#17: Natural vs. Lab Grown Diamonds

Hey all,

Welcome to a new edition of ✨ Spark to FIRE 🔥 newsletter!

I reposted this Tweet on Instagram about why the arguments for natural/mined diamonds over lab grown diamonds don’t make sense.

As the majority of my audience are millennials and Gen Z, I thought it would be a great post to share as I did WEEKS of research before purchasing a lab grown diamond engagement ring for my fiance. 

I’m going to go over the history of diamonds for proposals, the difference between natural and lab grown diamonds, misconceptions about the arguments for natural diamonds, and factors to consider when choosing a diamond.

If you haven’t already, please subscribe to my Substack so you get notified of new posts!

As always, feel free to DM me on Instagram (@MillennialMoneyVeteran) or Twitter (@MoneyVeteran) on suggestions for the newsletter! 

Latest posts

Here’s a link to my site where you can read my blog posts on all things about personal finance, real estate, and financial freedom like:

• Two Automations That Save Me Countless Hours In Managing My Vacation Rentals

• How To Protect Yourself As A Buyer When Purchasing A Property

• What Should You Do With Your Old 401(k)?

Natural vs. Lab Grown Diamonds

De Beers And The Diamond Market

It all started with a British company called De Beers in 1888. De Beers became a monopoly in the diamond industry by being able to control the supply and demand of diamonds. 

Before the 1940s, diamonds were rarely used for proposals. Due to the Great Depression, world wide demand for diamonds and the price of diamonds were falling and De Beers needed to fix it. De Beers hired New York–based ad agency N.W. Ayer to figure out a way to associate romance and social status with diamonds. Not only did De Beers control the supply and demand, but they were able to create the idea that diamonds were rare, valuable, and symbolic of status. This is where the slogan “A diamond is forever” came from and it created a surge in demand in the US. With inflated prices and increasing demand, De Beers did well. 

When the US market plateaued, De Beers created the idea that a second diamond ring was a way to reaffirm romance years later in marriage. Smart, right?

Then De Beers successfully expanded to Japan using similar advertising techniques and by promoting modern Western values as Japan was westernizing. Now, similar success has been happening in China with the social practice of diamonds for engagements.

In summary, diamonds are heavily marketed and ingrained into society so it’s important to be aware of how this social norm came to be. Thankfully, the use of cheaper alternative stones is becoming more common and lab made diamonds are becoming more popular.

Difference Between Natural and Lab Grown Diamonds

The bottom line is that the only difference between natural and lab grown diamonds is the origin. Natural diamonds are created under the pressure of earth’s crust over millions of years while lab grown diamonds are made in a lab. 

Natural and lab grown diamonds have the same physical and chemical properties. Both have the same hardness and durability levels. Even experts cannot tell the difference with the naked eye. They’re LITERALLY the same thing.

You don’t have to worry about ethical or environmental issues with lab grown diamonds either. The carbon footprint from a lab grown diamond is about 4 times less than a mined diamond. Although blood diamonds are not as common as they used to be, diamonds can still be used to fund conflicts and money laundering.

Misconceptions About Natural Diamonds

Diamonds Are Uniquely Rare

Gem-quality stones are rare since they make up a very small fracture of the Earth, but diamonds are one of the most common gemstones. Sapphire is rarer than diamonds, but less expensive. Diamonds are also not the most expensive gemstones either.

There are really rare diamonds like the pink diamond in the movie, “Blood Diamond”. But the typical diamonds that we’d buy are abundant.

Diamonds Are An Investment

The price of natural diamonds has gone up over time if you look back decades ago, but so has everything else due to inflation. Does this make diamonds a wise investment? I say absolutely not. 

You can’t expect to buy diamonds and sell it for 20% more in the next few years since most of the value is gone the moment it’s bought. You’d have to wait for inflation to take its course over decades. 

Natural Diamonds Retain Their Value

Both natural and lab grown diamonds have a resale value since you can sell it for money. However, you won’t make a profit on either since the resale value is significantly less than what you paid for it. This is due to the diamond retail markup and the difficulty of selling a pre-owned diamond. Retail markup can be as high as 200% and as low as 100% so even at the low range, you lose 50% of your diamond’s “value” if you try to resell it.

