What Is Diamond Clarity?
IF, VVS1, SI1 vs. VS2 - All these letters come along with a diamond description to give you important informations about the quality of the gem holding in your hand - but the tricky part is to understand the differences to use it for an investment worth it. No worries, I will give you all the insights you need.
Therefore I would start with the definition what actually diamond clarity means: diamond clarity is the measure of how pure and transparent a diamond is. If a diamond has certain spots or inclusions in it - depending on it's type, location or size - its value goes down, and so its price. I will explain to you what the five factors affecting the clarity grading are, which types of inclusions there are and how all of that has an impact on the price. And I guess that's one of the most important things to you.
Diamond Clarity Scale by GIA
Carrying on its tradition of providing proper grading system for diamonds, GIA has made a clarity grading scale, too. It starts with Internally Flawless (IF), which are the purest diamonds without any blemish or spots and ends at Inclusions 3 (I3). IF diamonds are the most expensive ones, because they are literally crystal clear! However, you don’t need to buy these ones to get an excellent looking diamond. If you were to buy VS1 or even VS2 diamond, you would get almost the same clarity as an IF diamond, at least to the naked eye, while saving a lot of money.
Let´s have a look at the grading scale:
SI1 vs. VS2 Diamonds: which one is better?
First of all: congratulations, if you are asking this question because you already understood the impact of the diamond clarity on the price! I will come to that important point later on. Many people try to save money within the clarity of a diamond and want to get the best quality out of their little budget. Totally understandable. As a result, it leads to the common question which clarity grade is the maximum grade for the pocket but the minimum grade that doesn't show any inclusions. This line goes between SI1 and VS2.
As you can see above in the diamond clarity scale the difference between these two grades are inclusions or dark spots that you could possibly see with your naked eye. I would not buy any diamond with visible spots in it if you don't need to due to your planned budget. We all love diamonds because of their purity and not because of their dark spots. Let's make it even clearer by comparing these two:
I marked the dark spots within the SI1 grade diamond with red circles. There are a lot of them and every spot is visible with your naked eye. In comparison I took a random VS2 diamond where you can see nothing but purity. Of course with a microscope you could see inclusions as well due to the fact that it's not an IF diamond but it's almost impossible to see it with the naked eye. You can compare more diamonds between SI1 and VS2 grades and you will see that mostly the SI1 ones will not be that eye-clean anymore.
I hope you got the difference clear. If your budget allows a VS2 grade or higher, go with it because it's worth it! Otherwise you have to be careful with a SI1 diamond and take even more time for investigating the gem.
Five Factors Affecting The Clarity Grade
There are many variables a diamond cutter will take into consideration when assessing the clarity. Just like the other 4 Cs, a clarity grade will indicate the characteristics of a diamond, many of which will only be visible to the practiced eye of an experienced jeweler. When grading the clarity of a diamond, magnification and good lighting are essential with strict standards applied across the industry. The clarity grade of a diamond will not just affect price, as it will also determine how best to set and wear them.
There are five main factors used to consider how inclusions affect the clarity of a diamond:
Size
Large inclusions will lower the clarity of a diamond. If they are large enough, they can also affect the durability of the stone. When inclusions are big enough to impact the clarity they are referred to as 'grade setters.' The cumulative effect of inclusions will also be taken into account, relative to the diamond's size.
Nature
Later on we will discuss the nature of the different type of inclusions and how they can affect diamond clarity. Only features that are present in the depths of the diamond are called inclusions. Diamond features that are only visible on the surface are called 'blemishes.' If you don't know what the depths of a diamond is, read more about the ideal diamond proportions.
Number
Naturally, the more inclusions that are present, the lower the clarity will be. However, if inclusions aren't readily visible, they won't have as much impact, so the number does not always play a determining role in clarity grade.
Location
Location can play a significant role in changing the clarity grade of a diamond. The biggest impact will come from inclusions that are close to the center of the table, while the inclusions around the girdle are less noticeable. If you don't know which part the table of a diamond is, just read more about it.
Relief
Relief refers to how much an inclusion stands out relative to the host diamond. Inclusions that have more significant relief will generally receive a lower clarity rating.
Diamond Inclusions
Diamond inclusions, or flaws as they are also commonly known, mean that a diamond cannot be graded as internally flawless. To the average retail diamond enthusiast, inclusions can be good news, because they lead to lower grades - although some are almost impossible to detect with the naked eye. However, even small inclusions can significantly reduce the price.
It's important to note that very few diamonds are perfect, and the ones that are will be priced out of range for most mere mortals. You could say that diamond inclusions mean more of us can afford to enjoy the sparkly brilliance of a diamond that is not perfect, but still pretty good.
Types of Inclusions
There are quite a few different types of inclusions which can affect the clarity of a diamond, so keep the following in mind next time you're shopping for a diamond and need to stick to a budget. This list is just a smaller group of inclusions and definitely not complete. As said before, a diamond is created by Mother Nature and so every diamond is different with many kinds of imperfection possibilities. You can get more knowledge about it on the GIA Website.
Mineral and Crystal Inclusions
Diamonds often collect tiny deposits of minerals and crystals during their formation. There have even been examples of diamonds embedded in other diamonds. Most often, the deposits are so small the naked eye won't be able to spot them without magnification. However, if the clump gets sufficiently large enough, it can lower the clarity grade and value of a diamond.

