Diamonds not a smart investment...

[Laila619]

Hi everyone! We are all jewelry lovers here obviously, but what do you think of these articles? I'd love to know your thoughts!

http://www.smartasset.com/blog/personal-finance/why-a-diamond-engagement-ring-is-not-a-good-investment/

http://blog.priceonomics.com/post/45768546804/diamonds-are-bullshit

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

 

[partgypsy]

I agree diamonds are not a (financial) investment.
There are a lot of things people buy that are not a good investment and depreciate soon after purchase, such a vehicles, sound systems, expensive clothes, other electronics.

Unlike the items above, jewelry with precious metals and good craftmanship does retain a percentage of the value, and continues to hold that value decades after purchase unlike the things mentioned above. They also are used as a bond of marriage, hold sentimental value and can be handed down to descendants.

If you are only buying a diamond for the financial investment, maybe buy a fancy colored diamond. But I suspect you are not buying a diamond for soley financial reasons, correct

Buy a ring that is of the quality you want, in the price range that you can afford. And enjoy it!


As long as people are willing to pay the prices to have those rings, then who am I to say? As long as the couple agrees to forgoe rings, or uses engagment money to buy a beautiful painting or whatever it is their money. The only reason why that article may rub me the wrong way, is that is may be used as a reason not to buy a fiance a ring of x amount, while at the same time he is buying a car for 3-5X for themselves. Beauty and value is in the eye of the beholder.

Next they will be doing an expose that the actual food products used in making a fine restaurant meal only cost x amount while the restaurant charges gasp 10 or 20x that amount!!!

 

[Dancing Fire]

Yes it is. I can sell my wife's 3ct stone for a profit!..

 

[missy]

Jewelry is not a smart investment unless you are dealing with very valuable (expensive and out of most of our reaches) jewels. There is another thread around discussing this very topic but just to add my thoughts here- I buy jewelry for my enjoyment and never as a way to invest my money. The jewelry I buy is for me and I never intend getting a return on that investment. The only investment value I can say it has for me is the pleasure I get from it. Looking at it and wearing it.

I would never spend the money I needed for health insurance, home/food/schooling/retirement on jewelry. I use disposable income (income I do not need to live on) only.

 

[Smith1942]

I'm not interested in the worth of my jewellery. I bought it because it makes my heart sing! I clicked on the second link but started nodding off at the lecture about intrinsic value and something about Hertz - dunno, my eyes glazed over.

Life, money and jewellery is there to be enjoyed! The finance industry acts as if we're all going to live to 95 (so buy our investment products!) and need extensive long-term care costing tons and tons of money but that isn't the case for many, many people. My parents friends started dying in their late sixties, quite a few of them, and quite a few more are not slated to reach very old age because they have other health problems. I used to mentally nibble my nails and worryworryworry about it all, and although we have plenty of investments/pensions/savings, I have spent spare money on diamonds because nature gives us so much misery with death and cancer etc that we might as well enjoy the great things that nature offers as well, like previous gems and metals. You get one life and it's more short for more people than we'd care to admit. I got sick of being scared. I embrace all the wonderful things there are to buy in the world and Suze Orman can shove it.

Now, if you'll excuse me, I've got shopping to do!

 

[Dancing Fire]

I'm not interested in the worth of my jewellery. I bought it because it makes my heart sing! I clicked on the second link but started nodding off at the lecture about intrinsic value and something about Hertz - dunno, my eyes glazed over.

Life, money and jewellery is there to be enjoyed! The finance industry acts as if we're all going to live to 95 (so buy our investment products!) and need extensive long-term care costing tons and tons of money but that isn't the case for many, many people. My parents friends started dying in their late sixties, quite a few of them, and quite a few more are not slated to reach very old age because they have other health problems. I used to mentally nibble my nails and worryworryworry about it all, and although we have plenty of investments/pensions/savings, I have spent spare money on diamonds because nature gives us so much misery with death and cancer etc that we might as well enjoy the great things that nature offers as well, like previous gems and metals. You get one life and it's more short for more people than we'd care to admit. I got sick of being scared. I embrace all the wonderful things there are to buy in the world and Suze Orman can shove it.

