But arriving at the right amount to budget is something that many young people continue to struggle with, and retail analysts say that more people are beginning to use the credit programs offered by the largest national jewelry chains. Thinking about how that money might work harder for you invested elsewhere clearly saps all the romance out of the process. And as someone who grew up spending summers working in her family’s small jewelry store, I am not opposed to celebrating the occasion, within reason, with something sparkly.
But let’s just pretend for a moment that you invested $12,700, or the current benchmark price for a high-quality one-carat diamond, according to the Rapaport Diamond Index, an industry benchmark for diamond prices. In a portfolio of 60 percent stock funds and 40 percent bonds with a real return of 4 percent, that $12,700 would rise to about $27,830 after 20 years, and nearly $41,200 after 30 years (that’s after inflation), according to calculations by Vanguard.
It is hard to compare those values with sentimental ones, as well as traditions that are deeply embedded in the American psyche. Diamond prices are generally less volatile than those of other commodities, and the average annual appreciation of a high-quality one-carat stone is about 3 to 4 percent annually, according to Edahn Golan, an analyst specializing in the diamond industry. “Supply is limited,” he said. “It’s a millions of years process, and they are mined faster than they are being generated by mother earth.”
Of course, euphoric couples in love aren’t thinking about supply and demand (or that the growing middle classes in China and India are driving growth in the latter), nor do they view the ring as an investment. Even if they did, it’s not a terribly efficient value proposition, at least when you generally buy at retail and must sell at wholesale (and nobody initially plans to sell anyway).
A ring with a 0.7 carat diamond that cost $4,895 on Blue Nile, an online jewelry retailer, might sell for 20 to 25 percent more at an average brick and mortar retailer, while the same size and quality ring could command at least 40 to 50 percent more at Tiffany or Cartier, said David Wu, a luxury goods and beauty analyst at the Telsey Advisory Group in New York.
But what is interesting is that given how much has changed over the decades — men now snoop on their girlfriends’ Pinterest boards for clues about what they really like, and couples often shop together — the fact that it’s a purchase loaded with expectations persists.
I spoke with about a dozen 20- and 30-somethings in the market for a ring, with budgets ranging from $1,500 to $25,000, and many of them, mostly men, admitted that they were concerned about appearances, which factored into their budget: I feel like I should keep up with people in our circle, said one. Her family is wealthier than mine, wrote another. The perception is that I earn a lot of money and should be able to spend in the same way, added another, who is earning a healthy salary now but has been in debt in the past.
And the most popular refrain: She is going to wear it for the rest of her life.
It is a purchase that is “heavily driven by the heart and expectations,” said Holly Wesche, owner of Wesche Jewelers in Melbourne, Fla., and whose family has been in the jewelry business for three generations. “They are not thinking about their college debt or the house. They are trying to make it happen.”
Many of the young and men and women I spoke with sounded relatively levelheaded about their spending plans — and the jewelers said that people tended to come into their stores highly educated on the topic and with a budget.
“I found that coming up with a budget is difficult,” said a 28-year-old consultant in Los Angeles, who wanted to remain anonymous because he had not yet proposed and did not want to make his concerns public. “It’s not easy to discuss.”
For Ms. Kaprovsky and Mr. Veach, it was an open discussion. The couple thoroughly educated themselves on the “four C’s” — cut, clarity, color and carat weight — that factor into a diamond’s value. They visited retailers in Pittsburgh, ranging from Zales to Tiffany, but ultimately bought a ring through Blue Nile: an elegant, hand-engraved platinum setting, which will showcase a round diamond, slightly shy of one carat.
They knew that buying just below the landmark sizes, say 0.91 carat instead of one carat, would save them money, and the budget-minded couple also managed to save elsewhere: The total price came to $6,250, but since Mr. Veach bought the ring on his Upromise credit card, he received 10 percent cash back, or $625, which will go toward his Sallie Mae student loans.
“We found our money values are pretty aligned,” Ms. Kaprovsky said. “We are both relatively thrifty and do our research when making large purchases.”
Engagement rings date back to Roman times, or further. But what many people probably do not realize is that the notion of a diamond ring was initially marketed to the masses in an advertising campaign in the late 1930s by De Beers, which controlled the diamond industry at the time. The same firm’s copywriters also decided, in the 1980s, that the purchase should be worth two months’ salary.
It is a powerful symbol. Even Mr. Veach joked about what wearing a cubic zirconia would say about their union. “A diamond is a 10 on the Mohs scale,” he told Ms. Kaprovksy, referring to the scale of mineral hardness, when making his case for buying the real thing. “C.Z. is an eight. What am I saying — our relationship is only strong as about an eight out of 10?”
That underscores the notion that the industry really isn’t in the business of selling diamonds, as Martin Rapaport, publisher of the Rapaport Diamond Index, recently said. “We sell the idea behind diamonds.”