How To Buy A Diamond Without Breaking The Bank

The following is a guest post by Phil Golden, the editor of Clarity of Diamonds.

Congratulations. You are just about ready to buy a diamond. Perhaps you have finally proposed to your girlfriend, or maybe it is an anniversary gift for your wife of many years.

Buying a diamond is an expensive proposition. For this little thing you are going to pay hundreds, or more likely thousands, of dollars. Even worse is you look at the diamond and you have no idea what you are looking at – if it is what the salesman told you it is, if the issues the salesman pointed out are really the important ones and what did he “forget” to mention about the diamond, what to look at to know if the diamond you bought is worth the money. So not only is it an expensive proposition, but it is also a frightening proposition.

There are really two aspects of buying diamonds by which you can save yourself a nice amount of money. One of those is where you buy your diamond, and the second is what features of the diamond you concentrate on.

Where To Buy

The first question is where you should buy your diamond. The old fashioned way would have you going into the shop of a local jeweler and having him tell you which diamond to buy, since they all look the same to you. Nowadays though, there is another, a better, option.

The better option is buying your diamond online. There are numerous benefits to buying diamonds online, while there is only one benefit to buying the diamond in a bricks and mortar jewelry store.

If you are buying the diamond in a bricks and mortar store, you have the obvious benefit of being able to see the diamond before you buy it. You get to hold it in your hand and inspect it to the best of your ability. You can look at it under the lighting, and lay it up against a couple rings and get a good idea of what it might look like on your wife’s finger.

The drawback of this is that even though you get to hold and look at the actual diamond before you buy it, if you are like most people you probably have no idea what you are looking at and how to evaluate the worth of the diamond in your hand. And you will be paying 20%-30% more by buying it from the jeweler just for that advantage of getting to see it.

B&M stores have a lot of overhead. They have to pay rent, they have to stock an expensive inventory, they have general overhead such as salaries, electricity, water, and the like, and all that gets added to the sales price of every item they sell.

When you buy diamonds online you are really harnessing the power of the internet. The major benefits you achieve in this are the amazing savings you will enjoy, along with the vast inventory available to you.

There are a number of benefits to buying diamonds online, though the most important benefit is the savings. The financial savings is the issue that most people care about the most. Because online diamond merchants have no overhead, or very little overhead, they are able to offer their diamonds for sale at much lower prices.

The lack of overhead allows the diamonds to be priced lower. This will give you savings usually in the range of 20%-30% and sometimes even more!

Is the ability to look at a diamond, even though you probably don’t know what you are looking at, worth 25% more? Think of it like this – if you were buying something for $10, you might be willing to pay $12 just to have that slight extra confidence because you got to hold it first. When you are buying a diamond that is worth $5000, $10,000 or even more, the difference is going to be in the hundreds, or thousands, of dollars. All that extra money being saved by buying the diamond online can either be saved and pocketed, or it can be used to buy a diamond of even better quality than originally planned.

Quality

The second issue is the quality of the diamond you buy. Much of the diamond industry is built upon the successful marketing campaign of the DeBeers syndicate. The average person can’t tell the difference from one diamond to the next.

There are many features to consider when buying the diamond. The main qualities include Color and Clarity – two of “the Four Cs”. There is a wide range of color, starting from color D and moving down to Color J. D is considered colorless, and then the range moves at different levels down to J. Beyond J is already called fancy color stones.

The thing is, unless you are a trained diamond dealer, most people cannot tell the difference between a G color and a F color diamond. Or between a diamond rated an E and between a diamond rated at F.

In clarity as well, the range begins with IF (internally flawless) and I2/3 (Included). Again, to be brief, most people cannot tell the difference between a VS1 diamond and a VS2 diamond, or between a VS2 and a SI1 diamond.

There are definitely qualities of the diamond that you are not appreciating, but are paying a lot of money for. If you buy a diamond rated at VVS2, you are paying hundreds of dollars more for a level of quality that you see no benefit from. You can save a few hundred dollars, and buy a VS1 diamond instead and still have a beautiful diamond that to your eye looks just as nice as the higher quality diamond.

