Investing in luxury goods has turned into an attractive alternative to the traditional avenues of investing in the stock market. A study in 2014 revealed that jewellery outperformed both prime London property and equities, and just two years later in 2016, it was reported that a luxury handbag could be a better investment than gold.
Precious metals such as gold and silver have always maintained their value, however we have come to observe that throughout history, leather bags have not been in such high demand as of now, making them a top investment item.
Nonetheless, The Watch Exchange assures that the time-keeping industry remains a great long-term investment. Luxury brands such as Rolex and Patek Philippe are known to control the supply of their watches, making sure that their watches are always in demand.
Patek Philippe & Rolex Watches
The Watch Exchange affirms that watches are often a safer investment than investing in the stock market. This is due to the fact that luxury, handcrafted watches such as Rolex and Patek Philippe, rarely ever depreciate in value. Instead, if you have an exclusive design or an older model that has come back into fashion, their value can significantly appreciate, giving you a good return on your investment. Their argument? Why wait nervously to see if you’ve lost or made money in the stock market when you can almost certainly guarantee that the value of your watch will appreciate. For example, The Watch Exchange confirms that since the 70’s the price of a stainless-steel watch has never depreciated, supporting the notion that they are a safe investment.
Why do they maintain their value/appreciate?
These exquisitely made watches maintain their monetary value because the demand for these specific watches always exceeds the rate of production. Despite luxury watch brands such as Rolex controlling the scarcity of their watches in order to create value, it is true that this is in part due to the fact that it takes over 500 hours to make a single Rolex wristwatch, meaning they can’t mass produce these luxury products because of the time and craftmanship it takes to make them. As such, this scarcity in the luxury watch market means prices go up, making them an ideal investment opportunity. The watch Exchange supports this with a statement about the exclusivity of the Rolex watches, adding that “specific models have up to a six-year waiting list if you try to purchase them directly from Rolex”.
Tips for watch investments:
- Look at brand reputation, more prestigious branded watches will sell for more in the future.
- Insure your timepiece!
Hermes Designer Bags
In recent years leather handbags have become better investments than stocks or even gold! Similar to luxury watch brands, luxury handbags from affluent brands such as Hermes are known to have a strong re-sale value. According to the Knight Frank Luxury Investment Inditex, luxury handbags were the top collectible investment of 2019 with a gain of 13%, a gain unmatched by other collectible investments or even the S&P 500 stock market index performance in 2019. For this specific luxury goods brand, the waiting lists for their bags can be long, once again showing that this market has a high level of scarcity, explaining its crazy levels of demand.
The Hermes bags to invest in now are the Birkin, the Kelly and the Constance, with this trio being described as the ‘Holy trinity of Hermes bags’. These infamous bags retain their status and value because they never go out of style and are masterpieces of artisanship. In 2017, the much-desired Hermes Birkin Himalaya Niloticus with diamond-studded 18-carot white gold clasps that broke auction records around the world, sold for approximately 338.000 Euros in Hong Kong.
Tips for bag investments:
- Choose a bag that will remain timeless – select classic shapes and neutral colours that can be styled for multiple looks.
- Pick a material that is durable – such as leather.
Diamonds
So, are diamonds still a girl’s best friend? This may well still be the case, with diamonds appreciating by 33% in the last decade! It is worth noting that a diamond that weighs in at five carats is not the same as five diamonds of one carat each. Bigger diamonds are simply worth more. And similar to watches, they are said to be a safe investment, shielding you from economic crisis, like market collapses or deflation by offering price stability. Asides from this, diamonds are extremely durable due to being the hardest thing on planet earth, meaning you can actually wear your investment and enjoy it without fearing decreasing its value through suffering damages.
However, if you invest in diamonds, you need to be in it for the long haul. Diamonds are not a short-term investment, and so if you want to have quick returns on your investment, this may not be the one for you. If you invest in this precious stone, then you should expect to wait at least five to ten years before reaping the benefits.
Tips for diamond investments:
- Purchase from shops that provide you with some sort of certificate and check that this is legitimate.
- Purchase diamonds that are independently The reason for this is because diamonds certified this way will be much easier to sell than ones that are not. Plus, they will be much more desirable.
