Act Surprised: Your Wedding Ring Is a Terrible Investment
Divorce. It's an unattractive yet common end to a relatively high percentage of marriages in the U.S. In fact, as many as 50 percent of American marriages end this way, often leaving catastrophic personal and financial consequences that linger for years.
The division of assets. Alimony. Child Custody Issues. Who gets the Stuff? These are all things that must be dealt with during and after a divorce, whether one likes it or not. And the truth is, it isn't always pretty.
Unfortunately, my beloved brother recently learned all about divorce the hard way — by actually going through one. And since he could no longer afford his giant house on his own, he had to move and sell most of his bigger stuff. I wanted to help in any way I could, so I offered to sell some of his bigger items on Craigslist and eBay. And within the timeframe of a few months, I sold his lawnmower and baby grand piano without too much hassle.
But, even though I tried for weeks, there was one thing I couldn't sell, his former wife's diamond engagement ring.
A beautiful yet depreciating asset
"Weird," I thought. The .75 carat set was beautiful and in perfect condition, and I even had the original receipt to prove the diamond's quality and clarity. And here's the kicker: He paid over $3,100 seven years ago, but was only asking $1,500 bucks. As a bargain-seeker, it seemed like a good deal to me.
The problem is, I had (and still have) zero experience buying or selling used jewelry, or any kind for that matter. I don't own any diamonds (my engagement ring is a sapphire), and I returned the only pair of expensive earrings my husband has ever bought me (and I've never lived it down). I'm just not into jewelry, nor do I want to be. However, I did want to help my brother so I spent some time researching what some of his options might be.
What are used diamonds really worth?
I searched for information, read articles, and conducted a considerable amount of research on the overall value of used diamonds, and what I found was shocking. According to research all over the web, and this awesome post at Priceonomics, diamond engagement rings are worth at least 50 percent less than you paid the moment you drive them off of the lot — or in this case, saunter out the front door of your favorite jewelry store. Even popular online diamond and engagement ring resale store IDoNowIDont.com advertises that sellers might be able to recoup as much as 40 to 75 percent of the value of their jewelry if they're lucky. And of course, that's before the site takes a 15 percent commission for setting up the deal. Ouch.
Several articles I read did suggest that I take the ring to several jewelry stores and pawn shops to see what they might be willing to offer. So I did. Out of the four stores I visited, the highest offer I received was a mere $800 for the set. For those of you who are keeping track, that's around 25 percent of the full retail value.
Diamonds are forever ... seriously
More bad news: It appears that, when it comes to diamonds, the American public has been sold a gloriously fabricated bill of goods. It all started in the early 1900s, when diamond behemoth De Beers owned over 90 percent of the world's rough diamond mines and distribution channels. By the mid-1900s, De Beers started turning to the advertising industry to promote their product. And they did an exceptionally good job, first by enlisting celebrities to pose for photographs and magazine spreads wearing the jewels, then by fabricating news stories that glorified the growing trend of diamond jewelry.
By 1948, the De Beers epic tag line, "A Diamond is Forever," had been born, along with the idea that the average suitor should spend two months of his income on an engagement ring. Sounds ridiculous, doesn't it? Unfortunately, we bought it all - hook, line, and sinker. And so it began, a period when humans thoughtlessly lavished one another with diamonds that were "timeless," "scarce," and "forever." But was any of it real? An excerpt from PolicyMic:
"This is the hidden history of the diamond invention. They are a fabricated fantasy, born of the greed of one tyrannical syndicate which has dictated the price for decades. Consumers have been fooled into perpetuating the idea that these abundant pieces of carbon are somehow unique symbols of esteem — tokens of wealth and romance.
De Beers propagated this illusion of scarcity to become one of the most successful cartels in the history of commerce. Almost any other commodity has fluctuated in response to economic conditions, but diamonds have steadily advanced upward in price since the 1930s. People continue to wear them or hoard them in safes as "family heirlooms." The most painful irony is, none of them could be sold for even a tenth of their original purchase price. The diamond market relies on consumers never parting with their rings or necklaces or earrings. That way, only the distributors can dictate value. It is a sad, cyclical delusion which costs lives, corrupts nations, and materializes our affections.
