14 Diamond Buying Secrets That Will Blow Your Mind (I Promise)

Diamonds are forever.

Especially if you don’t buy it the right way and saddle yourself with a heavy debt!

We all know diamonds are overpriced, supply is artificially restricted, and don’t serve all that practical a function when secured to metal and displayed the way we tend to display it.

But we also go to fancy restaurants where we pay more for calories if they’re dressed up on a plate, we buy works of art that look as though an infant painted them, we buy cars that cost more because of their emblems and decals, and we climb the proverbial Hierarchy of Financial Needs because, well, it makes us feel good.

Say what you will about marketing and branding, it works and it instills a special feeling that is worth paying for. Diamonds are overpriced if you view them only as rocks. They are well priced if they instill a feeling in the person receiving it and a reminder each time they look at it. Over a lifetime, that can happen a lot with a gem. (and if it doesn’t, then it makes total sense NOT to buy one!)

That said, it’s still important to be sensible. Which is why I was thrilled when a reader emailed me about how he was a Gemologist, once a Vice President at a retailer jewelry store and then at a wholesale diamond company. He had a long history in this business and wanted to share a few thoughts, secrets if you will, about diamonds.

First off, as a big thank you, Drew retired from his career and now works on a little side project called The Complete Retirement Planner .

Drew emailed me to share these thoughts (edited and formatted very lightly for clarity):

Table of Contents
  1. Diamonds are a Commodity
  2. Not Every “C” Is the Same
    1. Cut: First Amoung the C’s
    2. Color
    3. Clarity
  3. Don’t Succumb to Manufactured Social Pressure on Cost
  4. What You Need to Know About Color
  5. What You Need to Know About Clarity
  6. What You Need to Know About Cut
  7. Did You Know About Polish?
  8. Buy at Carat Thresholds
  9. Technical Price but Subjective Value
  10. Most Employees are Not Gemologists
  11. There Are No “Ranges” on Grades
  12. Certificates Do Not Declare Value
  13. You Can Submit for Certification
  14. Negotiate!

Diamonds are a Commodity

Diamonds are much like a commodity with very consistent prices paid between diamond dealers.

Diamond prices are tightly controlled, and wholesale diamond dealers/cutters all pay within a couple of percent of each other for diamonds of equal grading. Retailers with the most buying power will get the best prices by buying from the larger dealers, and then everything trickles down to the smaller dealers/retailers with each level adding a few percent to the cost. Supply and demand for a particular size/shape/grade ultimately rules.

Anyone selling to the public is, by definition, not a wholesaler, and is not offering true wholesale pricing (despite what they might say). If you can get a hookup with a wholesaler, such as through a friend or a relative, then you’re really getting a deal and you should invite them to the wedding. Anyone who sells to everyone but claims “wholesale” pricing is playing a marketing game.

The price that consumers pay will vary by how far down the food chain their retailer is. (that’s why when you sell jewelry, you often get a fraction of what it’s “worth”)

There used to be a stigma about buying diamonds anywhere but from a jewelry store but the “smart money” now realizes that there are better options online.

Blue Nile is one option and one of the first to sell online, but they also now have 6 brick & mortar locations. (we have a full review of Blue Nile on the site)

One of the best options is actually Costco. They sell more large diamonds (over 2 carats) than any other retailer, and they operate on a margin of only ~10-11%. All of their diamonds are G.I.A. certified, and they have an excellent return/customer service policy. Hard to beat that. You can learn a lot from their website.

Not Every “C” Is the Same

Cut: First Amoung the C’s

You did a good job stating that the cut of a diamond is the most important characteristic, as a well cut diamond (especially a round) can often increase the brilliance enough to make the color appear a shade or two better than it really is. The diamond will always be priced by its technical grade, but if it can appear better in natural light than it grades under a grading light, that’s a benefit to the consumer.


When buying a diamond, the best value will be found with a better color (I or above), and a clarity grade of S.I1 – S.I.2. Color grades from D – H are all in the white family, with very small differences between each grade.

I color is where a slight yellow overtone begins to be evident.

But the difference between color grades is not equal. If you could plot color spatially, the difference between D and E might be an inch (an example), the difference between E and F might be five inches, and the difference between G and H might be two feet.

