A report by online luxury goods retailer BagHunter.com became a trending topic on Facebook and Twitter when it revealed that investing in an Hermès bag outperformed both the S&P 500 and gold. Every year, the ‘Birkin’ increases in value by 14.2 percent, while the S&P and gold markets tend to fluctuate instead of rise steadily. A further study investigated the investment return on the Chanel ‘Medium Classic Flap’ handbag has increased by a shocking 70% in only six years. Essentially, this means that a well-placed luxury goods investment, like the purchase of an iconic ‘Birkin’ bag or a Chanel ‘Classic Flap’ bag, could boost your portfolio better than stocks or minerals. Suddenly, every woman with a Birkin (or five) has proof positive that her obsession was financially justified in the long term.
You’ve likely heard the term “investment piece” thrown around in fashion articles before, but never has it been clearer that a stylish, expensive purchase could be more than just a complement to your wardrobe. But how is it that your favorite luxury accessory actually appreciates in value every year? Conventional wisdom says, when you drive a brand new car off the lot, it immediately decreases in value, and the same logic could be applied to a “used” handbag. Yet, this common saying does not take into account rare, luxury vehicles that appreciate with age. Take, for example, the iconic 1961 Ferrari ‘250GT Spyder’, which was originally purchased by actor James Coburn for around $300,000 and sold over 40 years later in 2008 for nearly $11 million. Like the 1961 Ferrari, Hermès bags are subject to the same model of supply-and-demand – meaning their rarity and exclusivity help them steadily increase in value, rather than decrease or fluctuate, over time. Hermès uses such expensive, high-quality materials, puts so few bags into production every season, and grants so few people access to them that it has all but guaranteed the skyrocketing popularity of its goods.
While investments like stocks and gold are more ephemeral, a luxury investment piece like an Hermès ‘Birkin’ or Chanel ‘Classic Flap’ bag is physical and imbued with utility. This means that, if you buy one, you want to wear it in order to show off your status or – barring concerns over surface appearance – in order to use it as it was intended: to carry your belongings. If used frequently, damage is likely to occur, which decreases the value of the product. However, luxury brands like Hermès and Chanel are well-equipped to handle repairs, meaning your bag can easily last beyond a lifetime to be passed down to future generations or sold for a high valuation at auction. However, if you are seriously considering making an investment in an iconic luxury piece, the smartest move to ensure the highest amount of return on your investment would be to seal and store the piece in a climate-controlled environment.
In addition to the Hermès ‘Birkin and Chanel ‘Classic Flap’, there are other brands that also sell worthy investment pieces. Luxury Daily found that classics purchased from Cartier, Bulgari, and Chanel increased in value over time, and luxury consignment site TheRealReal’s chief merchant Rati Levesque told Luxury Daily that he “sees high resale value in Louis Vuitton, Christian Louboutin shoes, and Céline handbags for women. For men, labels Berluti, Tom Ford, and John Lobb have strong attention and demand.” Additionally, WatchTime.com cited Rolex and Patek Philippe as brands whose timepieces are also becoming more valuable. Shoes, however, are different, and are only resold at higher prices if they have never been worn. In this category, mint-condition Louboutins are your best bet.
Finally, it’s time to do the math, using the ‘Birkin’ as an example. If BagHunter.com is right, and the bag increases by 14.2 percent annually on average, then a ‘Birkin’ purchased at the low-range price of $12,000 will increase by $1,704 annually. In ten years, the bag will be worth $29,040. With such a huge, shocking, and historically steady rate of return, we wouldn’t be surprised to hear of investment managers trading in entire portfolios for as many bags as they can get their hands on. Additionally, a Chanel ‘Classic Flap’ that was valued at $2,850 in 2010 was worth $4,900 by the end of 2016, which indicates a staggering 71.92% increase. This means that the Chanel bag rose in value eight times faster than inflation. BagHunter’s study included a look at Chanel’s ‘Reissue 2.55’ in sizes 226 and 227 and the Chanel ‘Boy’ Bag in sizes small and medium, and found similar results. Both increased in value in the same time frame as the ‘Classic Flap’ to the tune of 69.23% and 66.66%, respectively. These facts solidify the case in favor of luxury investment pieces.
While securing such an expensive, valuable luxury item is difficult, Savoir Flair recently uncovered a local gem called Bagatelle at Mercato Mall that stocks authenticated vintage Hermès and Chanel goods. Whether you’re looking to really, truly invest in your financial future, or simply secure a coveted luxury item, it seems that you can’t go wrong with a ‘Birkin’ ‘Classic Flap’ or any other luxury good that increases in value over time.