Pinpoint Inclusions
Pinpoint inclusions are tiny crystals (as small as a speck of dust) that can appear by themselves or may clump together in the diamond. A larger cluster can create a hazy area inside the diamond, referred to as a cloud, and it will affect the clarity rating.

Laser Lines
Laser are an artificial inclusion created when using a laser to remove dark crystal inclusions. They resemble a tiny strand or threads that start at the surface and stretch inwards up to the point where the inclusion was removed.

Feathers
A feather is a crack in a diamond that as the appearance of a feather. Small feathers detract from the clarity but will only affect durability if they reach the diamond's surface.

Bearding or Girdle Fringes
A girdle fringe, also called bearding, is a hair-like crack that develops around the girdle (the outer edge of the diamond) during cutting. Small amounts of bearding won't affect clarity too much. If it's small enough it can usually be polished away or removed by recutting.

Growth Lines or Grains
Irregular crystallization during the diamond's formation can create growth lines. Colorless grain lines won't impact clarity, unless they are present in large quantities. Growth lines that are white or colored will also lower the clarity rating.

Diamond Clarity Plot
A diamond clarity plot is a map of a diamond describing the location of various diamond inclusions and blemishes. The goal is to provide documentation about the condition of a diamond, but a detailed clarity plot also helps to identify diamonds, as no two stones are alike.
Clarity plots closely match the shape and facet arrangement of your stone and gives you an idea of the location of each feature. The diagrams also include two views of the diamond: one form the pavilion view, and the other from the crown view.
Different types of inclusions are assigned their own colors for easier identification. Red is for most inclusions, while red and green can indicate cavities knots, etch channels or laser drill holes. Green is used to show the location of naturals, and black depicts extra facets.

How the Clarity Grade affects the Price
Each grade, no matter how minute the difference is, has a different price range. If you want to avoid visible signs of inclusions in diamonds over 2 carats, you should consider stones with a VS1 or higher rating. Diamonds between 1 and 2 carats will look best when choosing clarity grades of VS2 or better, as any inclusions will not be readily visible to the naked eye.
As a rough guide, a diamond of around 1.50 carat with F color, and a VS2 clarity rating will fetch approximately $10.000, a VVS2 already $12.500, while a similarly sized diamond of the same color, but with an IF clarity rating will retail for around $19,000 (click on the images to compare the prices online).
You see, there is a lot of money to save by taking a lower clarity grade. Understanding inclusions ratings will help you make the right choice when diamond hunting because you are using more than a diamond's clarity rating to make your choice. While inclusions can detract from a diamond's brilliance, they can also enhance its beauty on occasion.
Final recommendation
I would say do what your pocket allows you to do. If you do not have any limit, go with IF grade in diamond clarity and don't forget to tell everybody that it is an IF grade because otherwise they will not believe you. But if you have a limited budget, go with VS1 or VS2 diamonds as these are far cheaper than the IF diamond and usually don’t have visible spots in it unless someone has a microscope fixed in his eyes. Everything higher than VS2 is great (my own diamond was VVS1) but I will not push you to these prices. Please keep in mind, that even more important is the diamond cut.
One last suggestion, if you go to a retailer, check every detail of the diamond as the sellers can sometimes trick you into buying lower grade diamonds for a higher price!