The prices will go up exponentially for each grade because you are paying for relative rarity. The actual difference, viewed in natural light, is very minimal. For most people, it might even be indistinguishable.

Why pay more for a difference you can’t even see?


If you’re concerned about what the diamond looks like on a sheet of white paper, buy the best clarity you can afford. If you’re more practical, just make sure it’s SI2 or better, there will be no difference to the naked eye. At that level, there is no effect on brilliance or color either.

If you want to save money, spend it on color and save it on the clarity if you want the best bang for your buck.

Don’t Succumb to Manufactured Social Pressure on Cost

Ignore the notion that you should spend a particular amount for an engagement ring.

The idea that you should spend 2 months salary (or 3 months or more!) for a ring began as an marketing ploy by DeBeers. They control 85-90% of the world’s diamonds, so you can imagine their motivations.

It makes no sense for anyone to spend a particular amount for any product based on their income!

If you make a lot of money, do you need to buy a Mercedes or will you be just fine with a Honda, Toyota, or (insert your choice here)?

Please, think for yourself, and act responsibly for your situation.

That said, if you want to spend more, by all means do so responsibly. It’s your money and you should do what makes you happy, just make sure you learn how to buy an engagement ring online so you get the most for your money.

What You Need to Know About Color

Color refers to the depth of interior body color of the diamond. It has nothing to do with the brilliance or dispersion of colors when light passes through the diamond.

When graded, it’s done under a special diamond grading light (that replicates noon sunlight with insignificant amounts of ultraviolet) with a white background and with the diamond upside down so that you can look through the body of the stone easily.

Then, you compare that diamond with a diamond of a known grade. There is no such thing as color memory because most people can see over 1 million shades of color, so you can’t be sure of a single diamonds color grade without comparing it to a certified master stone. (Go to the store for thread to match a piece of clothing. Whatever color you select, it won’t match the clothing when you get home!)

Where one color grade stops and the next begins is also subjective. This is why experts can disagree on a color grade. This is also why certified diamonds are always graded by several Gemologists using a series of master stones.

The G.I.A. diamond color scale was developed in 1953, and starts at “D” because there were other scales in use at the time that used “A,” “AA,” and “AAA.” The G.I.A. didn’t want their scale to be confused with any of the others!

White diamonds (i.e. not fancy colored (blue, pink, yellow, etc.) are graded on a scale from D (the highest grade) to Z. You may never see a color below K in a store.

At the color grade of I, which is considered the “dividing line,” that’s where the body color will just begin to show a vague hint of yellowish overtone. The color will show obvious signs of a yellow tint at J and below. One you get past a Z grade, the yellow color is so obvious that the diamond becomes a “fancy” colored diamond.

The G.I.A. uses the following color grades for yellow diamonds: Fancy Light, Fancy, Fancy Dark, Fancy Deep, Fancy Intense, and Fancy Vivid. You may hear someone refer to a yellow diamond as a “Canary” diamond, but that is a generic phrase referring to any diamond with a yellow body color, and it is not a specific grade of yellow.

The difference in color grades is not equal in price or in degree. In fact, the difference between colors gets even harder to distinguish as the grade improves.

You are paying for the relative rarity of finding a specific color that is even a little bit better than the one before it. If an H color diamond costs $5,000 (all else being equal), a G color may cost $6,000, an F color $8,000, and E color $11,000, and a D color $16,000. If you could plot color spatially, and the difference between a G and an H was a foot (for example), the difference between a D and E would be an inch.

While it’s easy to get all wrapped up in this on paper, remember that in its natural habitat (natural light with the diamond facing up, set in a ring and displaying all its brilliance), the difference from one grade to another is extremely minimal.

Stay in the white family (above I), with no yellow overtone, and don’t worry about a particular color grade.

You’re not buying the diamond for how it looks on paper (hopefully!).

What You Need to Know About Clarity

Clarity refers to internal or external imperfections, including polish.

The effect of inclusions will depend on the size, number, placement, type, color, and relief (the amount of contrast between the inclusion and the diamond body). It is the overall picture that will set the grade.

