Before buying a lab created diamond, let's take a minute to talk about the resale value of diamonds from lab to mined.
You may be thinking that if circumstances lead to it, you or your loved one could sell the diamond and make some quick cash. Or, if you decide to get a different style of ring later, you could turn your first ring in and receive a good return. If you keep the ring for the rest of your life, a future child or grandchild could either wear or sell it.
But buying any diamond—lab-grown or mined—with the intent to sell it at a later time is not a good idea. While all diamonds certainly have resale value after purchase, markets can be volatile and resale conditions unfavorable, leading you to lose a lot of money during the sale.
Almost all diamonds are sold for less than what they were bought for. In fact, Alan Bronstein, a diamond trader who is president of the Natural Color Diamond Association, says that “Maybe 2, 3, 4 percent of diamonds have the opportunity to appreciate over time.”
Jewelers have access to hundreds of wholesalers who offer lower prices on diamonds that look exactly like yours. Because diamond sellers often price diamonds higher for the average consumer, the price is too high for jewelers with access to much lower prices. This situation almost guarantees that you will sell your diamond for less than you bought it for.
Because each diamond is unique, it’s hard to say exactly how much money you will receive when you resell. Diamond appreciation and prices fluctuate no matter whether you have a lab-grown or mined diamond.
Regardless of these similarities, there are some differences between projected lab-grown and mined resale prices.
Mined diamonds are said to lose value as soon as you walk out of the store from which you bought them—unless your diamond ring is especially unique or very, very large. In fact, The Guardian featured a mined diamond ring in an article called “Much depreciated: the goods that drop most in value.” Mined diamonds are usually sold back at anywhere from 30% to 70% of their original price.
The only “investment mined diamonds” are those that might be sold at an auction house like Christie's. Unless the diamond you are trying to resell is nineteen carats and bright pink, it will simply not make you any money.
Lab-grown diamonds also experience a depreciation in cost. A jeweler will use the Rapaport pricing method, which is the same used for mined diamonds, to determine your diamond’s wholesale and retail pricing. This method takes into account the “Four C's” of diamonds: carat, cut, clarity, and color, which determine much of the price. Then, the jeweler will take into account whether your diamond is lab-grown or mined and return to you with a price they think your rock is worth.
While you may get a fair amount of money in return for your diamond, there are many other ways to invest your money that might be more worth your while. For comparison to diamond investments, which, as you’ll recall, receive only 30 to 70% back in value, here are three other options:
A downpayment on a house. Of course, the resale value of a home varies drastically, depending on the neighborhood it is located in, the size of the house, its condition, and the changes or improvements you make to it. But besides the resale value—which is predicted to be especially high this year—you can make money by renting out your property or AirBnBing it as well. The huge investment of a downpayment can make a big difference to your finances, unlike reselling a diamond ring.
Paying off debt. The average American is burdened by about $38,000 in personal debt—and that’s excluding home mortgages. When you pay more interest than you earn in interest, you can lose a lot of money. Investing in debt payment may not feel like an actually investment, but the experts agree that it is, especially compared to jewelry.
Stocks or bonds. Stocks and bonds offer excellent opportunities to grow your current net worth. Experts recommend investing in both stocks, which are more volatile, and also bonds, which offer slow and steady returns. While neither option guarantees you a return, the likelihood that you will earn money in the long run is high.
Your career or side gig. Chances are that you aren’t making a huge investment in your career, and most definitely not in your side gig. But a new certificate or even just attendance at a large conference can pay off in salary raises, promotions, and new connections. In fact, a recent Forbes article listed investment in your side hustle as one of the top seven investments you can make.
In other words, there are many more reliable investments than an engagement ring available—a downpayment, debt payment, stock and bond investment, or your career are just a few of many.
So what is the worth of your diamond, if you don’t resell it?
Our advice, and the advice of most jewelers, is to treat your diamond ring like all of your other wedding purchases: as a commitment to your partner, not an investment.
Just as you save your money for a wedding venue, reception, flowers, and honeymoon, you should save up for your diamond ring. Treat it exactly like those other purchases, expecting nothing in return for it other than enjoyment and an expression of your love for your partner.
This way, you will not experience any feelings of regret if it ever comes time for you to sell your ring, and you will be able to see it as what it is meant to be—an expression of true love.
Have any lingering questions about the resale value of lab-grown diamonds? We’d be happy to help.