Are Diamonds Really That Valuable?



Buying an engagement ring for my wife was one of the most exciting but overly complex things that I have ever done in my life.  You read all the taglines from marketers:  A diamond is forever.  Diamonds are a girl’s best friend.  You can’t put a value on love.  It goes on and on and on.  When I was going through the process, I thought it would be fairly easy.  But boy was I wrong.  


Quick sidenote: In my brief research, I actually learned that diamonds are in fact not forever.  Apparently, diamonds will degrade to graphite, although diamonds should last millions to billions of years if temperature conditions remain at levels tolerable for humans.  Additionally, diamonds can burn in certain conditions.  Since diamonds are made out of carbon, at a high enough temperature with the presence of enough oxygen, a diamond can combust to form carbon dioxide.  Science lesson complete.


Completely Clueless

I was the last of my friends to get married, so I had plenty of advice from them. They schooled me on the four C’s: cut, clarity, color and carat weight.  They talked me through what type of setting I should get.  But even with all this help, it was still daunting.  


The question that kept coming up in my mind was, how did I know whether or not I was getting a good deal?  How is the cost of these small rocks really determined?  More importantly my eyes weren’t trained like to notice imperfections with a jeweler’s loop.  At some point, I had to take a leap of faith that what I was getting in fact matched the GIA report.


diamondsOn top of that, everyone refers to a diamond ring a “good investment”.  This is something that always baffled me because I saw diamond engagement rings selling for half their original price after a broken marriage.  For a second, I thought about buying a used diamond ring, but then something about it creeped me out. 


I ended up buying online to save some money through James Allen.  While most people are afraid to buy an engagement ring online, I felt confident from all the positive reviews.  So, I took the leap.  I saved about 20% from what I would have paid at a local jewelry store.


What To Consider

Since this is a finance website, you’re probably not here to read about my experience buying a diamond.  Although I’m sure for a couple of you, it’s topical.  So some quick advice.  First, figure out the style of ring that your spouse wants.  It’d be awful to give such a meaningful gift that they really don’t like.  On top of that, go in a store and get a feel for the size of the diamonds.  The difference between a .99 and a 1.04 is minuscule, but you’ll pay a huge premium to say you have a one carat diamond.  Additionally, you don’t need to spend two or three months of your salary on a ring.  Don’t get pressured into buying a ring that is more than you feel comfortable spending.   


Rise in Popularity

A common belief is that diamonds were not used as engagement rings until the De Beers company marketed the famous “a diamond is forever,” in 1947.  This is actually incorrect.


diamondsThe first well-documented use of a diamond ring to signify engagement was by Archduke Maximilian of Austria in Vienna in 1477.  The Archduke was the original trendsetter for the higher social classes as they began to give their loved ones diamonds, and it continued to spread throughout the masses.


For the next 450 years or so, diamond engagement rings were thought to be reserved for nobility and aristocrats.  Those that did not fall in these categories chose to go with simple gold bands, or as they are known, “posie bands”.


The Oppenheimer Family

The Oppenheimer family, under the De Beers company, get most of the credit when it comes to diamonds since they were the first ones to market diamonds to the masses. Their campaign in 1947 was in effort to boost up sales since diamond sales had declined after World War I and the Great Depression.


At the height of the De Beers empire, they controlled close to 90% of the world’s diamonds. They were able to do this as they continued to buy new diamond mines as they were discovered, to the detriment of the market.  They were also known to murder and kidnap those that tried to interfere with the diamond supply market.


diamondsSince they essentially had a monopoly on diamonds, they were able to set the price.  Here’s the really crazy part.  Diamonds aren’t rare.  They are abundant.  Diamonds are a marketing gimmick that pressures men to pay a premium in order to impress the women they love.


With all that said, the Oppenheimer family has now lost the monopoly that they once had.  Before they sold off their business, they dropped control to only 33%, losing market share each day due to the influx of diamonds found in U.S. and Canada mines.  Losing this monopoly has put price pressure on the diamond.


Actual Valuation of a Diamond

The Rapaport Group has been one of the leading research and trading services for the gemstone industry since 1978.  In their first report, they stated that you could buy a top-quality one-carat diamond for $6,000.  Today, a top one-carat diamond is $11,000.  I know it appears to have doubled.  But, if you really look at the return, it’s closer to a 1.61% return on investment since 1978.  This doesn’t even include the rate of inflation.  


As a comparison, if you had taken that $6,000 and invested that money into the S&P 500, you would have had an annualized rate of return of 11.635% with dividends, or more than $26,000 on the original $6,000 investment.


