Why Wearing Your Investments May Be A Timely Idea

Why Wearing Your Investments May Be A Timely Idea
Theodora Lee Joseph, CFA

9 months ago1 min

Investments don’t have to be boring: they can be fashionable too. Alternative investments – like luxury watches, handbags, jewelry, art, wines, and even furniture – have taken off in recent years, driven by the need for portfolio diversification and, more recently, high inflation. And none have done better than upscale watches from brands like Audemars Piguet, Rolex, and Patek Philippe.

As the chart above shows, the price of a basket of pre-owned high-end watches ticked higher by over 25% in 2021 and 2022 (black bars), clocking more than double the returns of the S&P 500. However, over a longer timeframe, the S&P 500 still proved unbeatable – outperforming all other alternative asset classes listed (blue bars).

Whether watches, wines, or handbags can continue outperforming may depend on whether inflation proves to be stickier than currently expected. But in the past, they’ve been a good way to grow your returns over time, while providing you diversification in your portfolio. That’s because their returns are less correlated to the economy than to an individual’s taste. That said, these investments are usually illiquid, meaning you may not always be able to sell them quickly. You’ll also need to be discerning over what brands and models you buy: not all watch brands, handbag labels, or wine vintages are good at preserving value.

So, if you’re considering buying a Rolex as an investment, make sure you buy one you really like. If it goes up in value, your investment will have paid off, and if it goes down, well, at least you’ll still have something you love.



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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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