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Are you looking to invest in something stable and growing, but aren’t feeling real estate or the stock market? How about something more, um, luxurious?
Today we’re highlighting five of the best luxury goods to invest in. Read on!
Designer Handbags
When it comes to luxury investments, handbags reign supreme. Specifically handbags designed by the titans of the fashion industry. Think Hermès, Chanel, and Louis Vuitton. For example, in 2016, a Hermès Himalayan Birkin bag, with white gold and diamond trim, sold for $372,600.
These incredible prices aren’t just because of brand names, but because of a tightly controlled supply. Only about 12,000 of those Birkin Bags are made in a year and are only sold to a very exclusive list of customers. This prestige and scarcity have given Hermès Birkin Bags an average annual increase in value of 14.2%—an outstanding figure when you consider the S&P 500 average return is 8%.
This isn’t a new trend, even if it is reaching new heights. Over the past ten years, some designer handbags have increased in value by 83%, outperforming almost every other luxury good on this list.
Watches
If handbags aren’t your thing, it might be time to look into the world of luxury watches.
At a Sotheby’s auction in 2020, a Patek Phillipe Ref 2499 watch, retailed by Tiffany, sold for $818,600. Watches being sold for upwards of millions of dollars is not unusual. When it comes to watches, the marketplaces can get quite competitive with celebrities and the One Percent dropping hundreds of thousands (if not millions!) on a new wrist piece.
Rolex in particular is always a great investment, with some watches having a return per year of nearly 10% or better. Other brands of note include Audemars Piguet, Patek Phillipe, and Hublot.
While watch prices vary, an investment-grade watch will likely have a retail value of at least $5,000.
Sneakers
While the astounding returns commanded by designer handbags and watches might not be surprising (they’ve always been symbols of financial status), you might be surprised to hear sneakers have become a worthwhile collectible to invest in as well.
Research analyzing 50 different sneaker brands over the decades has shown that some sneakers have increased in value by more than 60 times their original asking price. All of the sneakers on this list increased in value more than gold did during the measurement period.
What makes sneakers as good as gold (or better than!) among shoes? The reason is mainly that these shoes often have a good deal of cultural crossover and nostalgia attached to them. For example, Nike Air Jordans aren’t just sneakers, they’re actually culturally significant items in both basketball and hip hop culture.
Vintage Wine
Did you know the word vintage was first used to refer to wine? There’s a reason you can see the “vine” in there. This might make vintage wines the original luxury collectible!
While wine has been a collectible since the 19th century, it was in the 90s that wine started to take off as an investment. A bottle of wine can easily increase in value by 30% over five years, if not higher!
Wine is an attractive luxury investment because of the variety of buy-in prices. Since wine is intended to be drunk, it sits comfortably in the mid-range of luxury goods. Still, a wine that is worth investing in should probably be at least a few hundred dollars, and from a winery with some name recognition.
In terms of expected returns, the most expensive wines can be auctioned for anywhere from $10,000—$100,000. Of course, the higher returns tend to be for bottles with unique histories.
Classic Cars
For many people, their hobby turns into a money pit. But what if we told you there was a wildly rewarding hobby that will let you sell your projects for more than you bought them? Welcome to the world of classic car purchasing, restoration, and investment.
Over the past 10 years, classic cars have shown returns of a whopping 404%. This incredible growth has to do with the fact that classic cars are rarely affected by a downturn in the market that might drop the price of other goods. Classic cars as an asset rose even during the financial crisis of 2008.
This could be partially because vintage car collectors are famously fanatical, and often a very wealthy, niche group of consumers. Unlike an asset like wine, a car does not depreciate if it is enjoyed. Repair and refurbishment often boost the worth of the car significantly.
The downside to investing in cars is that it’s not something you can just stash in your wine cellar — you’ll need a proper garage to store it, and you’ll often have to hire someone to help refurbish and maintain it. However, the handier investor might see refurbishment as half of the appeal.