Comparison to Other Gems


Based on the chart below, furnished by Gemsociety, diamonds aren’t even the most expensive gem that you could buy.  That is left to either the Ruby or Sapphire depending on the size of the gemstone.  


Species 1 carat 1-5 carat 5+ carats
Diamond $4,300/ct $13,600/ct $44,500/ct
Ruby $5,050/ct $9,500/ct $100,000/ct
Emerald $5,470/ct $9,030/ct $23,000/ct
Sapphire $10,000/ct $16,000/ct $34,000/ct
Alexandrite $3,600/ct $15,000/ct $70,000/ct


In comparison, since 2005, Ruby prices have doubled in price and continue to rise due to their rarity.  In fact, rare gems are on the rise, thanks to celebrities like Kate Middleton, who wore Princess Diana’s Ceylon Sapphire as her engagement ring.


Do you think that gems are the wave of future engagement rings?  Do you think diamonds are good investment?  Share your thoughts below.

Mustard Seed Money

Welcome to the website. A mustard seed is a very small seed but astonishingly grows very large over time. My hope is that through your financial journey that your small investment in time, money and faith will grow beyond anything that you could ever imagine.


  1. I had smaller diamonds in my wedding ring, but the center stone was a tanzanite. I loved the deep purple color. Over our 10th wedding anniversary it feel out while we were camping. 4 years later and I have never replaced it. Now I wear my great grandmothers wedding ring. It might have the worlds smallest diamond in it. But after nearly a decade and a half of marriage, I don’t really care about the ring. It’s the least important symbol of our relationship. The 4 kids we have adopted, our 2 bio kids, the 27 countries we have traveled though, and all the triumphs and loses we have gone through together are a better measure. A gem seems a little silly now compared to those things.
    Ms. Montana recently posted…Smart Goals with Savings ArtMy Profile

      • I was mostly bummed because I felt too cheap to spend the $1000 to replace it. Maybe one of these days, so I can give it to one of my kids. Or just give it to them without a stone, and let them buy their own!
        Ms. Montana recently posted…Their Up is My DownMy Profile

  2. I’ve never been a jewelry fan and don’t see the hoopla around it. I’ve had friend say ahead of time that if their boyfriends doesn’t give them a nice diamond…”Or what???” You’d be pissed that a great guy is not pissing away his money on a ring? It feels like a ridiculous status symbol to me. I don’t even care to have a wedding that was remotely costly. Too me that money is about building a LIFE! Sorry for the rant. lol!
    Tonya@Budget and the Beach recently posted…Under the InfluenceMy Profile

    • Hahaha…rant away. I never understood the focus on the ring over the marriage. But then again I think pf bloggers have different ideas of what is important 🙂

    • Originally, my fiancee was excited about getting a diamond. I was a little worried. But then, when we were considering our potential savings for this year and next – and how it might effect our baby-making – she looked at me and said “I’d rather invest the money. I want to have a baby more than a stupid rock.” And I knew I made a good choice 🙂

      (I did get her a ring, with a bunch of small diamonds. She loves it, but it is the cheapest of all her friends rings. Doesn’t bother her, because our retirement accounts are infinitely larger than some of those same friends…)
      The Vigilante recently posted…Marriage Is Your Biggest Investment: Protect It!My Profile

  3. Honestly unless you plan on selling it, which I assume with an engagement ring is a no-go, then it can’t be an investment. To be an investment you have to expect to get your money back at some point. We skipped the whole shopping for a ring aspect, my wife and myself wear hand me downs from grand parents. It has more meaning that way as well.
    Full Time Finance recently posted…Reasons to do a No Cost RefinanceMy Profile

  4. Interesting read. Thanks for both the history lesson and the science lesson. 🙂

    When I bought an engagement ring for my now-wife, I did not view it as an investment at all. It was more of a gift that she would continue to use for the next 70 years. I paid no attention at all to the four Cs and instead just walked around a jewelry store with her and watched her reactions as she tried on different rings. I doubled back later and bought the one that she looked the most enamored with (which was luckily in the range of what I was planning to spend).

    I don’t know if that’s the right approach, but it worked for us.
    Matt @ Optimize Your Life recently posted…Why Do Bad Things Happen to Good People?My Profile

    • That’s probably a smarter approach than what I did. You wife got to choose what she wanted. My wife and I discussed what she was thinking and then I basically guessed. Luckily I guessed right but it does seem easier if I had taken her to a store to pick out the ring. Thanks for sharing.

