Luxury stocks or luxury items such as fine whiskeys or chic vintage cars can be an interesting addition to classic investments such as stocks or bonds. Designer handbags in particular have been enjoying increasing popularity in recent years. Selected models not only enjoy long-term demand, but some of them also generate impressive returns.
The era of low interest rates seems to be over, government and corporate bonds are attracting higher interest rates again, and the stock markets have recently recovered significantly – this is good news from an investor’s perspective.
Nevertheless, anyone who invests their money for the long term not only strives for security for the money they have deposited but also wants their investment to generate profits over time.
As an accompaniment to, for example, secure corporate bonds, investments in real assets are popular, such as real estate, wind and solar parks – or even luxury items. Although such investments often involve a higher risk, they also offer higher returns.
In addition to funds specializing in luxury brands, the classic luxury investments include expensive art, selected wines and whiskeys or vintage cars that can be bought at international auctions. In addition to the special appeal that they have for enthusiasts, they are definitely worthwhile investment items. As their age or rarity increases, their value generally increases. This also applies to designer handbags.
Individual legends and rarity make individual handbags extremely valuable
Examples from brands such as Chanel, Gucci or Louis Vuitton are not only produced at high prices but often only in limited numbers. The best example is the manufacturer Hermés. The designer bags are only sold upon request and after a long waiting period; for some models, interested parties have to take part in a selection process, at the end of which only some of the potential buyers receive a copy. In addition to their actual material value – expensive materials, elaborate craftsmanship, luxurious designs – this creates rarity.
Hermés also spins real myths about its handbags: The design for the Birkin bag, probably the manufacturer’s most famous bag, is said to have been created after the musician and actress Jane Birkin and Hermés boss Jean-Louis Dumas met on a flight. Birkin carried a large raffia basket instead of an elegant handbag, saying there was no handbag large enough for her carry-on luggage. That should change with the Birkin bag.
Legend and rarity – both fuel businesses on the second-hand market, where the bags are often traded well above their original price. Some of the Hermés models have been traded for several hundred thousand dollars in recent years: the Himalaya Birkin even changed hands for half a million dollars in 2019.
Some handbags offer higher returns than gold over the long term
What at first glance looks like an expensive hobby can make sense from an investment perspective – that’s what a look at the numbers shows. Some of the luxury properties experience enormous increases in value. For example, last year the Wall Street Journal reported on a Chanel SA Classic Flap Bag that, purchased in 2019 for $5200, was worth 8200 dollars two years later – an increase of 57.69 percent. Compared to other forms of investment, handbags generate significantly higher returns in the long term.
According to a comparison by the American online retailer Baghunter, the average return on Birkin bags between 1980 and 2015 was 14.2 percent. For comparison: the gold average fell by 1.5 percent in the same period. However, investing in handbags is also significantly riskier; designer items are sometimes subject to enormous fluctuations in returns: in 1995, the return on the Birkin bag reached its peak at 37.2 percent, and in the crisis year of 2008, the price fell by 36.6 percent.
Classics from Chanel or Hermés can be good entry-level models
Despite all the fluctuations in returns, the numbers show one thing: the Birkin bag has never suffered any real loss in value. Other luxury handbags have also proven to be crisis-proof, especially in the past two years. Nevertheless: If you want to invest in designer pieces, you need a certain amount of know-how. An unusual summer handbag in bright colors that is sold new today for thousands of dollars will not necessarily be in great demand tomorrow.
Timeless classics in muted colors, on the other hand, are likely to continue to enjoy greater popularity in a few years, even with constantly changing fashion. If you’re a newcomer and want to use designer handbags as an investment, it’s best to invest in tried-and-tested models like the Chanel 2.55 or the Lady Dior and of course, the well-known pieces from Hermés: Kelly, Birkin or Constance – provided you have the necessary change left over.