Rare and high-value apparel items and accessories like Rolex watches and Hermes bags appreciate 10 to 14% a year, making them a good investment. However, they’re not a reliable investment compared to ETF and stock. Luxury items depreciate when suffering damages resulting from regular use.
Not everyone is eager to invest in real estate, ETFs, bonds, stock, crypto or mutual funds.
These investments require a certain level of knowledge and long-term dedication that can be boring for the creative mindset.
Investing can also be fun when opting to put your money into luxury apparel items.
Some brands have created an artificial scarcity situation with high-demand items, driving the price beyond the reasonable mark.
For example, jewelry was always considered an investment as it involves precious metals and stones which can be sold separately.
But expensive leather bags have never, throughout history, enjoyed such a massive demand.
If you have a 5-figure amount available, should you jump at the opportunity and invest in fashion? Here are my 2 cents.
Investing in fashion companies
Buying and reselling fashion items can be a hassle. Not to mention that some items may require decades to appreciate.
The choice of fashion items is overwhelming, so choosing the one with the best resell value can be troublesome.
If you want to rely on numbers and prefer stock, you can also benefit from luxury brands.
Before investing in a fashion brand, do a quick investigation. Brands that are fast-growing with medium to low prices are not something you’d want to invest in.
The largest fast-fashion company Inditex is the exception.
They managed to bounce back from a 30% loss in 2020 to a 60% higher profit in 2021.
However, it is safer to look for high fashion brands with strong pricing power.
This means even if their items hold a much higher price than the similar in the niche, they still sell well.
The fashion stocks you should be paying attention to right now are Nike, LVMH ( the owner of Louis Vuitton, Dior, Fenty, Givenchy), Gucci, Ferrari, Farfetch, Tiffany, and Cartier.
Is fashion a good investment
The fashion industry suffered as all others in the last 2 years. But it also bounced back better than ever.
Of course, the need for clothing will never disappear, but how high can the brands keep their prices?
The oldest fashion brand in the world, Hermes is known for its immensely expensive and hard to get bags. The brand has a quota on their most famous bag, the Birkin.
Once you become a customer, you’re assigned a sales associate. They’re recording everything you buy and offer you a Birkin after you ramp up at least $50,000 a year. The bags start at $9,500.
This complicated and costly way of selling the bags has made them so popular and in-demand that you can find some reselling for over $200,000!
So is fashion a good investment?
It depends; some items have 500% price appreciation and much higher resale value, while others depreciate over time.
It’s all up to careful buying and reselling at the right moment.
Who invests in fashion?
Fashion items serve to diversify your portfolio, not to be your only investment.
Many popular influencers, socialites, and entrepreneurs keep their millions in designer items, including handbags and watches.
Jamie Chua, a Singaporean socialite, holds the most extensive collection of 200 designer bags, each of them worth between $8,000 and $300,000. Her net worth is estimated at $50 million.
Auro Montanari, known by the pseudonym John Goldberger holds the largest watch collection.
In 2018 he sold his white gold Rolex Daytona for $6 million.
His net worth is not publicly known.
Rally – alternative fashion investments
Rally is a service that allows you to buy a portion of a luxury item. They have a website and app, which makes the approach easier.
How does this work? Rally buys the goods and then turns the value into equity shares. Think of it as buying shares of a company. Then as the value of the goods grows, you get to sell the shares in-app. The approach is simple, hassle-free, and the app is available for both iOS and Android.
Investing through Rally is a way of investing in fashion without purchasing a large item that costs thousands of dollars. Instead, you’re risking a smaller amount but still getting exposure to luxury investments.
So what can you invest in on Rally? Luxury fashion goods, art, comic books, collectibles like trading cards, classic cars, even dinosaur fossils!
The 5 best fashion items investments in 2022
Thinking of investing in a luxury item? Here are our top picks, proven to hold and increase their value over time.
1. Hermes handbags
Hemes is a french luxury brand established in the 1800s and has been thriving ever since.
Their craftsmanship is unique, and the waitlist for a Hermes bag is long.
Even though the brand sells other luxury items, like clothes and shoes, bags are their most popular category.
Hermes Birkin bags come in various sizes, and the market dictates their popularity.