    • You’re absolutely right, a diamond ring shouldn’t be considered an investment because hopefully you don’t need to ever sell it.

      Glad to hear you enjoyed the nuggets of wisdom 🙂

  5. Diamonds are still the best looking stone, due to the shine. Rubys and emeralds might be worth more, but they don’t shine as bright in the sun. If we all stopped buying diamonds the price will go down, its a standard price/demand of the product. Hopefully it will be a once in a lifetime semi – investment for the wife. Expect about half of the price paid back if lucky.
    EL recently posted…Personal Finance Myths We Need to IgnoreMy Profile

  6. Thankfully we never viewed the diamond ring as an investment. Good thing, too, because when we sold it a few years ago, we got less than a quarter of what we paid for it (but we only paid $800!). It likely wasn’t good quality to begin with. My husband and I got ring tattoos a few years ago and stopped wearing wedding rings at that time (which drives our family crazy!).
    Amanda @ centsiblyrich recently posted…One of the best ways you can save money: Tax advantaged accountsMy Profile

  7. Very interesting post! I too bought my engagement ring online about 9 years ago. Although it is a little unnerving buying online, it does offer a decent amount of savings, and the company I chose was Blue Nile (owned by Warren Buffett and Berkshire) so I felt it was reputable.

    Regarding the value, I did broach the idea with my wife about investing the money instead and buying a nicer ring 10 years down the road. While it was a half-hearted suggestion, it wasn’t a long discussion…
    The Green Swan recently posted…Time to Sell Investments and Hoard Cash?My Profile

    • Hahhahaha…I’ve only had one friend that has convinced his wife to forgo an engagement ring.

      He convinced her instead to spend the money on an epic honeymoon.

      I think later on she ended up getting a cubic zirconia and is happy with it.

  8. Interesting and informative read! I didn’t know that rubies or sapphires could be more expensive than diamonds. I don’t really see gems or diamonds as investments. I see them more as consumer goods. Sure they may have some resale value, but more often than not you’ll get less than what you originally paid for.

    I personally took the easy way out and went engagement ring shopping with my wife. A lot less stressful.
    SomeRandomGuyOnline recently posted…Things I Would Tell My Younger SelfMy Profile

    • I think you did it right. Take out the stress and get exactly what your wife wanted. In some ways I wish I did that. But my wife was happy so it worked out well!!!

  9. Excellent post, MSM! Really enjoyed the science lesson. I was reminded of the “Blood Diamond” movie.

    From my perspective, neither diamond nor any other gem are investments. Once you purchase it, you will need to save guard it as well – a bank locker costs money to keep them safe. Moreover, you time is wasted visiting the bank locker. There are no dividends.

    S&P 500 is far more rewarding.
    Michael recently posted…Saving for College EducationMy Profile

  10. Diamond rings are way over priced for what they are. Funny story: When we bought my wife her new ring, we did a lot of comparing to her old ring. We literally bought the same quality diamond, and for fun we asked the jeweler if we could trade in her old ring for some credit or to add it to her new ring. The jeweler was like “… oh, no. This diamond is too cloudy and has too many cracks.” They offered us about a quarter of what the new ring cost.

    • One thing that I wonder about. Do you think there are people that buy used diamonds and then resell them in a jewelry store and we are none the wiser? It’s something that I think about from time to time.

  11. I think people are getting more unique with their ring choices based on what I have seen from my younger friends over the last few years. Some gems and some used have been bought.

    I am with ya on being lost though, pretty much walked in and said “I’ll take $xx worth of diamond please”
    Apathy Ends recently posted…5 Money Moves You Need to MakeMy Profile

  12. Very educational post, though I don’t think I will ever have to buy jewelry. My wife does not like jewelry. I guess I am pretty lucky in that regard 🙂 Also, we skipped engagement all together and went right to the marriage. The only jewelry I have ever bought is our wedding bands, that’s it.

  13. Very cool to see the price comparisons of different gemstones relative to a diamond. I had no idea diamonds had fallen in value. Do you think some if has to do with diamonds grown in labs nowadays?

    One pretty interesting article I read recently is that you can actually “become” a diamond upon your passing. If a traditional burial or cremation isn’t your style, you can have your ashes used to create a diamond! I’m not sure if that’s for me, but it’s fascinating nonetheless.
    Michael @ Financially Alert recently posted…Silly Ways People Make Money and What We Can Learn From ThemMy Profile

    • I am sure that the pressure from labs has had downward pressure on diamonds. I also read that Canada found some large diamond minds and prevented De Beers from buying. This caused a bigger supply of diamonds and essentially broke up De Beers monopoly.

