A selection of rough diamonds, produced by De Beers, is seen in this undated handout photo released to the media on Friday, Nov. 4, 2011. Anglo American Plc agreed to buy the Oppenheimer family's 40 percent stake in De Beers for $5.1 billion in cash, ending the dynasty's 80-year ownership in the world's largest diamond miner. Source: De Beers Group via Bloomberg EDITOR'S NOTE: NO SALES. EDITORIAL USE ONLY

The Pros and Cons of Diamond Investing

Most people realize they need to invest their money to have a comfortable future, or to be able to leave something for their children. Yet too often people fear investing. They are afraid their money will be lost when a market crashes, or they don’t understand the stock market to begin with, which makes them skeptical. Stock markets and currencies are also just paper issued by governments and institutions, which may not be there to cover their obligation to the holder of the paper in the future. Not surprisingly there are a lot of people who take comfort in being able to have some of their wealth in tangible assets that they can see and hold. With diamonds becoming increasingly popular, it leads many to wonder what the pros and cons are when it comes to investing in diamonds.

The Cons

As with any type of investment, diamond investing still comes with some potential risks. There are never guarantees with anything in life, including when it comes to investing money. The risks of investing in diamonds may be lower than in many other types of markets, but they still do exist.

Cons when it comes to diamond investing include the possibility that people could physically lose their diamonds, they may not purchase them from a reputable company, they may be investing in diamonds that are not of the right investment quality, or properly laboratory certified. Investing in diamonds from a company that is not well established and respected can be disastrous. The correct way to protect a diamond investment is to make the purchase from a reputable company, that back’s what it is offering with the  correct grading laboratory certifications and specifications for investment purposes, selling to you at the wholesale not retail price.

In order to help protect the investment, it’s important that the diamonds are safely stored, or properly identifiable if put into jewelry.

The Pros

Investing in diamonds has been popular for many years, in fact since the dawn of human civilization. Diamonds are the most compact form of tangible wealth and they show steady incremental growth. The advent of 21st century analytical tools and the corresponding accurate certification of diamond qualities propels the investment market forward today, allowing non-experts to invest comfortably.

Additional pros when it comes to diamond investing today is that it’s easy for people to understand what they are getting, unlike paper investments. Diamonds are something that people know has enduring value, so they feel comfortable putting their money into them. They are also a tangible asset, one people can hold in their hand. They know where their money is, rather than just wondering and hoping. When in need, those diamonds can be pulled from the closet, safe or wherever they are and be turned into almost immediate cash.

Diamonds have a long history of rising in value, with a 5% per year growth being the average for the past decade. Also mine output is dropping while global population increases which means more demand with less supply. The track record for diamond values is there for people to see and investigate, and they can easily make heads or tails of it. Plus, diamond investing is affordable. Since people are purchasing the size and number of diamonds they want to invest in, they set their investment based off of what they can afford. While some people may start with a $1,000 investment, others may opt for $100,000. Diamond investing is open to everyone, and they can be handed down easily as a family heirloom or even enjoyed in jewelry

Going Forward

As with all investing options, it’s a good idea for those who are considering diamonds to do their research. Some people are putting all their money into paper markets no one fully understands, others prefer to put some of their money into something that has stood the test of time, trusting what they can physically hold, and what they can easily pass down or sell off. Diamond investing has been around for a very long time, and we still haven’t seen anything yet. Many people are taking a second look today, or a serious first one, because of all the benefits, and low risk that this type of investment provides.