OE OFFERS SOME SENSIBLE ADVICE ON INVESTING IN DIAMONDS FOR THE ORDINARY FOLKS WITH LIMITED BUDGET

First, fear not you need a million or even a hundred thousand ringgit to be able to invest in diamonds. But don’t fool yourself thinking a few thousand will do. You will need at least RM 20,000 as seed money to buy an investment worthy diamond with potential to increase in the medium to long term. Diamonds that increase by a few hundred thousand ringgit sadly requires a few million ringgit to begin with. Think in terms of 3 to 5 years, not 12 months before you see any notable appreciation.

TIPS ON BUYING DIAMONDS FOR THE AVERAGE PURCHASER

If you have several millions to invest on a single stone, you will already have the experts from Christie’s, Sotheby’s or the nearest designer boutique to advise you. But if your budget is RM 20,000 to RM 50,000, read on.

1; SIZE MATTERS, THE BIGGER THE BETTER
You may notice full page advertisements offering 0.3, 0.5 and even 0.75 carat diamonds at attractive prices. These are great for everyday wear but a diamond of investment grade must be above 1.5 carats. Some experts insist it must be at least 2 carats. Please note a 2 carat diamond does NOT cost twice as much as a 1 carat diamond of similar quality but can be four to seven times more! Diamonds over 1 carat are already quite rare so a 2 or 3 carat diamond easily costs over RM 25,000.

2; SINGLE STONE IS BETTER THAN MANY STONES
A solitaire or single diamond of 1.5 carats is worth far more than a cluster of 120 tiny diamonds totaling 1.5 carats. The large number of diamonds may appear impressive but cannot be compared with a single stone of identical weight. Unless you purchase an elaborate set consisting of matching necklace, earrings, ring and brooch, a single diamond is the better choice. A ring of 2 or 3 diamonds is also considered investment worthy provided their total weight is above 2 carats.

3; THE 4 C’s
A diamond’s value depends on Carat, Colour, Cut and Clarity. These are self-explanatory but any jeweler can explain why the prices of two diamonds of identical weight can vary so dramatically, sometimes up to several hundred percent! A 2 carat diamond of D colour and VVS1 clarity can cost more than a 10 carat diamond of H colour and S12 clarity. However this is up to you as some prefer size and weight rather than clarity and colour.

4; BUY ONLY CERTIFIED DIAMONDS
If unsure, buy loose stones that are sealed in their plastic pouches which have been certified by reputable laboratories like GIA (Gemmological Institute of America) , HRD (Diamond High Council), EGL (European Gemmological Laboratory) or IGI (International Gemmological Institute, Antwerp). These certificates are accepted worldwide though GIA seems to be the most well known. However, please remember once the seal is broken, the guarantee is also broken! Hence the importance of getting a reputable jeweller should you wish to set the diamond into a ring as there are cases of completed rings that contain a different, inferior and cheaper diamond! Imagine the horror of submitting a D colour, VVS1 diamond and getting an E colour, V2 stone back! You may not even be aware your diamond has been swopped until years later when you wish to resell.

5; BUY FROM RECOGNISED RETAILERS LIKE OE
A reputable retailer will issue a receipt detailing the stone’s 4 C’s before accepting your diamond for mounting into a ring and another certificate detailing the diamond’s 4 C’s once the ring is completed. Some retailers will even offer a buy-back scheme at either the purchase price or current market price!

6; CRAFTSMANSHIP COUNTS
While famous designer brands carry more prestige, it is not necessary to pay a premium just to have the wellknown name engraved onto the shank of your ring. Definitely not when you wish to set your loose diamond into a ring or pendant. However, the overall value will increase if the workmanship is fine and flawless compared to shoddy workmanship.

7; BANKING ON DESIGN
Tastes and fashions change and what is chic and trendy today may seem hopelessly out of date in another decade. Classy, timeless and simple designs are better at defying the vagaries of fashion. It is easier if you are considering relatively larger diamonds of 1 carat as the setting can be straightforward without unnecessary frills as the emphasis will be on the sparkle of the diamonds.

8; BUY THE BEST YOU CAN AFFORD
Instead of buying five rings totaling 8 carats for let’s say RM 20,000, it is better to buy just 1 ring with 1 diamond for the same amount. The solitaire diamond may be just 1.7 carats but regardless of caratage, it is always advisable to buy a single stone rather than several stones of same weight. Even if you have the cash to buy a 6-carat diamond, it may not always be available!

9; BE REALISTIC
Diamonds hold their value because certain cartels like De Beers own most of the mines and can reduce or increase the supply of diamonds into the open market so as to keep prices stable and avoid wild fluctuations. Hence the value of diamonds is supposed to increase slowly but this does not apply to bigger diamonds over 2 carats. Large diamonds are always in short supply, especially those from 5 to 10 carats. Many assume diamonds are dwindling in supply. This may not be always true. While old mines become exhausted, new mines can always be discovered!

10; WHY DIAMONDS?
Buying diamonds is like investing in a piece of eternity. Most diamonds are under a billion years old and will still sparkle millions of years from now. Diamonds are the most concentrated store of value that exists. You can put RM 10 million into the coin compartment of your wallet in the form of a diamond. They are tangible, liquid, portable and easily converted into cash. You can bring them with you wherever you travel and no one will ever know. Authorities can trace where money is transmitted while mansions, cars, sculptures and properties are not portable. Investors can use diamonds without decreasing their value and pay no property tax on their investments!

Lastly, you can enjoy wearing your investment while it appreciates in value! Which stocks, shares, bonds, deeds, treasuries and commercial papers can do that?