Now, if you'll excuse me, I've got shopping to do!

So true about Suze Orman. She advice you to save, save, save until you die.... IMO, once you reach a certain age money becomes useless. What so good about money if you can't enjoy it while your still young.

 

[Circe]

Part Gypsy - interesting that your parallel was a beautiful painting! I was about to say that for me, buying a piece of jewelry is akin to buying a piece of art. I rarely buy art because I think it's going to increase in value (though, come to think of it, some of it probably has become "collectible" at this point). I buy it because I love looking at it, and it makes me happy.

What I find interesting about both of these articles - and the many others of their ilk that I've come across over the years - is how they situate the engagement diamond as an illogical drain foisted upon innocent men by foolish, gullible women.

C'mon, where are my articles about how stupid it is to sink money into a cool-looking car? Or a fancy gaming system? Inevitably, it's the stuff that's used as a female status symbol that's presented as unnecessary and wasteful. (... shoes, anyone?) I'm pretty sure most women enjoy their engagement rings long past the time when their masculine partners revel in their new motorcycles.

Not to mention the fact that in the current socioeconomic system, women also work, and while there are exceptions, most marriages function in a shared economy post-ceremony. Dudes may be the ones making the initial outlay, but it's a shared cost in the grand scheme of things.

Let's argue about why women get engagement presents and men don't (and, for that matter, why women are discouraged from proposing, and strongly criticized if they put forth any opinion about the process, from "pressuring him into it" to flat-out ultimatums, from asking for a specific kind of ring to, even more sadly, voicing some dissatisfaction with this thing they're supposed to wear for the rest of their lives post-proposal). Let's argue about why status symbols are so important in our society. But let's admit that the engagement-ring-rage is less about financial outlay/investment, and more about gender and other social roles in a time of enormous changes .....

 

[Lady_Disdain]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

The money I spend on jewelry (and books, CDs, clothing, trips, spas, etc) is my fun money, budgeted for this. Buying jewelry does not divert funds from investing but from other discretionary spending. If I broke my spending down strictly into cost of living (basic costs only - an expensive gym is a luxury), discretionary spending (including the fancy cheese I like and is not really necessary for nutrition) and investment, a lot of it is discretionary. This is the balancing game: enjoy life now and plan for the future. Look to the future too mich and you may end up miserable in the short term and vice versa.

In your case, you are comparing 2 different things: two luxury purchases (a ring or a trip, which depreciates even faster, since it is "consummable") vs an investment (or, at least, cost of living). One is simple: will both of you get more enjoyment, in the long term, from a trip or from a ring? No right or wrong answer, just what works for you. The second question is different: should we invest money or spend it on fun things? This depends on your financial planning, where you are in life and what your future looks like.

 

[ChristineRose]

There was a time not too long ago when gems were a form of currency, like gold. You could buy a diamond in the morning and sell it in the afternoon for the same price less a small fee. Before they invented banks people would convert their metal coins into gems rather than walk around with bags of metal.

That time is long gone. Diamonds supplies now are set by a monopoly and there is no diamond market (in the sense of a stock market) where stones are presented to all and freely traded. Cutters and jewelers either work with the monopolist or they don't get stones.

If you sell your diamond at a pawn shop or a gold buyer's, the stone will eventually end up back in the same supply chain as all the other diamonds, and it will be marked up at every step. Hence you can't reasonably expect to get anything near what you paid for it. If there's an exception it might be an auction at Christie's.

That said it's still pretty disturbing how many people are trying to market gems for their resale value. Diamonds are not a commodity (like gold), they are not a currency, they are not scarce (emeralds are rarer), they are not limited (like land), they are price-controlled, and they have little inherent value (no one makes them into computers or houses).

Justify it because everyone spends money on the things that someone else things are worthless. During my formative years my parents spent endless hours telling me how every fun thing I wanted was wasteful. Now it's obvious to me how much money they spend on things I could do without. Make your own choices and find your own balance.

 

[Kaleigh]

Generally no. But bought well. Some signed pieces. But yes not like gold etc...

