Making investments for the future is about finding the next big thing to jump in price. For a number of years, gold has been king when it comes to the value of precious metal assets but thoughts are now turning to the new kid on the block for where the smart money is predicted to be going; diamonds.

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If you’ve not looked at buying diamonds in the past, here’s a guide to making your move and joining the increasing number of people who are recognising the fact that it’s an industry which is in over demand and has a shortage of quality goods.

Risk, amount of time for investment and capital

Buying diamonds will need a substantial amount of initial capital investment whether they are raw or cut and polished and it should be seen as a long-term investment. An element to consider is that diamonds can be challenging to sell without a large commission involved as well as the possibility of other expenses such as a valuation fee.

If you don’t want to buy actual diamonds, you can invest your funds into either a mutual fund or an exchange traded fund which deals directly with the diamond market or diamond mining businesses. This isn’t as expensive at entry level but obviously doesn’t have the excitement actually owning diamonds yourself to sell in the future or even decide to have made into bespoke pieces of very special jewellery.

Price fluctuations in the diamond market are common so really think about whether you are happy to see potentially volatile fluctuations in the investment value.

Check out the quality and validity before purchase

Before handing over any money, have an expert check out the carat weight, grade and certification of the stones. Documentation from a trusted source will detail the grade of the diamonds, the cut and clarity if it’s a cut and polished gem as well as the report on the flaws, inclusions and blemishes.

If there is no documentation available, never take the details on face value. Use an independent company which can identify and grade the stones and can also provide industry-recognised paperwork.

Always think long term

Specialist jewellery companies which buy loose diamonds for wedding rings, Houston based or elsewhere in the world always buy wisely when they are looking to set them into their statement pieces. You also need to have the same mind set when it comes to when to buying and selling; the long term performance is much more important than day to day rises and falls in the prices.

It doesn’t matter if you’re planning to own physical diamonds or you’ve invested your hard earned money in a mutual fund, you know you’ll be tempted to check the prices on a daily basis. Try to resist as it really can be a market with large jumps and falls and this could cloud your judgement as to the long term asset value.

Think steady and think positive  and you’ll make the money you want to. Another aspect to consider is that if you only think short term and sell and then buy again because you’ve realised the error of your ways you’ll be liable for hefty transaction costs. Buy once, hold for a number of years to come and you’ll be happy you made the leap of faith into diamonds rather than investing in gold.