Currently, small bags are trending, so the resell value of their smallest Birkin is the highest.
The mini Kelly bag retails in store for $8,000, but the resale price starts at $20,000.
The most expensive Hermes bag to ever resell was a Diamond Himalaya Birkin.
It was valued at $300,000 but sold for $400,000 due to high demand.
2. Chanel handbags
At the beginning of 2022, Chanel announced an increase in their prices and a quota on their most popular, classic bags.
It’s not news that Chanel is a luxury brand, but following the footsteps of Hermes has made bag owners a little richer.
They’ve limited the purchase ability of customers to one handbag per year, again creating an artificial scarcity.
Their classic bag called 2.55 was created in 1955 and has been a best seller ever since.
The original price of their large classic black calfskin bag is $10,000 but resels for up to $20,000 depending on age and leather condition.
3. Rolex watches
Rolex watches are a longtime synonym for wealth.
The Swiss watch brand founded in 1905 sells roughly 1 million watches every year. So how come their watches appreciate every year?
In 2021, Rolex had a 262% resale value. But not all of their watches.
The Submariner and Daytona models hold value and can grow by 10% in resale price every year.
You can customize the watch upon purchase, making it one of a kind and increasing its resell value.
4. Patek Philipe watches
Patek Philipe watches are one of the collector’s favorite.
Their waitlist is years long. However, this brand doesn’t create an artificial scarcity, but their manufacturing is a long and complicated process.
The Nautilus, Aquanaut, and the Calatrava are in high demand due to their innovative features, so investing in one guarantees a good resale value.
On average, Patek Phillipe watches have a 258% resale value.
5. Vintage designer jewelery
Investing in antiques is a demanding hobby, but putting a little sparkle in your portfolio can pay off greatly.
You need experience, knowledge, and the right appreciators.
Gold, silver, and diamonds are luxury items on their own, but their value skyrockets when combined with exquisite craftsmanship.
Vintage jewelry is 20 to 100 years old, while antique is at least a century old. So, just like art, vintage or antique jewelry can only appreciate in time.
Look for pieces by famous designers. A stamp or hallmark of a great design appreciates the resale value.
In 2015, a customer took a ruby and diamond necklace to Bonhams, an auction house, for appreciation.
It was valued at $15,000 before discovering the Cartier engraving. It sold for $35,000 solely due to the engraving.
The same happened with a 110 years old Chanel costume necklace valued at $6,000 and sold for $68,000!
Quick research discovered that Coco Chanel herself wore the jewelry once.
Fashion items with worst resale value
Not all expensive fashion items will resale at a reasonable price.
Clothes have the highest depreciation point.
According to The Real Real, a luxury resale service, brands like Versace, Tod’s Marc Jacobs, Coach, Tory Burch sell for a fraction of the original price.
Designer shoes also have a low resale value due to the nature of the product.
Where are Gen Z investing?
Gen Z’s are known to defy conservative approaches to investing, putting their money toward cryptocurrencies and meme stock.
Contrary to popular belief, 75% invest in ETF and stock.
Is Versace an investment?
Versace items are among the brands that depreciate the most, so buying a Versace bag is not a wise investment.
However, their stock has grown by 45% in the last 5 years.
In 2018 Michale Kors rebranded to Capri and bought Versace. The brand is listed on NYSE under CPRI.
How do you invest in fashion brands?
Most prominent fashion brands are publicly listed, so you can buy stock on the stock market.
Do designer clothes increase in value?
Rare and valuable pieces like Burberry trench coat, some designer gowns can grow in value.
However, most everyday pieces depreciate after a season or two.
Fashion enthusiasts are always critiqued for throwing their money on clothes.
However, some of them make wise decisions by purchasing high-value items.
As history shows, designer items like bags, jewelry, and watches tend to grow in value.
Not many of us are willing to spend $10,000 on a bag and wait to resell it for $20,000. Others like to diversify their portfolio by investing in luxury purchases.
What all collectors and luxury investors have in common is their diversified portfolio.
Jeffree Star, an American makeup mogul famous for his Hermes bag collection, revealed that he receives the highest ROI from his real estate and stock investments.
If you like to splurge on a luxury item but want to be able to resell it at a good price, research the brand before jumping.