid component of a well-developed portfolio – no matter who you are.