 

[distracts]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

How is a vacation a better investment than a diamond? When you are done with a vacation, all you have are memories that will fade with time. The diamond at least you can resell for some money if you get tired of it. While I don't think of diamonds/jewelry as an investment, I certainly think they are more of one than a vacation. A year later, you can sell your vacation for $0. A year later, you can probably sell your diamond for 50% of the purchase price - on the bad end, 20%, which is way more than you could get for your vacation memories.

And I like them much more too since I find vacations terribly stressful.

 

[innerkitten]

Good jewelry can hold it's value.

 

[Smith1942]

I'm not interested in the worth of my jewellery. I bought it because it makes my heart sing! I clicked on the second link but started nodding off at the lecture about intrinsic value and something about Hertz - dunno, my eyes glazed over.

Life, money and jewellery is there to be enjoyed! The finance industry acts as if we're all going to live to 95 (so buy our investment products!) and need extensive long-term care costing tons and tons of money but that isn't the case for many, many people. My parents friends started dying in their late sixties, quite a few of them, and quite a few more are not slated to reach very old age because they have other health problems. I used to mentally nibble my nails and worryworryworry about it all, and although we have plenty of investments/pensions/savings, I have spent spare money on diamonds because nature gives us so much misery with death and cancer etc that we might as well enjoy the great things that nature offers as well, like previous gems and metals. You get one life and it's more short for more people than we'd care to admit. I got sick of being scared. I embrace all the wonderful things there are to buy in the world and Suze Orman can shove it.

Now, if you'll excuse me, I've got shopping to do!

So true about Suze Orman. She advice you to save, save, save until you die.... IMO, once you reach a certain age money becomes useless. What so good about money if you can't enjoy it while your still young.

Exactly. Remember the cliche that cool sports cars are always driven by older men? I don't want to be like that with jewellery. I want to decorate my face while it's still relatively young!

 

[Smith1942]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

How is a vacation a better investment than a diamond? When you are done with a vacation, all you have are memories that will fade with time. The diamond at least you can resell for some money if you get tired of it. While I don't think of diamonds/jewelry as an investment, I certainly think they are more of one than a vacation. A year later, you can sell your vacation for $0. A year later, you can probably sell your diamond for 50% of the purchase price - on the bad end, 20%, which is way more than you could get for your vacation memories.

And I like them much more too since I find vacations terribly stressful.

Yep. Agree completely. I hate travelling - she sheer stress of it does me in. And my parents have spent about 300k, conservative estimate, on cruising in the last 15 years, but if I spend three hundred dollars on a piece of jewellery there's a sharp intake of breath. It is completely, utterly ridiculous.

Don't you just love the way that people love to judge the spending of others, as if their own spending choices are so great? I think all that money spent on cruises is a complete waste. You might as well set fire to the money, in my opinion. I'm too polite to tell them that, though.

 

[Smith1942]

Part Gypsy - interesting that your parallel was a beautiful painting! I was about to say that for me, buying a piece of jewelry is akin to buying a piece of art. I rarely buy art because I think it's going to increase in value (though, come to think of it, some of it probably has become "collectible" at this point). I buy it because I love looking at it, and it makes me happy.

What I find interesting about both of these articles - and the many others of their ilk that I've come across over the years - is how they situate the engagement diamond as an illogical drain foisted upon innocent men by foolish, gullible women.

C'mon, where are my articles about how stupid it is to sink money into a cool-looking car? Or a fancy gaming system? Inevitably, it's the stuff that's used as a female status symbol that's presented as unnecessary and wasteful. (... shoes, anyone?) I'm pretty sure most women enjoy their engagement rings long past the time when their masculine partners revel in their new motorcycles.

Not to mention the fact that in the current socioeconomic system, women also work, and while there are exceptions, most marriages function in a shared economy post-ceremony. Dudes may be the ones making the initial outlay, but it's a shared cost in the grand scheme of things.

