Are Luxury Watches a Good Investment
The world of luxury watches consists of more than just the splurging on remarkable timepieces for the sole purpose of keeping time or making a fashion statement – quite an expensive one if I may add!
Luxury watches also offer an investment opportunity to the consumer who knows how and when to buy. To determine whether luxury watches are a good investment or not, you must know enough about the market to be able to find watches that will maintain or preferably increase their value over time.
The brand of watch behind luxury timepieces are an integral piece of the investment puzzle. Brands with a long and distinguished history, such as Rolex, inspire consumer confidence (read Is Investing in Rolex Watches Better than Stocks ). Brands that have a reputation for innovation or exemplary craftsmanship, such as Hublot and Patek Philippe, also grab their share of attention in the marketplace.
Some newer watch brands have also entered the resale arena by producing innovative and technologically-advanced watches in limited quantities. DeWitt and Richard Mille are two examples. Their watches could also gain value over time because of this.
Vintage (as opposed to newer) watches are typically a good choice for investing (read 10 Things to Know Before Buying a Vintage Rolex). Vintage watches are typically more attractive because their age has already allowed their value to increase. This appreciation pattern (or favorable track record) draws many collectors and investors in, whereas newer watches don't benefit from having a history of appreciation yet.
Many vintage watches also have the distinction of containing high-quality materials and mechanisms. This may translate into an exceptional lifespan for these timepieces – and they can remain in excellent working condition for many years.
Vintage watches frequently display wear and tear and even discoloration that may occur naturally over time. This unique wear could actually increase a watch's value by making it more of a one-of-a-kind timepiece, an added attractiveness of vintage models.
Scarcity is an accompanying trait of vintage timepieces. Scarcity in the watch market tends to push values up. The more prestigious and in-demand a timepiece is, the scarcer it becomes. The scarcer the watch becomes, the higher its price ascends.
Although vintage watches are generally more attractive from a valuation perspective, there are new timepieces that can also become winning investments. When shopping for a new watch as an investment, try to focus your purchase on special or limited edition models. The limited production will likely go a long way in increasing the watch's value after a few years of acquisition.
When opting for a new watch that is not a limited production piece, know that the time it will take for the watch to regain its value and provide a return on your investment is likely relatively longer.
In our Is There a Market for Pre-Owned Watches article, we discussed that the market for used luxury timepieces is alive and strong.
One way to avoid the initial drop in value that many new watch investors experience when purchasing retail is to buy pre-owned instead. Savvy investors can acquire attractive pieces in “like-new” condition from certain reputable dealers, sometimes at deep discounts to retail prices. This can increase the investor's return over time since the initial outlay is reduced. This fact was discussed in the last part of our investing-in-Rolex blog post (link provided earlier).
The above benefit makes certain pre-owned watches as attractive as their vintage cousins, despite the much younger age.
The Story Behind the Watch
Watches on the second-hand market that have a story behind them can benefit from an increased value; for example, watches owned by celebrities often fetch top dollar at auctions. Even basic and non-luxury watches that were once owned by well-known public figures can carry a hefty price tag.
During World War II, Rolex offered British prisoners of war watches with the agreement that the POWs would pay for them whenever they wished. The offer was made to boost the morale of the British soldiers. Nowadays, due to their history, these vintage pieces fetch a high price on the second-hand market.
Researching a Watch
To ensure that any watch you purchase has a good change to deliver you a favorable return, take the time to your research. When investing in vintage, you will also need to research the history of the watch and authenticate any claims about previous owners if possible.
As an investor, you should ask for documentation and certifications for the watch you are considering. Have the watch inspected to ensure that it works properly and contains all of its original parts. Replacement parts can typically reduce a watch's value substantially, so it is important to have the watch appraised.
Wearing your Investment
An enjoyable aspect of investing in luxury watches is that you can use and wear them while they silently increase their worth in the background. In fact, it's advantageous to wear a luxury watch because it keeps the watch mechanisms in working order, so you can kill two birds with one stone!
Most people purchase a watch because they like it and enjoy wearing it – but that is only half the story. If you are an investor at heart and spend some time buying wisely, you'll not only get to protect your initial investment – but also make a positive contribution to your nest egg over the years. There's nothing wrong with that!
If you want to make your next watch purchase an investment, make sure to contact us.