Pink diamonds are popular among investors and collectors because of their colour, rarity, and limited natural supply. Unlike other tangible assets, there aren’t enough natural pink diamonds to supply the demand. Fortunately, lab-grown pink diamonds are also appreciated, but huge lab-grown pink diamonds are also rare.
But as an investor, if you still want to pursue or build a portfolio around pink diamonds, you should do so. However, you need to have adequate information, research, and realistic expectations.
In this article, we’ll discuss some tips for diversifying a portfolio with pink diamonds.
1. Why Pink Diamonds Are Considered Rare
Before you start adding pink diamonds to your investment portfolio, it’s best if you can start by understanding why they are rare. Although pink diamonds were already considerably rare even before, they became rarer with the closure of the Argyle Mine. However, rarity doesn’t always mean high value, so you should also check it.
2. Define the Reasons for Pink Diamonds Investment
When it comes to investing and diversifying your portfolio, each of them must have a clear purpose. It’s not ideal to invest in something just for the sake of diversification. Instead, there should be a deeper reason why you choose a specific asset. For instance, you’re planning for long-term wealth preservation; that’s why pink diamonds are one of your assets.
3. Avoid Putting Too Much Capital Into One Asset
Diversification is about spreading risk across various assets and avoiding concentrating all your eggs in one basket. When diversifying your portfolio, you can invest in stocks, property, bonds, and other physical assets (like pink diamonds). The value of an investment depends on the risk it entails.
4. Learn How Diamond Quality Affects Value
When investing in pink diamonds, you should know how the quality can affect the value. Some of the specific factors that may affect the quality of a pink diamond include carat, colour, clarity, cut, shape, and certification. For instance, in terms of colour, the more intense pink a diamond is, the higher its value.
5. Prioritise Independent Certification
As mentioned, certification is one of the factors that can affect the value of pink diamonds. Depending on whether the gemological laboratory is reliable, it can provide an authentic certification. Having the real certification can significantly help, especially as an investment.
6. Consider Different Diamond Qualities
When it comes to diversifying pink diamond investments, it doesn’t mean you should buy different pink diamonds. You can also look into other gems and assets to make sure you won’t lose a significant amount of your capital if the market becomes volatile.
7. Research Provenance and History
The provenance and history of a pink diamond can also be a factor when it comes to its value. If there’s a complete history of the previous owners and the source, it’s easier to identify the value and whether it has been properly taken care of.
8. Understand Liquidity Before Buying
As an investor, you should ensure that you’re aware of the liquidity before buying or selling pink diamonds and other assets. For online trading, it’s easier to liquidate since there are established markets. However, when it comes to pink diamonds, you need to look for an appropriate buyer, dealer and auction house to help you sell them.
9. Account for Transaction and Ownership Costs
Aside from the value of the pink diamond when it was acquired, the way it was stored, the insurance, dealer margins, valuation fees, and certifications are also considered when it comes to the computation of the returns.
10. Buy From Reputable Sources
If you’re in the planning process of buying pink diamond investments, you should look for reputable sources to ensure that you’ll obtain a genuine pink diamond. Whether it’s for investment, a gift, or a personal collection, you should have the pink diamond you paid for.
11. Keep Detailed Records
Aside from the information you can obtain from buying the pink diamonds, you should also keep detailed records of every pink diamond and other investments you have. It should include the invoice, independent valuation, lab reports, photos, insurance information, storage information, and transaction records.
12. Review Your Portfolio Regularly
When investing, make sure to review your portfolio regularly. That way, if there are some errors, you can easily spot them and make the necessary adjustments. On the other hand, if you don’t review your portfolio, you might end up losing your capital, including all your investments.
13. Think Long Term
Pink diamonds are considered a long-term investment, so if you’re planning to invest on it, make sure you have long-term plans. Besides, it can be hard to look for ideal pink diamond investments, so it’ll be a waste if you just sell it right away.
Final Thoughts
Pink diamonds can be a great investment option, especially if you’re looking for a tangible asset to diversify your portfolio. However, it may not be easy. By considering the tips listed in this article, you can identify whether it’s the right fit for your portfolio and be able to manage your investments the right way.
ABOUT THE AUTHOR
Aliana Baraquio is currently writing for Musson Jewellers Australia, a rare and enduring jewellery design business that has been providing the finest jewellery for over 40 years in Sydney. Her free time is spent on her phone and new comics to read.