Let's argue about why women get engagement presents and men don't (and, for that matter, why women are discouraged from proposing, and strongly criticized if they put forth any opinion about the process, from "pressuring him into it" to flat-out ultimatums, from asking for a specific kind of ring to, even more sadly, voicing some dissatisfaction with this thing they're supposed to wear for the rest of their lives post-proposal). Let's argue about why status symbols are so important in our society. But let's admit that the engagement-ring-rage is less about financial outlay/investment, and more about gender and other social roles in a time of enormous changes .....

Couldn't agree more.

 

[Circe]

Thanks, Smith!

 

[iLander]

Long term, it's fine.

My 1 carat diamond RB, 20 years ago, cost $1500, in a 14K solitaire setting. I'm pretty sure I can get a couple of thousand for it today. Possibly more.

Which is more than I can say for the car I bought 20 years ago, new, for $12,000. I see it on ebay now for $2000 or less.

 

[OreoRosies86]

I do think a huge amount of diamond buyers go into their purchase thinking that buying a large rock is like having a personal bank of one. "I'll spend $60,000 on this diamond and if I ever find myself in a bind I can sell it for what I paid!"

It is important for people to know that unless you are buying a world class or completely unique stone, you are entirely at the mercy of what maybe a handful of people in the entire world would want (or be able to) buy.

 

[JewelFreak]

These guys are not talking to PS-variety buyers, but to the vast population in general, who know nothing about diamonds & go to Jared's or Tiffany & believe the hype. If someone wants a diamond & can afford it, dynamite. But they should realize as you all wrote above -- that the ring is a symbol of sentiment & faith & is beautiful, but not an item that will grow in value -- certainly not the quality the average young couple buys.

What's the so-called "rule" now? Spend something like 3 months' income on an e-ring? Okay, go for that if you choose -- but don't do it believing your mass-market-store diamond will increase in value & pay you back. Do it in addition to, but not instead of, true investments. This is what those articles are saying, I think.

Here, we buy gems & jewelry for sheer love, not expecting to make a killing later on them. Same as any passionate interest -- the articles express it too dramatically, but the idea is to know the facts & keep it in perspective.

--- Laurie

 

[insured]

In an either/or scenario, if it were a diamond or a downpayment on a house, or a few months rent, I would take the essential of housing. If you have enough to cover your housing and other essentials, and it were a diamond or a vacation, that depends on your personal priorities, and what you'd get most enjoyment out of, which will obviously differ from individual to individual.

If disposable income is tight, and it's a diamond or saving for the future, the point of the articles I think is that the amount some spend on a diamond would go a long way, if invested that early in life, given the power of compounding.

As example, $15k spent on a diamond, if invested otherwise with an average rate of return of 6% would be worth $102,654 after 50 years. The diamond almost certainly will not be! If essentials and saving for the future is comfortably covered, what disposable income (which is by definition, disposable) is spent on, whether it's fancy cars, mcmansions, art or jewellery (and don't forget charity ), is up to the spender

 

[Dancing Fire]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

And I like them much more too since I find vacations terribly stressful.

I agree, especially when the Visa bill is due...

 

[Laila619]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

How is a vacation a better investment than a diamond? When you are done with a vacation, all you have are memories that will fade with time.

I agree, but some people would argue that at least the vacation can be enjoyed and experienced by both parties, whereas the ring is more for the woman's enjoyment. And you can *do* something with a trip, whereas you don't do anything with a ring other than have it look pretty on your finger.

I dunno, a trip wouldn't be my idea of a good investment. But I could definitely see saving the money for a home or something more useful than a jewelry piece.

 

[Dancing Fire]

A vacation will sparkle for 2 weeks. a diamond will sparkle forever.

 

[MissGotRocks]

A vacation will sparkle for 2 weeks. a diamond will sparkle forever.

Amen!

 

[royalstarrynight]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

How is a vacation a better investment than a diamond? When you are done with a vacation, all you have are memories that will fade with time. The diamond at least you can resell for some money if you get tired of it. While I don't think of diamonds/jewelry as an investment, I certainly think they are more of one than a vacation. A year later, you can sell your vacation for $0. A year later, you can probably sell your diamond for 50% of the purchase price - on the bad end, 20%, which is way more than you could get for your vacation memories.

And I like them much more too since I find vacations terribly stressful.

