Why You Should Invest in Chanel Bags
Turns out, they are great assets that can help you navigate uncertain economic climate
I wrote this article back in 2018 “Can your next Chanel bag make you money? Looking at designer bags as alternative investments”, which continues to be my most popular article I’ve ever written on Medium. I am not surprised because this topic continues to both fascinate and divide people. You often hear from luxury influencers and YouTubers talking about their designer bags as “investments” and the luxury community is so divided on this topic with one side saying no they are not while the other say they are, indeed.
I understand. It may not be an “investment” in the most traditional sense in that bags are meant to be loved and used (could there be a bias because it’s about women empowering themselves and building wealth? That’s a whole other topic for another day).
What if I told you that bags are actually a savvy investment option you should consider? It’s a tangible asset that you can collect, use for many, many years and sell for significant profit?
Side note: I’ve actually sold some bags recently to further curate my closet. In fact, two of my vintage Chanel bags were sold way above the price I paid for them and I walked away not only getting the best cost per wear since I wore them for quite some time, but also made extra cash that I can invest into other bags or put in my investment accounts. I also see my collection as part of my investment portfolio, providing extra financial security.
We are experiencing an uncertain economic climate right now with the rising living costs, inflation and now the talk of recession all the while the household debt continues to climb and wages remain stagnant. Some say cash is king, others say cash can lose its value with the ups and downs in the global economy.
It is all about diversification, and I am here to tell you that: YES you should invest in real estate, YES you should invest in the stock market and bonds and YES you need to invest and prepare for your financial future. But investments aren’t just typically what you think of; in fact, there are many alternative investments such as vintage cars, fine art, wine and luxury goods that not only hold their value but also continue to grow in their value.
“By their correlations, most collectibles offer diversification to traditional financial assets such as bonds and equities” — Deloitte -
Don’t just take my word for it. The latest report by Deloitte supports what I’ve been saying for years — here are the top three highlights:
#1 Chanel bags are better financial assets with strong demand
“Lagerfeld-designed Chanel handbags are likely to continue benefiting from the scarcity effect in
the next few years, in our view, but the brand’s broader evolution in luxury handbags will be determined by the ability to sustain collectors’ excitement going forward. Hermes Birkin bags,
in contrast to Chanel bags, have had higher volatility, more comparable to that of global bonds or hedge funds among financial assets, but a better risk-reward than the latter.”
Another side note: Hermes Birkin bags have actually outperformed the stock market and gold in the past. As a matter of fact, this CNBC article states that handbags were better investments than other asset classes.
#2 Luxury handbags have low volatility, hence providing more stability for investors
“Watches and jewelry as well as handbags (especially Chanel handbags) are clearly standing out as stores of value with low volatility (between 2.5% and 5% annually) and low drawdowns.
With the exception of pocket watches, their annual returns are 4.5%–6.5%. Their information ratio (which puts returns in relation to volatility and is thus reflective of the risk-reward) is impressive, with values exceeding 100%, i.e. average returns systematically outpacing fluctuation ranges. Particularly noteworthy are Rolex watches and Chanel handbags, with very strong information ratios of 200% or higher. This means that the average annual return of 10% for Rolex watches for example is double the usual fluctuation range of 5%.”
Especially in the current volatile market we are in, low volatility sounds pretty good to me!
#3 Chanel bags can protect you from inflation and give you extra financial security during recession
“As 2022 is marked by a transition to a more elevated inflation regime and higher interest rates, it is relevant to evaluate the sensitivity of the various collectibles to inflation and interest rates (see Figures 4 and 5). The best inflation protection (as measured by performance in extreme inflation periods) is offered by Chanel handbags, followed by traditional Chinese works of art and wristwatches, in particular Rolex. Most vulnerable to more elevated inflation regimes are fine wines, and American and Latin American art. Conversely, classic cars and post war & contemporary art do best in low or normal inflation times. Rolex watches appear to be the ideal inflation all-weather stores of value.”
And a bonus point here: next time men tell you and brag about their cars, please show them this report from Deloitte which states: “Of all the categories, wine is the most pro-cyclical collectible, whereas cars have a negative correlation with most assets, showing some counter-cyclical properties.”
Investments are deeply personal and sometimes emotional choices. Let’s not judge each other on how we choose to spend our hard-earned money.
Ladies (and gentlemen), let’s empower ourselves by building our wealth one step at a time. Or should I say one Chanel bag at a time? Cheers!