The above is just an example, but my point is that there are many aspects of the diamond that give you plenty of room to maneuver and allow you to save money.

Comments

[Aaron Walters]

Generally, Pawn Shops have some great options! Go look at them at the major stores,learn a bit and then visit your friendly pawn shop. They generally will let you have it appraised to ensure value and work with you on the item. If they don't seem to be open and willing to work with you, then it isn't the place for you, find another one.

[Ben E.]

While I agree that pawn shops may have some good diamonds, I think it can largely be a risky venture.

The author of this post is right: a majority of diamond buyers have no clue what a "fair price" is for a diamond and largely cannot tell the difference between colors, cuts, or even clarity.

What the author of this post does not mention is that getting a "certified" diamond is the best measure of a diamond. Unfortunately, even certified diamonds can vary from source to source. The most reputable certified diamonds are: GIA and AGS.

If someone is considering buying a diamond, I would point them to pricescope.com; this is the online forum that helps beginners (and experts) with diamond questions.

[08graduate]

I had occasion to buy a diamond last year, and went with a laboratory created one from D.NEA. These are bona-fide carbon diamonds, not cubic zirconium, and are actually somewhat more expensive than diamonds dug out of the earth. I don't normally get wrapped around the axle about "fair trade", but I couldn't conscience proposing with a stone that might have funded slavery or child warfare. What kind of symbolism is that?

Anyway, I highly recommend D.NEA. They were helpful on the phone, the stone was delivered as promised, and it's beautiful. I used http://www.diamond-cut.com.au/holloway_cut_adviser.htm to pick one with a good cut, and it really does sparkle more than most engagement diamonds I see. For fun, try shining a laser pointer into a cut diamond!

[Jim]

The color, clarity and cut can make a huge difference in the price. A very high quality 1 carat can cost 5-10 times as much as a lower quality 1 carat. My input is to determine priorities on the 4 c's. You may want to visit a store and decide if the color matters much to you or if the differences in clarity are even noticable. Then decide which is most important and what you minimums are for the others. e.g. you can get a 1 carat, good cut, J color, SI2 inclusion for ~$3k but if you want VS2 clarity, very good cut and F color then that same $3k may only get you a 0.7 carat.

Bluenile is one online merchant that has a wide variety and GIA certifications.

[Grant]

My rant is specifically about engagement rings, although I also bought some diamond earrings this year for my wife.

I shopped in the B&M stores and and bought from BlueNile. The diamond I bought would have cost (including taxes) 30% more for sure from a physical store. I also didn't like the salesmen in the stores, they were nearly sleazy- showing me cloudy, overpriced diamonds and acting like those were the best there were. Do your research online, and make sure you are happy- there is no reason to settle for sub par diamonds!

And don't buy into that "if you love them, you have to buy them a 1 carat stone", or "it should be X amount of your annual salary". Decide what you can afford and what you like. My wife is very petite, and would have looked ridiculous with a full carat stone... she also would have been offended by the price of a 1 carat had I got her one (she looked up how much hers cost!). Speaking of 1 carat, there is a huge price jump once you go over that. So if you want to get your partner a 1 carat, but are willing to not be technical about it, get a .97 or something. You'll save a lot.

[Kate]

I'd also recommend Blue Nile (friends have had good experience with it). An added bonus is that you can pocket some nice change using Ebates on what is typically considered a fairly large purchase.

[Jim]

I agree with Grant. The "2 months salary" rule was created by diamond sales/marketing. The average amount people spend is closer to 1 month salary (roughly). So don't feel pressure to spend 2x as much as everyone else based on the marketing.

And a 0.97 carat can certainly save you a good amount over a 1.00 carat. That 3% size difference can cost 20% less pretty easy.

[Harm]

I can't think of a worse way to spend your money than buying
ANY sort of jewelry.

[jeffinwesternwa]

Costco an option by chance??

[TJ]

The philosophy of buying an engagement ring is the most interesting part. If you get ripped off and never know it (i.e. it looks great, and you're not passing it around to diamond experts), does it matter...