Inclusions in the center of the diamond are graded more harshly than those off to the side. Clarity is always graded with the diamond in a face up position (unlike color grading), using 10x magnification.

The clarity grades are: FL (Flawless) (you may never see one of these), IF (Internally Flawless), V.V.S.1 (Very, Very Slight), V.V.S.2, V.S.1 (Very Slight), V.S.2, S.I.1 (Slight), S.I.2, I1 (Imperfect), I2, I3.

The good news is that anything above a grade of I1 has no visible inclusions. Like color, you are paying for the relative rarity of each grade, but the top 8 grades display no visual difference to the naked eye. You may be able to see inclusions easily only when using magnification.

Don’t get too wrapped in choosing a specific grade. You may want to stay away from visible inclusions but how much more are you willing to pay for a difference that you can only see under a microscope? 🙂

What about S.I.3? You may hear someone refer to a clarity grade of S.I.3. This is not a recognized grade. The term refers to the “gray” area when one person can see a particular inclusion without magnification, but another can’t. Or if you can see an inclusion when holding the diamond very close to your eye but not at arms-length. Seeing, or not seeing, an inclusion with the naked eye is the difference between a grade of S.I.2 and I.1, but who is right?


Diamond dealers made up the term S.I.3 to refer to a diamond with this uncertainty.

What You Need to Know About Cut

Cut refers to the arrangement and precision of facets on a diamond. It is the only factor controlled by man.

Each shape (round, pear, oval, marquise, emerald cut, trapezoid, etc.) has a different facet arrangement that maximizes the way light reflects through the diamond. The angle, placement, symmetry, and polish of each facet directly affects appearance and brilliance. For this reason, the cut is considered the most important factor in choosing a diamond.

Remember, a diamond with a color/clarity grade of D/Internally Flawless could appear completely lifeless if it’s poorly cut. A well-cut diamond with a grade of J/S.I.2 could be one of the most brilliant diamonds you’ve ever seen. The cut can reflect so much light through the diamond, causing so much dispersion (the breaking up of white light into its spectral colors) that it may even appear a shade or 2 better in color than it technically grades under a diamond light.

Beware buying a diamond based solely on its color and clarity grades. The poorly cut D/IF diamond will command a far greater price than the well-cut J/S.I.2., but it will have no brilliance (it’s called a “fish eye” in the trade because it just stares at you with no life).

The point of having a diamond is to see it sparkle. Save your money and go for practical beauty rather than a paper grade.

Did You Know About Polish?

A diamond certificate will also list a grade for the Finish of a diamond, which consists of Polish and Symmetry.

Polish considers the surface condition of the diamond, including: scratches, polish lines, facet junctions, nicks, and pits.

Symmetry is the exactness of the shape and arrangement of the facets. Polish and Symmetry are graded individually as: Excellent, Very Good, Good, Fair, Poor.

Buy at Carat Thresholds

Stores won’t tell you this but there are significant price breaks for diamonds weighing just less than certain “magic” thresholds.

For example, diamonds in the .90ct – .99ct range can cost $1,200 – $3,000 per carat less (depending on the exact color and clarity grade) than a diamond weighing exactly 1.00 ct. Since the majority of the weight of a diamond is in the bottom half of the stone, a small difference in weight won’t affect the circumference or how it appears when seen from the top.

Save some money and get a diamond that looks just as big as a more expensive one. Other price breaks occur just below 1.50 ct and just below each whole carat.

Technical Price but Subjective Value

A diamond will always be priced by its technical grade, but its overall appearance is far more subjective.

Educate yourself enough that you’re familiar with how diamonds are graded. Decide which factors are most important to you and a range of color and clarity that you want to stay be in. Then make the final decision with your eyes only. How a diamond looks on paper isn’t what’s going to matter.

Most Employees are Not Gemologists

Most jewelry store employees, and even many owners, are not trained Gemologists.

Always consider the source.

If you’re purchasing a diamond, make sure that it has a certificate from an independent organization such as the G.I.A., or A.G.S. (E.G.L. is okay but slightly less respected due to looser grading standards).

There Are No “Ranges” on Grades

If you’re told a color, or clarity, range – like, “it’s a G-H color,” – it’s not a certified diamond. The grades are exact and they need to properly disclose the exact grade.