Unless you plan to sell your diamond, I don’t think it should matter what the value is. Diamonds are given to share a lifelong commitment. It should be considered a sunk cost or a family heirloom to pass onto other generations. 

Factors To Consider When Choosing A Diamond

Natural or Lab Grown Diamond?

Remember that lab grown diamonds ARE diamonds. The choice between natural and lab grown diamond is up to you, your significant other’s preference, and your/their budget. Thankfully, my significant other preferred a lab made diamond because she understood that it’s still a diamond and no one would know unless we told them. 

I would not break the bank for a natural diamond. I strongly lean towards lab made diamonds over natural diamonds because it just doesn’t make sense to buy a natural diamond today. With the availability of more affordable diamonds without a history of unethical practices, lab made diamonds just make more sense. However, if you or our significant other have a strong preference for a natural diamond and can afford it without breaking the bank, go for it! 

A Great Alternative Stone

A great alternative for a diamond is moissanite. It’s actually my most preferred stone. Moissanite shares a lot of similar qualities as a diamond and it’s a lot more affordable! A lab made diamond is a fraction of the price of a natural diamond and moissanite is a fraction of the price of a lab made diamond! 

Another great quality of moissanite is that it has a higher brilliance level, which is the amount of sparkle. While diamonds reflect mostly whiter light, moissanite has a rainbow-like effect. 

Here’s a side-by-side-by-side with a natural diamond, lab grown diamond, and moissanite from popular jewelry brand Lauren B: 

The 4Cs of Diamond Quality

The 4Cs is the universal method for assessing the quality of any diamond. The quality of a diamond is assessed on the combination of the 4Cs - color, clarity, cut and carat weight. 

The cut is the most important aspect of a diamond’s quality. The cut refers to the symmetry of the diamond which reflects a diamond’s sparkle, brilliance, and overall appearance. I recommend getting the highest ratings for a diamond’s cut which are “Excellent” or “Very Good”.

The color of a diamond is also important. You’ll want to aim for “Colorless” or “Near Colorless”. It’s very hard to tell the difference between “Colorless” diamonds with the naked eye and the price goes up dramatically for “D” and “E”. I’d recommend “F” or “G” because I compared a “D” and “G” diamond and I couldn’t tell the difference. The light that’s reflected makes it hard to tell the true color. You won’t see yellow diamonds in jewelry stores since they don’t buy it to sell since no one would buy it. 

People often associate the carat of the diamond as the size, but it’s actually the weight. Two diamonds that are the same shape and carat weight may still appear different in size based on the actual measurements. If you want a diamond that “looks” bigger than it is, look at the diamond’s diameter rather than the weight.

Clarity is probably the least important C as a diamond shopper. It’s hard to see the internal flaws of a diamond with the naked eye. Diamonds are rated using microscopes and other methods so it’s okay to go with a rating less than “Flawless”. Even if the diamond’s clarity is considered poor, the diamond could still look great if there aren’t any visible imperfections.

Tips When Shopping Around

1. Go to multiple jewelers to discuss what you’re looking for and compare prices for diamonds. 

2. Separate diamond price from the band/setting. You’ll have two leverage points to negotiate.

3. It doesn’t hurt to negotiate. Remember that the markups are high so there is wiggle room. There are also many other options. I negotiated the price of my diamond down by about 33%! 

4. Incentivize the jeweler by saying you’ll return to the store for wedding bands. They’ll have a repeat customer.

5. Although I went to an Instagram-famous jewelry store, diversify your options to smaller shops since there could be a premium on the price due to the brand’s demand.

6. Offer to pay in cash for a discount. This works best for a small shop where you can speak to the owner. If you know, you know. 

7. Get an appraisal report from the jeweler on the diamond for insurance purposes. I got a valuable property insurance policy to cover the engagement ring. It costs me about $11 a month.

Thank you so much for being a subscriber! If you haven’t already, consider upgrading your subscription to a paid plan so you can get every post delivered to your inbox and gain access to the full archive!

Click below to share this newsletter with someone who would be interested in this content!