  14. This history lesson in diamonds was pretty interesting, I must admit. From an investment point of view, I think diamonds and gold are a good choice, provided you buy them in the non-designed state, I.e. A gold coin or a diamond without a ring, because the long term value does not deplete in the absence of wear and tear. But if you’re buying these things to wear, then be prepared for the value to fall at the time of resale.
    Fehmeen recently posted…#28: Earn and Save With a Purpose – Saving/Income HackMy Profile

  15. The diamond industry is such a racket! It’s all marketing hype and a monopoly. And how they got people to even believe that you’re “supposed” to spend one month’s salary on the rock is crazy too. Oh, you know it’s two months salary now. It used to be one but since everyone was following along like sheep, they decided to up it to 2 months. Jewelry stores would never buy back diamonds because they’d have to admit that the diamond they told you was so valuable…really has little value. You’ll have to take it to some diamond broker who’ll give you a lot less than you paid. Recently I’ve heard about moissanite which looks better than a diamond without the crazy costs. If I could go back in time, I might have considered that. Only problem is the social pressure to get a diamond. I didn’t know that other gemstones were even more expensive.
    Andrew@LivingRichCheaply recently posted…Dealing With Facebook EnvyMy Profile

  16. I purchased my wife’s engagement ring on the internet. It was cheaper and I liked the style more than the jewelry stores in my town.

    Regarding the wedding ring, my wife & I did purchase a used wedding ring (I think it was 50 to 75% cheaper than regular retail price). It had some small real diamonds and it was the one way we could get a nice ring as we were somewhat stretched financially at that time.
    Josh recently posted…Money Buffalo Blogging Weigh-In #13My Profile

    • That’s great that you were able to find the diamond ring that you wanted within your price range.

      They seem to be super expensive brand new and can be a real deal if you buy them used.

      Thanks for sharing!!!

    • That’s awesome that your household passed on diamonds. I know the social pressure at times isn’t easy.

      On top of that man made diamonds look awesome. I’m sure if I could do it over again and the price was right I would definitely get a man made diamond.

  17. My husband bought me a sapphire engagement ring, and i love it. It was reasonably inexpensive and it stands out as interesting even though the stone is pretty small. That and my wedding ring are the only jewelry I wear.

    That said, I don’t think gems are much of an investment…I’d much rather have stocks for that reason. But as a symbol of a promise…they work nicely if you don’t go overboard on spending.
    Emily Jividen recently posted…What’s for Dinner? Simplify Your Way to Meal Planning SuccessMy Profile

    • You are absolutely correct engagements are not an investment as much as a promise.

      Now if someone would invent a stock ring 🙂

      Can you imagine having a ring that paid dividends each quarter 🙂

  18. We ditched the whole engagement ring hype (sorry, don’t mean to offend anyone). Mrs CF actually asked me without an engagement ring. I mocked that a bit, so she got me a big plastic one (it was huge!). For our wedding rings we selected two titanium rings, and outfitted one in with few red stones. Total cost was below about $100.
    Do we think diamonds are an investment? No, at least not for the common smaller ones. But gems certainly may become the next trend in engagement rings. Most of the times however, bigger is not better!
    Team CF recently posted…September 2016 Cheesy IndexMy Profile

  19. Tell me if I’m crazy for dropping the rider policy on Mrs. AC’s $8k engagement ring… Ten years on and she still hasn’t lost it! We now have custom rubber rings so we can do active stuff and be seen as man and wife. Those rings were maybe 0.1% the cost of the diamond

    • I’ve recently seen NFL players wearing those custom silicon wedding bands. If I knew that was available back in the day I would definitely have gotten something like that 🙂

  20. I bought my wife a diamond ring in Russia in 2012. I can’t remember the exact size, but I think it was about half a carat. At the exchange rate back then it cost around $6500. I thought I might have got a better deal, considering it was mined in Russia, but apparently they are sent out of the country for finishing!
    Nonetheless, I would never buy diamonds as an investment. It is a purely emotional thing to buy a diamond engagement ring!

  21. Here’s our story about gemstones. We were gifted a beautiful blue topaz necklace a few years back which was totally worthless to us at that point in our lives. We proceeded to visit the local pawn shop, official appraisal in hand, to see what we could get for it. Despite being appraised for $1,500 (it was a huge stone) the shop wouldn’t make any offer at all. We walked out with a new understanding of the investment potential of gemstones

Leave a Reply

Your email address will not be published. Required fields are marked *

CommentLuv badge