The cost is determined by the grade so would you be paying for a G color or an H color? If they don’t know, make sure you’re paying for an H (or maybe even an I, since they may be wrong if they can’t be specific to start with!)

Certificates Do Not Declare Value

If a diamond certificate includes a dollar value for the diamond, that’s a problem because it might be fake.

Respectable independent labs will assess the grade of the diamond but will never assign a value.

Since value is determined by the grade, it’s considered a conflict of interest to assess both.

You Can Submit for Certification

Anyone can submit a diamond to be certified, you don’t need a store to do it for you.


Don’t be afraid to negotiate.

Retail jewelers are very aware of their online competition from retailers like James Allen and Blue Nile.

For more on both companies, here is our James Allen review and Blue Nile review.

Diamonds are difficult to compare “apples to apples”, but if you state a cost for a specific shape, weight, color, and clarity, (cut is harder to compare) it gives you a strong starting point.

Every retailer wants to make a sale, so be polite and straight forward, and tell them (honestly) what you can buy the diamond for elsewhere.

Ask them to match the price, or to get as close as possible. There is an advantage to being an established customer at a brick and mortar store if the ring ever needs repair. You may find an unbeatable price on-line, but who’s going to repair the prongs, or re-size the ring in the future?

Plus, once you’ve negotiated on one item, you know you can negotiate on the next gift you need!

Other Posts You May Enjoy:

How to Watch NFL Games Without Cable

Many people are saving money by cutting their cable TV. Who wants to pay over $100/month when they only watch a few channels. But what if you’re an NFL fan? Does it mean that you have to give up watching your favorite sport? No, you don't. Here are 10 ways to watch NFL games without cable.

50 Best Gifts For $100 and Under

Looking for affordable gift ideas for your friends or loved ones? You could spend hours browsing online or at the mall, searching for the perfect gift. Our you could check out this list of great gifts for $100 and under.

10 Facebook Marketplace Scams to Avoid in 2023

Like credit card fraud, Facebook Marketplace scams are becoming all too common, as criminals find new ways you steal your money and identity. To fight back, you must learn to recognize fraud before it's too late. Here are ten common Facebook Marketplace scams, along with tips on how you can avoid them.

About Jim Wang

Jim Wang is a forty-something father of four who is a frequent contributor to Forbes and Vanguard's Blog. He has also been fortunate to have appeared in the New York Times, Baltimore Sun, Entrepreneur, and Marketplace Money.

Jim has a B.S. in Computer Science and Economics from Carnegie Mellon University, an M.S. in Information Technology - Software Engineering from Carnegie Mellon University, as well as a Masters in Business Administration from Johns Hopkins University. His approach to personal finance is that of an engineer, breaking down complex subjects into bite-sized easily understood concepts that you can use in your daily life.

One of his favorite tools (here's my treasure chest of tools,, everything I use) is Personal Capital, which enables him to manage his finances in just 15-minutes each month. They also offer financial planning, such as a Retirement Planning Tool that can tell you if you're on track to retire when you want. It's free.

He is also diversifying his investment portfolio by adding a little bit of real estate. But not rental homes, because he doesn't want a second job, it's diversified small investments in a few commercial properties and farms in Illinois, Louisiana, and California through AcreTrader.

Recently, he's invested in a few pieces of art on Masterworks too.

>> Read more articles by Jim

Opinions expressed here are the author's alone, not those of any bank or financial institution. This content has not been reviewed, approved or otherwise endorsed by any of these entities.

Reader Interactions


About the comments on this site:

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  1. Laurel Larsen says

    It was interesting to read that the grades on diamond colors increase the price a ton, but are also hard to distinguish the higher you go. My boyfriend and I have been looking at rings but we’re also trying to save some money for the wedding. I think we’ll be looking for something that just looks good instead of worrying about grades.

  2. Taylor Anderson says

    I like how you mentioned that one shouldn’t be pressured to buy a ring that was worth 2 months of salary. A lot of my friends are getting married, so these tips could potentially help them out. Thanks for all the great tips for buying a diamond ring.

As Seen In: