Buying to upgrade - strategy ideas?

[treysar]

Some day I would like to have a 2 carat diamond. I do not want to upgrade my current diamond.

So I’m trying to decide the best way to go about this.

I was tinking of buying a small diamond (think very small) and upgrading every few years. Would this make sense? I was thinking of setting it in a soliatire as a ring, or maybe as a pendant – whichever way would be cheaper to re-set when I upgrade.

Any tips or ideas?

Thanks.

 

[chrono]

Sounds like a very good plan. I''d start with a pendant in a simple basket setting. This way, the setting is inexpensive and you will not loose much when the upgraded diamond needs a larger basket.

 

[Lorelei]

Sounds good to me, in this way you will have your honker before you know it!

Definitely keep the setting simple until you have the size diamond you want, you can pick it's final home then!

 

[decodelighted]

I dunno. I prefer to keep my options open. If you save money off to the side for your project - but keep it liquid (or even invest) ... you can decide LATER if you still really want a 2 carat (in addition to your gorgeous e-ring) ... or maybe by then you''ve moved onto other desires: vacation, honkin sapphire, motorcycle, tuba lessons WHATEVER. Also - you might along the way run into a great deal on a 2nd hand stone ... an antique stone etc that wouldn''t be available for the "trade up" plan. All your $$ would be tied up in a 1.25 ct or something awaiting further "upgrade". Too many negatives to this idea in my view -- not enough pros.

 

[treysar]

Oooh, deco, point well taken. The truth is my heart is set on a OEC.. I never thought about not being able to do exactly what I want.

The thing is, It would be nice to have NO CHOICE but to buy a larger diamond – life comes alon and you realize you NEED other things, but it almost traps me in to getting what I want… ya know what I mena? I mean in a GOOD WAY.

Hmmm.

 

[decodelighted]

Date: 8/3/2007 1:19:34 PM
Author: treysar
The truth is my heart is set on a OEC.. It would be nice to have NO CHOICE but to buy a larger diamond – life comes alon and you realize you NEED other things, but it almost traps me in to getting what I want… ya know what I mena? I mean in a GOOD WAY.

I *do* know what you mean. I kinda secretly wish that there was a "trade up" program for OECs

. I would buy teensy microscopic ones THIS VERY INSTANT and work my way up to those dangly Nicole Richie e/rs I posted the video of.

 

[chrono]

I too wish WF would do OEC upgrades.

 

[kcoursolle]

Since you already have a gorgeous e-ring, I think I''d start the upgrading with pendants. I very simple basket or bezel should run you about $200 in WG. You could maybe just change out the pendant and keep the same chain and pay even slightly less every time you upgrade.

 

[fleur-de-lis]

Hi Treystar-- I'm a bit of a numbers girl, and I think from a #s perspective it might not be the best plan. Let's assume that you'll be upgrading every two years, and it'll take 5 payments to get to that 2 carat, $20,000 stone you're coveting.

Option 1: Diamond prices stay flat. You buy a $4000 item now; in 2 years time you trade that in, add another $4K that you have since saved, lather rinse repeat. In addition to all the points the other posters mentioned about having to stick with one vendor the entire time and the wasted cost of the various settings for the various stones, you're losing out on the opportunity for your money to make money. That initial $4k, if invested even at a very conservative 6% return, will be worth $6457 (8 years), second $4K $5728 (6 years), third $5082 (4 years), fourth $ 4509 (2 years), last 4k flat. Adding those up, at the end of the 8 year period, you'd have $25,776 in your budget. Had you done the upgrade route, and assuming you never spent a dime setting those stones through the years, you'd only have $20,000 to play with. (If you spent $500 setting every two years, you'd only have $18K.( The "upgrade regularly" plan has lost you either $5,776 (or even $7,776)!

Option 2: Diamond prices increase. You buy a $4000 item now; in two years time, diamond prices increase so that the equivalent item now sells for $5K. You, however, only get a $4k credit, so you add your new $4K... but you're really only increasing your stone's value by $3K. Your new $8K stone becomes worth $10K two years later, but you trade it in for $8K, thus losing $2000 "equity" worth in that transaction as well... and so on, thus losing any gains at every turn, while the successive diamonds you purchase represent a loss.

Does this mean you shouldn't get diamonds? No. But it does mean that if you're a regular consumer, DIAMONDS ARE NOT A SOUND FINANCIAL INVESTMENT!

Buy diamonds if you like 'em. (I do.) Upgrade if you want and can afford an upgrade. But as convenient upgrade policies are and I'm glad they're in place, they are not investment plans designed for the benefit of the consumer-- they are for a greater benefit to the business, who gets repeat customers by having them and get the advantage if diamond prices increases. (Heck, they're to the advantage of the business if even inflation increases.) They're a better deal for the average consumer than no upgrade option, because layperson resale on diamonds incurs a 40-60% loss, and compared to that a 10% opportunity cost loss is preferable. But... it is still a loss.




Treystar, the best way to get there is to develop a regular plan of savings in a high yield account or even a high-yield CD kept separate from your normal finances so you're less likely to raid it. If you see something you love along the way, go for it, and keep with the savings. Upgrade sparingly yet decisively. I'm not going to offer the advise to only save your money in the bank-- because where's the fun in that, right?

-- but if you get there by only one way-stop/trade-in instead of 5, you will be WAY ahead of the game. Good luck!

 

[MichelleCarmen]

Hi,

If you''re a person who needs instant gratification or would feel deprived without any "fun" diamond to show in the short-run, I''d opt for the smaller diamond that can be upgraded every few years. IF you have the patience to set aside money every month and not dip into your funds, then that may be the better route. But, then again how long will it take you to save up for a 2 ct? Can you hold out that long?