Yep. Agree completely. I hate travelling - she sheer stress of it does me in. And my parents have spent about 300k, conservative estimate, on cruising in the last 15 years, but if I spend three hundred dollars on a piece of jewellery there's a sharp intake of breath. It is completely, utterly ridiculous.

Don't you just love the way that people love to judge the spending of others, as if their own spending choices are so great? I think all that money spent on cruises is a complete waste. You might as well set fire to the money, in my opinion. I'm too polite to tell them that, though.

Amusingly, I just went on a cruise and met an elderly couple that said that cruising was cheaper than a nursing home.
I guess if it saves you rent, food and housekeeping money you can have both!

 

[royalstarrynight]

I don't think you should ever go into buying a gem, diamond or not as an "investment". It simply won't appreciate past the market performance on average and will crash faster because it's a luxury good.

However, if it brings you joy that may be good enough. Everybody obtains different amounts of joy in different ways.

At this stage of my life, I'd rather put 15k towards my down payment but who am I to judge you for buying a 15k rock. Just make the decision that works for you and don't pass judgement on other people!

 

[ChristineRose]

Long term, it's fine.

My 1 carat diamond RB, 20 years ago, cost $1500, in a 14K solitaire setting. I'm pretty sure I can get a couple of thousand for it today. Possibly more.

Which is more than I can say for the car I bought 20 years ago, new, for $12,000. I see it on ebay now for $2000 or less.

Well, cars aside, that's less than 2% per year, which is not enough to beat inflation.

 

[justginger]

A vacation will sparkle for 2 weeks. a diamond will sparkle forever.

I disagree. The memories I have from traveling will never 'disappear,' they cannot be lost or stolen, like a diamond. I have videos, photos, and well -- my memory! DH and I often smile and laugh together, recounting things we've seen or done around the world, the people we've met along the way. It's a form of bonding, a sense of adventure, a lesson in compassion, and a break from "normal life." I may end up selling Poppy to help fund our 5 month South American/Antarctic trip, when it rolls around in a few years' time. If I do, I have no doubt it will be worth every single penny.

 

[justginger]

For those of us who love diamonds but are also conservative and smart with our money, how do you personally justify spending money on something that really has no intrinsic value and depreciates right after purchase? Would you have been happy if your boyfriend suggested using the money for an e-ring towards a down payment on a new house or an engagement trip, and you got engaged with a simple band instead?

How is a vacation a better investment than a diamond? When you are done with a vacation, all you have are memories that will fade with time. The diamond at least you can resell for some money if you get tired of it. While I don't think of diamonds/jewelry as an investment, I certainly think they are more of one than a vacation. A year later, you can sell your vacation for $0. A year later, you can probably sell your diamond for 50% of the purchase price - on the bad end, 20%, which is way more than you could get for your vacation memories.

And I like them much more too since I find vacations terribly stressful.

Yep. Agree completely. I hate travelling - she sheer stress of it does me in. And my parents have spent about 300k, conservative estimate, on cruising in the last 15 years, but if I spend three hundred dollars on a piece of jewellery there's a sharp intake of breath. It is completely, utterly ridiculous.

Don't you just love the way that people love to judge the spending of others, as if their own spending choices are so great? I think all that money spent on cruises is a complete waste. You might as well set fire to the money, in my opinion. I'm too polite to tell them that, though.

Amusingly, I just went on a cruise and met an elderly couple that said that cruising was cheaper than a nursing home.
I guess if it saves you rent, food and housekeeping money you can have both!

I've actually seen the sums worked out, interestingly. Cruising continuously for (I think it was) 15 years vs a 'normal' nursing home worked out to be about 3000 pounds more expensive. That's it. And you have proper service, real entertainment, rooms decorated and cleaned, almost unlimited, decent quality food, new, young people to meet every day, 24/7 doctors available, etc. It's an option I'd definitely consider myself, if I live to that age!

 

[CharmyPoo]

I love vacations and seeing the world. These are life experiences and a good trip is never forgotten in my opinion. I see it as an investment in myself I would not use my vacation budget on bling and vice versa. I have been aching to go on another Asia trip.