I was in your position a while ago. Got as far as actually buying the rock, but never pulled the trigger and now I'm sitting on a pretty expensive useless piece of carbon.
Like all major financial investments I get into, I usually research the bejesus out of it until I’m almost an expert in the field before spending my hard earned cash. Here’s what I learned about buying a diamond ring broken down to layman’s terminology.
Diamonds are rated on 4 scales. They are Cut, Color, Carat, and Clarity. An association called the GIA, has a guideline for each category to put a diamond on this scale.
I could go into each one but instead spend a lot of time here as it has excellent information on each of categories:
http://www.bluenile.com/diamonds/diamond-education?track=head
That’s pretty much all you need to know on what determines the value of a diamond. Once you know the scales you can pretty much know to the dollar how much a diamond is worth. Keep in mind if you want a legitimate diamond and are willing to pay for it, make sure to get a GIA graded report for the diamond. Think of it as a certificate of authenticity. You wouldn’t buy a Rolex without one, so I would recommend that you get one for your diamond.
Once you know about diamond and their ratings, you can move on to some tips on pricing and diamonds in general.
1) First you need to know that diamonds are NOT a scarce commodity. They are fairly abundant but the value of them have be artificially inflated by the diamond industry. Also the idea of having a diamond being the means of engagement and having to cost 3 months salary, etc. etc. is also all marketing. If you follow the history of engagements, you’ll find that diamonds rings are only a very recent development to propose with. Also the value of how much you should spend is a completely arbitrary amount devised by the marketing team at DeBeers. However, I completely understand that you have to quantify your interest/love in someone somehow and if the current norm is in diamond rings, then so be it, then I guess we all have to play the game. The reason I mention this is because it is important to know that the value of a diamond is very arbitrary. It is completely demand based, so make sure you shop hard for the best value. It is one of the few purchases where haggling, bargaining and researching is very much worth the time and effort (like cars).
2) Your soon to be fiancé should fall under one of two camps. She cares how much you spend on the ring, or doesn’t care how much you spend on the ring. If she does care how much you spend, then you’ll have to focus on aspects of a diamond that reflect that. You’ll want a high quality diamond, GIA report and you’ll probably get a diamond that has high quality aspects that aren’t apparent beyond you and your fiancé. For example, there are levels of clarity and color that are imperceptible to all but the highest level gemologists, yet will impact the cost of a diamond tremendously. If your fiancé cares about the value (cost) of the diamond, then she’ll want these features because it will be a much more expensive diamond. It will just be for her own self worth and satisfaction because 99.9% of the people who actually see the ring wouldn’t be able to tell if it is a color level A or C. If she doesn’t care on the value, then you have a lot more flexibility on the price and/or size. You can cut corners on clarity and color because there will be small imperfections that the average person won’t be able to see. So you should either be able to save a few bucks on getting a slightly less perfect diamond or a bigger rock depending on which way you want to go. Also, this opens up the door to man made diamonds. See my post
here for a good description of man made diamonds.
3) One advantage of buying a diamond outside of the US, like the Caribbean islands it that you don’t have to pay taxes. Also there are loop-holes in the US where you can avoid a sales tax as well. I don’t know your budget but if you were to buy a $10,000 diamond, in some states you could pay nearly $1,000 in sales tax. For that much you could fly to a Caribbean island, buy the exact same diamond and throw in a nice vacation for you and your fiancé as well. Another tactic is to buy the diamond in state but have it shipped to another state to someone you trust and avoid any sales tax. When I bought a high end watch for around $13,000, it was going to cost me around $1000 in sales tax. Instead I shipped it to my brother (insured of course) who then shipped it back to me. The tradeoff was that I had a few more day to enjoy my purchase.
That's pretty much the nuts and bolts of the actual diamond. As for the ring itself, that's all personal preference. What style, mounting, metal (gold, platinum etc.) is all going to be up to you and your wife to be. Just keep in mind a few simple things. If your wife is say tough with her hands or clumsy, consider using 6 prongs to hold the diamond in place. If you have only 4 prongs holding your diamond, and she bangs her hand against something and breaks one of those prongs, that diamond will go flying loose. 6 prongs will decrease the brilliance of the diamond because it will block the light that gets under the rock, but will give you one level of security. There are other tips, but if you have any specific questions, let me know.