I''m currently saving up for a pendant and am setting aside money each month. I could buy a smaller stone and upgrade next year when I do plan to purchase a larger diamond, but I think it would be a hassle. But, the diamond you''re considering is quite a bit larger than the size I''m thinking, so personally, if in your shoes, I''d as least get one little diamond to tide me over

 

[treysar]

My worry about saving $ rather than buying now, is that LATER things may come up in life where I''ll have to USE the savings for something else.

If i buy NOW, I''ll just have no choice but to have A DIAMOND!! As you can see, currently a diamond is more appealing - i almost want to TRAP myself into havin to buy a bigger diamond every few years!!

Also, it is rather appealing to watch a rock GROW before my very eyes - not as appealing as bank account IMO...

 

[WorkingHardforSmallRewards]

Well, obviously the best way to approach it is to invest in something that appreciates in value. In that way you can potentially get your diamond more quickly, and hopefully have more left over for a really nice setting--or something else in addition to your 2ct.

But like you said, you might get more practical in future. There are certainly a couple of ways to combat this.

The first I can think is to set aside a certain amount of money and give it to your husband. Tell him that in X number of years YOU WANT a 2ct diamond ring. This money and certain predetermined alloted quantities of money to be invested in the future should be set aside to accrue further interest until X amount of time has past, at which time you should be able afford at least a 2ct diamond ring, maybe more, and that is what the money is for, he can't argue with it If he is anything like me, if you make it clear enough he will make sure it gets done when it is time, no matter how practical you might start to act later. After all, as the years pass, even just five years, he will surely start to appreciate the brevity of life more and more, and I can't imagine he would accept you denying yourself something that he has been helping you work for for so long?

But another idea I have would be to come up with something else of similar value that your husband wants. Then you both work to save money and find investments together that will allow both of you to get that present for yourselves that you have been saving and investing for. So in X number of years you get yourself a 2ct. diamond ring, and he gets something else of equal value that he loves. That way you can both share in the saving and investing experience together, then share in the purchasing experience together. Plus, then, because you have been saving for so long to get the items that you want, you be able to understand how much your husband really wants the thing that he has set his heart on. So that way you would not have an option of becoming "practical" because it would mean taking away from him that thing that he set his mind on, and he would then push you to make the purchase, because he would also understand how much it means to you.

Anyway, I think there are surely a lot of options out there aside from putting all your money in a diamond that will lose value in hopes that the buisness you bought from doesn't go out of buisness in the next 5-10 years

or that somehow the diamond alternatives, other gems, or whatever don't have some disastrous effects on diamond value... plus all of the other obvious emergency benefits that would be available in the event that lives were hanging in the balance. Afterall, if something tragic did happen in that time frame its not like you would then use the money to continue the upgrade, you would just be stuck with a diamond that is not what you really wanted and wouldn't have the money to take care of the emergency or upgrade.

But, I think most importantly, if you just put your faith in "having" to upgrade the diamond, really imagine the sequence of "watching it grow."

You upgrade from a .5-.7 and barely notice a difference in size, then a .7-.85 and barely notice a difference, then .85-1ct and barely notice a difference, once you hit the 1.5-almost 2ct mark it will be like watching somebody grow. If you are with them everyday you don't really notice the size increase you know? just suddenly..they are bigger. I imagine it would be the same if you did a continual upgrade, so that eventually you will have to say.."there isn't much of a size increase, honestly, I can barely tell every those I pay those huge sums of money, and there is hardly any perceptible difference at all-- maybe it isn't worth the additional 5,000 dollars (or whatever it happens to be), lets spend the money on something else rather than an extra .2 or .5cts of diamond"

That type of practical reasoning would, I imagine, be much more of a threat to your goals than the chances of you denying yourself the change from a 0ct right hand ring to a 2ct right hand ring. Big size difference there

!

Anyway, those are a couple of my lengthy thoughts, and though I have alot more, I am going to have to cut it short

 

[MichelleCarmen]

Date: 8/3/2007 11:37:21 PM
Author: treysar
My worry about saving $ rather than buying now, is that LATER things may come up in life where I''ll have to USE the savings for something else.

If i buy NOW, I''ll just have no choice but to have A DIAMOND!! As you can see, currently a diamond is more appealing - i almost want to TRAP myself into havin to buy a bigger diamond every few years!!

Also, it is rather appealing to watch a rock GROW before my very eyes - not as appealing as bank account IMO...

Yep, I can relate to that! My husband is considering going back to graduate school, so I''m thinking I''d better buy now before finances become an issue!

Since you can never predict what will happen in the future, I''d think your best option is to be sure that you''re purchasing an upgradable stone that you truely love. Go as big as you can w/in your price range since you may end up wearing the same diamond for five years! Try not to settle with any stone.

Good luck

 

[Stone Hunter]

Date: 8/3/2007 11:37:21 PM
Author: treysar
My worry about saving $ rather than buying now, is that LATER things may come up in life where I''ll have to USE the savings for something else.

If i buy NOW, I''ll just have no choice but to have A DIAMOND!! As you can see, currently a diamond is more appealing - i almost want to TRAP myself into havin to buy a bigger diamond every few years!!

Also, it is rather appealing to watch a rock GROW before my very eyes - not as appealing as bank account IMO...

Yes I''m sure that that I''d end up spending my money on something else that needs it. Like new gutters for the house. That''s why I was thinking of buying a very very tiny diamond and ugrading like you have. But of course I''d like to stumble across a cheap OEC and have the money to buy it ...