When it comes to investments, it’s well known that you need a high level of diversification to allow you to build your wealth. This gives you options regarding how you hold your money. It also gives you choices on what to hold onto or sell as the markets change and new investment opportunities come to the forefront. Among them, diamonds are definitely a great choice.
Most people’s investment portfolios often include a good mix of stocks, shares, and commodities. One such commodity that can be well worth investing in is diamonds.
Diamonds offer a promising addition to your portfolio with their timeless appeal and consistent demand. Their value has shown a tendency to appreciate over time, making them a potential source of long-term gains.
Before you make the decision to invest in diamonds, it’s crucial to understand the potential pitfalls and avoid making costly mistakes. This cautious approach can help you navigate the diamond market with confidence.
Expensive Isn’t Always Better
While the mantra “buy low, sell high” is great for all investments, it’s not quite the same with diamonds. First, you lose money on tax, typically sales tax, at the point of purchase. There is no VAT, unlike in the UK, but there is capital gains tax if you sell for a profit. Moreover, there are import duties if you import the diamonds.
Then there is the retailer markup and hidden costs, such as settings if you’re having it put in jewelry, not keeping it loose. You’ll also need insurance for high-value diamonds if they’re in jewelry or worn out and about.
You Can Buy The Wrong Diamonds
Not understanding the grading and quality clarifications of diamonds can result in your buying stock that isn’t worth what you paid for. Such stock is never likely to increase in value over time. Typically, colored natural diamonds are going to be more attractive to buyers than your white diamonds. Although they’re a great investment option, too. The round brilliant diamond is the most popular shape. You need to be looking at the different cuts and clarity of the diamond. Higher clarity means it has fewer inclusions and imperfections, making it more valuable.
Typically, you should aim to include high-quality mass-market appeal diamonds that are sought after. They don’t have to be the biggest and most expensive diamonds in the world. Simply good quality diamonds, such as the ones you can buy from Rare Carat. They aim to be the best place to buy diamonds.
You Shouldn’t Expect Massive Gains
Despite what TV shows and movies allude to, you can’t simply go around and resell bags of loose diamonds for a massive profit. While diamonds are always popular, they take time to increase in value. This is not an investment for those seeking short-term gains. If you choose this option, you can expect to have to hold onto them for a while before you see any significant increase in price and value. This means you should only consider this if you can afford to have funds tied up in this commodity.