[jdgjdg]

Of the four C's, "cut" is the one least mentioned, but is arguably the most important. It determines how light bounces around the stone, and thus how sparkly it is.

[Darrell]

I agree with jdgjdg: ideal cut all the way. You can easily shop for a diamond by the numbers. Determine what you want (get a book from the library that explains the C's and what to give/not give on), then how much you can afford, and buy. I did this for my wife's engagement ring and results were fantastic!

As a bonus, you can buy a setting at a local jewlers and still get a warranty on that portion (tarnishing, cleaning, lost paver diamonds, etc). You can then add a small rider to your homeowners policy to cover the main diamond, so there's no reason to buy into many sales tactics of "if you buy online and the diamond falls out or gets stolen, you're screwed!".

[Annie]

Craigslist! Diamonds there are usually 50% or less than the original price. Just meet at the jewelry store to have it checked.

[Zach]

I'm glad to see jdgjdg and Darrell mention it (because the post did not!). A quality cut (most basically identified as "ideal" on most certifications but there's a lot more to it than that) is really the most important factor.

Any time you talk about diamonds you are going to have people who bring up the classic "why bother" or "I can't believe you spend huge amounts of money on that" and whatever else along those lines. That's fine, diamonds may not be for everyone, but to many people they are.

If you're going to do it, do it right. Research and learn. I bought my wife's engagement ring online and had a great experience (goodoldgold.com, for the record).

I learned an INCREDIBLE amount from this site: Pricescope.com. Far and away the most valuable resource I found when I shopped. I was able to by a diamond I was proud of and that blew away my now wife. For me/us, it was worth it, and I was glad I put in the leg work to know what I was getting. If your'e going to spend several thousand dollars on something (particularly something that hopefully lasts a lifetime) I think you owe it to yourself to make sure you educate yourself and have some idea what you're doing

[jack]

Borsheims. Pretty competitive with the best of the online stores but also has a physical store (albeit only in Omaha).

[kt]

definitely recommend pricescope.com for information and they have a good search engine as well. i ended up going with id jewelry (idjewelryonline.com) and the service was spectacular.

[Nick]

One of my favorite PF topics! We went to a trusted jeweler and looked at estate pieces. We found a diamond that was very nice, but in a setting that we didn't like at all. The ring had a "very impressive" center stone and two side stones that were decent sized as well.

We ended up buying the ring, spending $1,000 to put the diamond into a new setting and another $200 to turn the side stones into earrings. We then got the ring appraised and the ring, alone, appraised for 5 times what we paid for everything - and we still have the platinum setting and earrings! The only thing that hurts is the insurance premium...

[Mike Hunt]

My father is an expert on gems. He told me that there are enough diamonds in the world to provide 1 carat for each person on Earth so it isn't all that precious of a gemstone. Alexandrite, Tanzanite are much more rare and precious.

I'm not a big fan of the Debeer's monopoly and therefore am not so much of a diamond man. I did buy a diamond engagement ring and a diamond wedding ring for my wife though, both were under 1 carat and suit her hands just fine as she has very petite hands.

I'm blown away when I hear of people spending $20k on a diamond!

-Mike

[Greg McFarlane]

Phil, did you grow up in a household where the kids got punished for using contractions?

[JACK]

Nick,

Not saying you didn't get a good deal, but insurance appraisals (especially if you are talking about one done by the store you bought the jewelry from) are one of the worst ways to judge the value of something. Anyone who appraises something higher than what you paid for it, is basically telling you that they are faking the appraisal. Because if it is truly worth 20K when you only paid 4K, why on earth would they have sold it to you for 4K. The correct question is what would it cost you to replace the item. In most cases, unless you landed on a unique opportunity, if you have done your homework and price shopped, it's probably going to be pretty much what you paid for it.

[Laser Pointers]

"it really does sparkle more than most engagement diamonds I see. For fun, try shining a laser pointer into a cut diamond!" yeah, laser pointers have so many uses!