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For the most part, I like to live a frugal life. But it’s no secret that luxury bags are my weakness.
The mixture of utility and art perfectly blended together draws me in and brings me immense happiness. And since our businesses have started to take off, I have definitely invested more into luxury goods.
But outside of my own happiness, are these items truly an investment?
Today, I wanted to take some time and truly explore the idea of luxury items as valuable assets and how they can be a part of your investment portfolio –or if they even should.
I know a lot of people have opinions on this topic, and like a lot of things in life, what you do with your money should ultimately be based on your lifestyle and preferences.
Also, I’m not a financial advisor of any sort, so before you decided to get that bag, you might want to make sure your financial health is in order.
So let’s chat bags, specificity, luxury bag.
What’s An Investment Bag?
There are a few ways we can go about classifying bags as investments. The most used way to classify a bag as an investment would probably be in terms of over all use and cost per wear. If the bag is one you wear often useful to your lifestyle and last for a long time, then it was a good investment for your wardrobe.
Recently, some people have started talking about bags and comparing them to stocks and commodities. For those familiar with more tradition forms of investments, this sounds silly. And I would have to agree if anyone thinks their going to strike it rich buying and hoarding Chanel.
However, luxury bags are an asset. So while it’s completely unlikely that you’ll become wealthy from your bags, you can make a bit of coin if that’s what you’re looking for.
Luxury As An Asset Class
Let’s understand what it means to say that your bags can be an asset.
What’s an asset?
In the simplest terms, a financial asset is anything you own that can be quickly liquidated for cash value. Even items that depreciate in value over time can be considered an asset.
For example, a new car bought for $15k that had depreciated to $5k over the years, is still considered an asset that you can use.
You can apply the same concept to fashion pieces. Any luxury bag you buy that you can then sell later on can be considered an asset.
Bags With Value
As mentioned above, anything that you can liquidate for cash value is an asset. But it’s not a very good asset if it depreciates quickly. So what does this mean for luxury bags?
That all depends on the value of the bag. And value doesn’t necessarily equate to price tag. Lets take a look at two bags from Chanel: My large Boy Bag and my WOC (both of which are featured in this blog here).
I bought both my Boy bag and Chanel WOC pre loved around the same time last year. I paid a similar price for each; around $3200.
Originally, my Boy with chainmail retailed for $7000 while my iridescent WOC retailed for $2650.
As you can see, while I paid a similar price for both bags on the reseller market, one bag depreciated in value while the other went up.
Certain bags will roll out with a high price tag because of their exclusivity, materials used and association to a brand name. But these things alone won’t help a bag retain its value.
In order for a bag to retain its value, there will need to be some sort of demand for it. The WOC being such a poplar model from Chanel, coupled with the fact that the Iridescent rose pink is still wildly sot after allowed for this particular bag to raise over 66% in value in just 2 years (and 26% in value in the year that I’ve owned it).
So Are They a Smart Investment?
A good asset, possibly.
But an investment, in terms of building wealth and making a living off of? Not likely.
I know that there are folks who do make a decent living buying up high value fashion pieces and reselling them for a mark up. But most folks aren’t going to have the capital or time to do this. I know some people also buy highly sought after bags in junk condition, have them repaired and resell them for a profit. But again, this is more work than investing.
If needed be, I can sell my bags and recoup what I paid, if not more. And some of my bags are seeing better returns percentage wise than some of my stocks. But unlike stocks and housing, bags (while an expensive accessory) are relatively low in price and you can’t really add value to them like you can with other traditional investments.
So while you might have a bag go up over 50% in value in a year, you’ll likely make more money in the long run if you invested the same money in stocks.
If you’re going to invest a lot of money into a bag, do so because you like the bag and will find some personal value or utility in owning it (it making you happy is totally a valid utility).
While certain bags can be flipped for a profit, it’s not a sure bet, and realistically, you money can be better invested elsewhere if you’re looking for long term gains.
That said, if you do find yourself picking up an investment piece and you take great care of it, you’ll likely see a decent return on your money if you do decided to sell it later on.
But over all, I feel like these bags are better defined as useful assets than sound monetary investments.
Is there a bag that you’re interested in as an investment piece? Share down below!