Luxury Handbags as an alternative Investment Plan
How luxury handbags can be good investment plan – Either it’s a profitable investment or just a leisure-time activity, people spend their lives collecting postcards, vintage pieces, rocks, stamps, and many other items. I, myself had been obsessed with the designer/luxury handbags for over a decade now. And every time I see a Good handbag, it’s no surprise that I want to buy it at the very moment without thinking twice.
The world of Fashion, luxury and Designer Bags has always been admired by the world’s leading companies such as Vogue, Elle and many more. Spending hours on those pages of Fashion brands, I’ve got a pretty good knowledge about the pricing of Luxury Handbags.
The first handbag that I bought was from a very well known Fashion brand, and guess what? It was trending at that time. So of course, I paid a good amount for that luxury piece. After a few months, I visited the same Brand’s website and noticed that the same bag I bought was listed there with a fairly high price. The price was almost up to $200. Which got me thinking about the Investment benefits of the Designer Handbags.
One more interesting fact that I noticed was people being judgmental towards the Luxury products. For many people, investing in a car or stamps is a normal investment decision, but when it comes to luxury handbags, opinions change.
Today, in this post, we shall discuss Can Luxury handbags be an alternative investment plan? Strategy to make handbags a good investment for the future, and an example that shows the increasing prices of the designer handbags.
What kind of Investment is Luxury Handbags?
To move ahead, we need to get 2 things right i.e. Different types of Investments. One investment that we hear of in terms of Buying business, assets, shares, bonds, stocks is known as Traditional Investment.
Other than the traditional investment, the things we buy in order to get some income or profit in the future is known as Alternative investment. Luxury handbags fall in this category but are seen as a very underestimated investment.
Risks of Luxury Handbags as an Alternative Investment
Most people think that investing in a designer handbag won’t bring any profit or value to their economies. Rather than seeing its long-term profit, they merely see it as a loss of money or dead money sitting at the bottom of your closet. That’s not completely true.
Luxury handbags as an investment raise many opinions and the answer depends on who you ask. For example, a traditional investor will never tell you that investing in handbags is an option. Whereas, if you ask a Celebrity or a Fashion lover, you will be surprised by how much they think it’s a great investment plan.
So are there any risks involved in buying handbags as an investment? Yes, like any other investment asset, risks are there. But not if you think and research before you buy the luxury handbag.
Let’s say you buy a Hermes Birkin bag after seeing the trend and how much its costs go up after each month. If the bag goes up to $100 every month and the trend is consistent, then you should buy it at the very moment. After a year, the same bag will cost so much more than the original value, bringing you a ton of profit without any hassle or hard work.
Look at the points below before investing in any luxury handbag to avoid any risks and loss.
- Examine the Trend for at least 3 months before buying
- From time to time, check the brand website for updated prices
- Research the bag market and audience
- Check how much the bag was sold at previous Auctions
- Take risks if you see the profit potential within the next few months or years.
How to Calculate Annual returns on Luxury handbags as an Alternative investment
The annual return rate will be the profit that you will get after a year of investment. Calculate the return from this formula:
((Ending value/ Beginning value)^(1/ # of years))-1
As found by the studies and calculations it is shown that the total return on traditional with alternative investment was increased by 7.25% which is more than the return on traditional investment without alternative investment.
Luxury Handbags and Purses Market
Handbags have their roots originally from the ancient times. Throughout the history women and men have been carrying some sort of bag or pouch to take their essentials with them.
But the bags were not that popular until the late 18th century when the first Tote handbag was made. At the time, the bag got a lot of criticism and remained unpopular until the 19th Century. Hermes also made the first Hermes Kelly bag in 1930 which got popularity in the 1950’s.
After that the market evolved, the consumer started to embrace the new modern fashion and brands grew over time. Today the Luxury handbags industry is worth billions and every Brand is trying to get fresh & attractive designs on the market.
The Investment Value of Luxury Handbags
Louis Vuitton Luggage, Hermes Birkin bags, Chanel 2.55 bag, Gucci bags are some of the high-ticket pieces in the fashion and investment industry. The prices of these bags never go down instead they go up by 10-12% per annum.
The Chanel 2.55 bag is said to increase by 30% in price over the period of next 4 years. Obviously, the value may vary depending on the maintenance and condition of the handbag. The increase in prices will make a lot of profit for the investors.
Hermes Birkin bags are said to be excellent for a good investment return. Hermès Birkin bag has set the world record by selling the bag for $203,150 at the Texas Heritage auction which was originally priced at $80,000. Another Hermes Bag was also sold for a very high price of $113,525 at the auction.
This tells us about the increasing worth of luxury designer handbags. Another line of Luxury handbags that seem to be the most profitable is the rare or limited edition bags. These bags always go up in price and the profit margin on them is sometimes more than 100% of the original price.
Hermes Birkin Limited edition handbags are unique and are often sold at auctions rather than in-stores. This makes the handbag a unique collector’s piece and consumer go head over heels to buy the bag.
The market for Hermes bag is great and Fashion lovers especially business women have turned their heads to this luxury handbag alternative investment.
Points to consider in a Luxury Handbag for a Good Investment plan
An investment Luxury handbag must be chosen carefully and cleverly. Rather than making a decision in an impulse, time should be taken to consider a few important things.
- First and foremost, the Market should be reviewed and analyzed in order to make the investment successful.
- Special notice on the Craftsmanship and the longevity of the handbag must be paid.
- The hardware should be solid and long-lasting, stitching must be done to support the bag for years.
- The design and canvas should never be taken as an investment.
