This topic continues to fascinate people and also divide them. Luxury influencers, YouTubers, and other luxury-related personalities often refer to designer bags as investments. The luxury community is divided over this issue with one side claiming that they are not and the other stating they are.
I understand. Bags are intended to be used and loved, so it may not be considered an “investment”. This is a different topic.
What if I said that you should seriously consider them as a smart investment? You can buy a tangible item that you will use for years and then sell it for a significant profit.
Chanel bags are a good investment.
Recently, I sold a few bags to help me curate my wardrobe. Two of my vintage Chanels were sold for a lot more than I paid. I got the best value per wear, as I had worn them for a long time. I also received extra money that I could invest in other bags or place into my investment account. My collection is also part of my portfolio and provides extra financial security.
With rising living costs and inflation, we are currently experiencing an unsettling economic climate. While household debt continues its upward trend, wages are stagnant. Cash is king for some, but it can also lose value due to fluctuations in the global economic climate.
Diversification is key, and I’m here to tell that you should: YES, you should invest your money in stocks and bonds, YES, you should prepare and invest for your future financial security. There are other investments than what you might think. For example, vintage cars, fine arts, wine and luxury items are all excellent investments that will not only retain their value, but continue to increase in value. Guess what? Luxury handbags continue to be the most popular collectibles.
Deloitte: By virtue of their correlations, collectibles are a good way to diversify traditional financial assets like bonds and stocks.
Do not just take my word. This report from Credit Suisse Deloitte confirms what I have been saying for many years. Here are the three main highlights.
1. Chanel bags are a good investment with high demand
In our opinion, Chanel handbags designed by Lagerfeld will continue to benefit from the scarcity factor in the coming years. However, the evolution of the luxury handbag brand is determined by its ability to maintain collectors’ enthusiasm going forward. Hermes Birkin handbags, as opposed to Chanel bags have had a higher volatility. This is comparable to global bonds or hedge fund among financial assets. However, they offer a better reward-risk ratio than the latter.
Hermes bags outperformed both the stock market and the gold in the past. in this CNBC article says that handbags are better investments than other asset categories.
2. Luxury handbags are low-volatility, which means they provide more stability to investors.
Watches, jewelry and handbags are the most valuable stores with low volatility (2.5% to 5% per year) and low drawdowns. Their annual returns, with the exception of pocketwatches, are between 4.5% and 6.5%. The information ratio, which compares returns to volatility, and reflects the risk-reward, is very impressive. Values exceeding 100% are recorded. Average returns consistently outpace fluctuation ranges. Rolex and Chanel handbags are of particular note, as they have information ratios that are 200% or more. The average annual return for Rolex is 10%. This is twice the normal fluctuation range.
Low volatility is a good thing, especially in this volatile market!
3. Chanel bags will protect you against inflation and provide you with extra financial security in times of recession
In order to assess the impact of inflation and interest rate changes on the value of collectibles, we need to look at the figures 4 and 5. Chanel handbags offer the best protection against inflation (as measured through performance during extreme inflation periods). This is followed by wristwatches and traditional Chinese art, especially Rolex. Fine wines and art from America and Latin America are most vulnerable to higher inflation regimes. Classic cars and art from the post-war era and contemporary periods do better in times of low or normal inflation. Rolex watches seem to be ideal all-weather inflation stores of value.
What’s driving this growth? And how does it impact the resale marketplace: Chanel pricing strategy has been a major contributor to their exponential growth. Chanel had several price increases over the past few years. In fact, Chanel’s Medium Classic Flap prices have increased by more than 35% since 2020.
The price of the Medium flap is likely to surpass Hermes Birkin’s …). in a few months. For most of us this has caused us to turn to the resale markets to find Chanel bags. You can get Chanel bags at up to 50% off retail price if you search Fashionphile or Rebag.
Vintage Chanel bags, which are between 20-30 years old, have also seen a recent rise in price.
Case in point, I remember purchasing my Vintage Jumbo XL flap for $2,000 in 2018 and now it is $6,000+. Forbes also reported earlier this year that one of the leading consignment stores, Fashionphile , reported $500M in sales . In fact, Bain estimates that the luxury resale market is estimated to be valued at more than $33 billion. It is estimated this market will surpass $52 billion in the next five years .
The growing demand for classic Chanel bags and the limited supply will drive up the price on the resale marketplace. It’s time to buy your Chanel bags. Could it be that in the near future, the resale price of Chanel bags will surpass the retail price like Hermes?
Investments are often personal and emotional decisions. We shouldn’t judge one another on the way we spend our hard-earned cash.
Let’s build our wealth, one step at atime.
