Luxury watches are designed to be worn, collected, and enjoyed. However, while they were originally created as functional items, high-end timepieces also have the ability to appreciate over time and thus serve as investments.
We live in a world where the term “investment” can describe anything from traditional assets like stocks and real estate to modern-day hype items like sneakers, NFTs, and even Pokémon cards. With that in mind, luxury watches have almost always been able to retain their value or even appreciate over the years, and there are some models that trade hands on the open market for values that are thousands of dollars greater than their original retail prices.
We spoke to the luxury watch enthusiasts from The Watch Standard to get some answers about investing in watches.
Why Do Luxury Watches Make Good Investments?
Unlike stocks or bonds, luxury watches are physical items that you can wear and enjoy every single day. While their ability to appreciate is certainly important, the simple fact that they offer an intrinsic utility gives them an inherent advantage over other traditional assets like gold, stocks, or even cash. A gold bar or a pile of money can do very little for you unless you sell or spend it, yet all luxury watches will be able to provide you with the time of day (at the very least), regardless of their monetary value.
Additionally, inflation is inevitable and while the value of a dollar only decreases, most luxury watches tend to get more expensive over time. For example, a stack of cash is worth less today than it was twenty years ago simply due to inflation, yet a luxury watch that originally cost the same amount as that pile of cash has a very good chance of actually being worth more today than its original retail price from two decades ago.
Furthermore, many luxury watches are worth more than their actual weight in gold, and some can even cost millions of dollars. There are few physical items on this planet that provide a greater value to size ratio than luxury watches, and many in-demand models offer a degree of liquidity that rivals traditional physical investment goods such as gold or diamonds.
What are Some Important Things to Know about Investing in Watches?
When it comes to investing in luxury watches, it’s always important to remember that the various brands and models will all perform differently. Certain companies like Rolex and Patek Philippe are considered the ‘blue chip’ investments of the luxury watch world, while other brands such as Richard Mille are the equivalent of high-performing tech stocks that currently show phenomenal returns but still need to prove their long-term ability to offer consistent appreciation.
Similarly, it’s also important to think about how long you plan on holding onto your luxury watches as financial assets. Some timepieces can generate strong profits by quickly buying and selling them, while others require a long-term strategy that might involve holding onto them and waiting for the right market. For example, if you are lucky enough to purchase a stainless steel Rolex Daytona at retail, you can immediately turn around and sell it for a profit of nearly $30,000. On the other hand, there are certain vintage Rolex models that you could have originally purchased for a few hundred dollars several decades ago that are now worth a minimum of six-figures on the open market.
Just like buying and selling stocks, sometimes your investment strategy is more important than the actual assets you are trading, and it’s always important to have a plan whenever you are purchasing a luxury watch as an investment. If you want to sell your Rolex, you’re better off picking a few smart picks rather than randomly guessing. Typically, it is the sport models that will yield the highest returns or a watch worn by other celebrities such as John Mayer, Paul Newman, or even James Bond.
Which Specific Watches Should an Investor Focus on?
Not all timepieces offer the same returns, and the best luxury watches to buy as investments are often the ones produced by internationally renowned brands that are virtually guaranteed to exist for the foreseeable future. Historic manufacturers such as Rolex, Patek Philippe, and Audemars Piguet have all been around for more than a century and they are some of the most famous luxury watch companies in the entire world. The simple fact that they will exist in the future virtually guarantees that there will be a market for their watches, and this goes a long way towards ensuring their future resale value.
With that in mind, buying a watch strictly because it has the potential to be a good investment can often detract from your ability to enjoy it. One of the greatest benefits of owning a luxury watch is that you can actually wear it, rather than just having something that sits in a safe or exists as a value on your bank statement. It’s undeniable that many luxury watches can be great investments, but it’s always most important to buy what you love because that is precisely what makes watch collecting a passion, rather than just a money-making endeavor. However, making a smart choice that ends up appreciating in value is a cherry on top.