What if you don't want your diamond to be forever?
The PolicyMic piece makes several great points, including the fact that people who never sell their jewelry may never realize just how little it is worth. But let's not forget the fact that as many as 50 percent of marriages end in divorce. Just think of all of the used engagement rings that result from so many failed marriages. The sad truth is this: My brother isn't the only one who has been unpleasantly surprised by just how little their used engagement ring is worth.
Kassandra D. went through something similar after getting divorced in 2006. Like my brother, she and her fiancé paid around $3,100 for her engagement ring and band. And, like my brother, she was less than impressed with the resale value of her used diamond jewelry.
"I listed the ring on two online sites, Craigslist and Kijiji.ca, which are local to Canada," said Kassandra. "The appraised value was $4,000, but I initially listed it at $1,000 negotiable." Despite the underwhelming resale value, Kassandra decided to go ahead and sell the ring to a newly engaged couple for $850.
"It goes to show that the retail prices on new diamond engagement rings are overpriced to begin with," said Kassandra. "The couple whom I sold it to got a really good deal and paid a fair price for it."
How to game the diamond industry
The couple who bought Kassandra's used wedding set are straight-up geniuses in my book. Let's look at the facts: They bought a used ring that appraised for $4,000 for a mere $850, and completely skipped out on paying sales tax to boot. Winning!
But, they aren't the only ones who've gotten away with it, and they won't be the last. If you plan on putting a ring on it in the near future or know someone who is considering it, it might be time to weigh the pros and cons of buying a used diamond engagement ring. A few places to start your search:
- IDoNowIDont.com -- Hilarious name, I know. Still, IDoNowIDont.com offers the largest selection of used engagement rings and loose diamonds on the web. Staff gemologists even check every stone to verify its quality and authenticity.
- eBay.com — eBay also provides an excellent platform to buy or sell used engagement rings or loose diamonds. They even offer a diamond-buying guide that can help buyers feel confident about their purchase.
- HaveYouSeenTheRing.com -- HaveYouSeenTheRing.com is similar to other used engagement ring sites in that all jewelry bought or sold through their site is evaluated by a licensed gemologist. They also advertise that you can save as much as 80 percent off of retail by making offers directly to the seller.
The bottom line about diamond engagement rings
There's nothing wrong with purchasing an expensive diamond or diamond engagement ring. However, it's important to understand the type of purchase you're making. The truth: An expensive engagement ring is a want, not a need. It's kind've like buying a fully loaded BMW 4-Series instead of an old trusty Honda Civic. Sometimes you just want what you want, and that's OK. Many people would even argue that engagements and weddings are events worth splurging for.
But, for heaven's sake, don't buy an engagement ring as an investment. Also, don't delude yourself into thinking that it will hold its value. It won't. And, despite what the diamond industry has to say about it, there's nothing wrong with a used ring. In fact, you don't need an engagement ring of any kind to get married. A lot of people skip the entire tradition for a multitude of reasons. My parents don't wear rings, for instance, and they've been married over 40 years. I think it's going to work.
Marriages matter, diamonds don't
After hearing me out, my brother chose to keep the ring in case he gets remarried in the future. When that time comes, he plans to "trade it in" to see if he can get more than the $800 offered by the jewelry store. I think that's an excellent decision, although it could backfire if the ring actually becomes worth less in future years. We'll have to see.
Overall, this situation simply underscored the reasons I'm not overly impressed with shiny, expensive jewelry in the first place. I love being married, and I don't feel any less married because I only have a small sapphire ring on my finger. The truth is, the amount of money spent on an engagement ring has no bearing on the quality of a marriage, despite what De Beers has to say about it.
A diamond is forever? It might be true, but that's only because the payments will literally go on forever if you do indeed spend two months of your income on an engagement ring. No thanks. In my eyes, diamonds and jewels are a lot like fireworks; shiny and fun to look at, but ultimately pointless.
This article Act Surprised: Your Wedding Ring Is a Terrible Investment originally appeared on Get Rich Slowly.
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