- The material must be a very good leather. The more exotic the leather is, the more valuable the item is. Snakeskin, Crocodile, pony, alligator and other animal skins are easy to maintain and durable.
- Go for a Big name Brand when investing in a luxury handbag. They have a steady reputation and far more potential to generate good investment returns.
- Buy the designer bag in person at stores, this ensures that you are buying the original piece and the quality is not compromised.
This way your asset will hold the value in long-term and will achieve positive and profitable returns when auctioned.
Hermes Birkin Bags – An Example
Hermès Birkin is named after Jane Birkin who initially told the Hermès CEO Jean Louis Dumas what she anticipated from the Birkin bag. The bags are handmade in France and they take hours to produce, are carefully assembled and completed sacks are signed by the craftsmen.
The reason why Hermes name is huge and the reputation is secure is that Hermès has not spread them too wide or made them excessively accessible. Additionally, the holding up list and the non-open cost for most purchasers makes Birkins much more select.
Hermès Birkin bags are high-ticket pieces and the attributes of the handbags additionally fit in the set capabilities, for example, fabricating measures and surely understood the brand.
There are other brands and exclusive bags too that could be utilized for instance in the exploration.
Here is the latest Auction Data for the Hermes Summer Collection 2018. Compare the prices of each and every bag so that you’ll have a better idea about the investment potential of Hermes Birkin Bag.
|Lot no||Hermes Birkin Bag||Estimated Price||Sold for|
|1104||BIRKIN 35 bag Navy blue smooth leather Gilt metal hardware||4,000 – 6,000 €||5,460 €|
|1105||BIRKIN SHOULDER bag Natural Barenia calfskin leather Denim canvas White saddle stitch seam Silver palladium metal hardware||2,000 – 4,000 €||2,860 €|
|1106||BIRKIN 35 bag Fauve Togo calfskin leather Silver palladium metal hardware||4,200 – 6,200 €||6,500 €|
|1108||BIRKIN 30 bag Kaki ostrich Silver palladium metal hardware||12,000 – 17,000 €||14,300 €|
|1110||BIRKIN 40 bag Fuchsia porosus crocodile Gilt metal hardware||25,000 – 35,000 €||32,500 €|
|1112||BIRKIN 30 bag “H” canvas Natural Epsom calfskin leather Gilt metal hardware||5,500 – 8,500 €||7,150 €|
|1113||BIRKIN 35 bag “H” canvas, ebony Clémence baby bull Silver palladium metal hardware||7,000 – 10,000 €||14,300 €|
|1115||BIRKIN 25 bag Rouille niloticus crocodile Gilt metal hardware||20,000 – 30,000 €||27,300 €|
|1116||BIRKIN SO BLACK 35 bag Black box calfskin leather Black chromed silver metal hardware||10,000 – 20,000 €||16,900 €|
|1118||BIRKIN 35 bag Red Braise porosus crocodile Silver palladium metal hardware||38,000 – 48,000 €||49,400 €|
|1119||BIRKIN 35 bag Orange Clémence baby bull Silver palladium metal hardware||7,000 – 10,000 €||7,450 €|
|1123||BIRKIN 30 bag Blue-grey matte niloticus crocodile Silver chrome metal hardware||25,000 – 35,000 €||29,900 €|
|1125||BIRKIN 35 bag White Courchevel calfskin leather Silver palladium metal hardware Marked “M.C.S”||4,000 – 6,000 €||4,550 €|
|1126||BIRKIN 35 bag Electric blue Clémence baby bull Silver palladium metal hardware||5,800 – 8,800 €||7,150 €|
|1127||BIRKIN 30 bag Black Togo calfskin leather Silver palladium metal hardware||7,000 – 10,000 €||9,750 €|
|1128||BIRKIN 30 bag White Clémence baby bull Silver palladium metal hardware||7,000 – 10,000 €||9,100 €|
|1129||BIRKIN 35 bag Black Togo calfskin leather Blue-grey Mysore goatskin interior Silver palladium metal hardware||7,000 – 10,000 €||8,450 €|
|1130||BIRKIN 25 bag Chocolate box calfskin leather Piping and interior Cyclamen Mysore goatskin Silver palladium metal hardware||4 000 – 6 000 €||4,940 €|
|1131||BIRKIN 35 bag Graphite porosus crocodile Silver palladium metal hardware||15,000 – 25,000 €||19,500 €|
|1132||BIRKIN 35 bag Cocoa Togo calfskin leather Silver palladium metal hardware||4,800 – 6,800 €||5,200 €|
|1133||BIRKIN 25 bag Anis green lizard Silver palladium metal hardware||15,000 – 25,000 €||27,300 €|
|1136||BIRKIN 40 bag Étoupe Togo calfskin leather Silver palladium metal hardware||3,800 – 5,800 €||3,900 €|
|1138||BIRKIN 35 bag Blue Indigo matte porosus crocodile Silver palladium metal hardware||40,000 – 50,000 €||50,700 €|
You can view the Full Hermes Collection Auction Results here: https://www.artcurial.com/en/sale-m1044-hermes-summer-collection
As seen from the above example and Auction data, we can predict that Hermes Birkin is the most profitable alternative investment. Along with Hermes, many other Designer Brands such as Chanel and Louis Vuitton can also bring huge profit margins and are totally worth investment.
Talking about alternative investments, other small accessories, such as Glasses, shoes, Clothes and watches can also be a great investment to make from time to time.
Keep in mind that alternative investments may require a lot of time to bring you considerable profit, buy at the right time and enjoy later. This is how luxury handbags can be good investment plan keeping in mind the Luxury Designer brand.
Let us know in the comments down below if you ever made an alternative investment and how it turned out in terms of profit.