Smart Women Smart Money | Harris & Harris Wealth Management

One evening, my husband and I had friends over and it came up that it was their 10-year anniversary. His gift to her was an “upgrade” for her engagement ring. When they exchanged the diamond for a new and improved version, they were surprised at how much their diamond had appreciated.

Now, this begs the question: Should I invest in diamonds? And how would I go about doing that? We women know how important the ring is when he gets down on one knee to ask for your hand. So, when we see it coming, we start giving him hints: leave articles detailing the 4 Cs (carat, color, clarity, and cut), casually window shop the jewelry store as you walk through the mall, that sort of thing. All so he will select THE perfect ring. Now of course, this ring has great sentimental value to you, but also has great monetary value, and could even be a good addition to your portfolio.

If you are a Sex in the City fan, you may remember the episode, “Ring a Ding Ding.” Charlotte gives Carrie her $30,000 Tiffany engagement ring as a loan so Carrie can put a down payment on an apartment. What a gesture! That really showed how much Charlotte valued their friendship.

So, what do you think? It looks like Marilyn may have been right, diamonds really are a girl’s best friend. Interested in investing? The Rapaport Group, established in 1976, operates a diamond-pricing service. They recommend the initial investment be in Round diamonds, 1.01 to 1.49 carat, D-H color, IF-VS2 clarity, Excellent to Very Good Cut. Rapaport Specification 2+ diamonds. These diamonds trade on a daily basis, their prices are well known, and they are easy to purchase and sell. If you don’t know what this means, find out before you make an investment.

Here are a few other tips for you: Always get your diamond authenticated by the Gemological Institute of America (GIA), the primary diamond grading authority, and confirmed by your personal diamond expert. It’s not worth having if you can’t determine its value. Stay away from very large, expensive (spectacular) diamonds. They may appreciate in value, but they are difficult to sell. So, this may not be the best way to grow your nest egg and you can’t buy too many pairs of Jimmy Choos in your retirement if you can’t make your assets liquid when you want to. But the smaller carats are something to think about when looking for diversification beyond stocks and bonds. For other variables to consider, here is a more detailed list.

As of this writing, there is only one fund that invests in diamonds, Diamond Circle Capital Plc (DIAM). However, be on the lookout for The Rapaport Group; it’s planning to establish a $100 Million Fund that will buy and hold polished diamonds, starting in the first half of 2013.

So ladies, the next time he asks for ideas of a gift for your special anniversary, promotion, or new addition to the family, consider adding to your diamond collection.