Can your next Chanel bag make you money? Looking at designer bags as alternative investments
Now, this isn’t a post about my obsession of designer bags (well, I admit I am slightly obsessed), but it’s looking at them from an investment perspective and their cost-per-wear.
I know there are tons of articles about why you should buy a Chanel bag or Louis Vuitton or even Hermes. The history of these brands is impressive, surely, and they will continue to produce classic pieces that never go out of style. What I want to focus on here is WHY and HOW these designer bags make a great investment.
In fact, I gave a presentation on this very topic in business school, looking at it from a financial perspective. Think about it… you typically think stocks, mutual funds and real estate when you hear the word “investment” right? Most women say they find investing to be overwhelming so why not start with small investments that they are familiar with like designer bags?
I don’t know about you, but most investments seem like they require the help of a certified financial advisor to truly understand and make the right decisions. However, I found a way to potentially make few extra hundreds or thousands of dollars aka my alternative investments with DESIGNER HANDBAGS.
FUN FACTS — DID YOU KNOW?
- In fashion, there’s an unspoken rule of the “Big Three” — Chanel, Louis Vuitton and Hermes. These only go up in price and their resale value is very high.
- Louis Vuitton’s iconic bags such as Alma, Neverfull and Speedy still sell for close to 90% of their retail price. They are durable and classics that never go out of style. Coco Chanel herself carried the Alma bag and Audrey Hepburn was a big fan of the Speedy.
- Chanel increases its price as much as 20% every year.
- Chanel’s classic flap bags were reported to have increased their value by 70% in the past several years
- Even if you stepped into your nearest Hermes boutique to get your hands on the infamous Birkin, you can’t… unless you are a celebrity or a wife of a billionaire? Wait 5+ years, if that.
So, with these annual price increases and best resale value, how exactly are these bags considered investments?
Let’s do the math (I know I know, I hate dealing with #s but when it comes to designer bags, it’s worth it, I promise)
Using residential real estate as an example, unless there’s a big boom or you live in the Bay Area, the typical annual growth for real estate investments range from 3–5%. There’s a lot of maintenance that goes into that, of course, to ensure your property remains desirable. On top of that, you have property taxes and home insurance. Now, I am not saying home ownership is bad. By ALL MEANS, you should invest in real estate as it is still a sound investment (I do). What I am saying is that there are alternative investments that are so atypical you may not have thought about.
Case in point: According to the Financial Times, “a recent study found that it can make more economic sense to invest in a Chanel 2.55 handbag than in the stock market. The JustCollecting Rare Handbag Index, which tracks investment-level bags, found that in the 12 years from 2004 to 2016, the Chanel 2.55 Medium Classic Flap bag had spiked by 230 per cent in value”.
The rising popularity of luxury consignment shops such as Fashionphile, Yoogi’s Closet, and The RealReal have provided a strong, trustworthy platform where people can sell “pre-loved” bags that are almost brand new as well as vintage pieces and make money.
You can find Chanel bags from 20–30 years selling for $2000-$3000 and current items selling above the MSRP, due to their popularity even though they are “pre-loved”. Furthermore, there’s a strong luxury community that exists on YouTube where you can get thorough reviews and experiences with these bags and all the tips to guide you on how, where and when to sell your bags (I highly recommend you check out Minks4all — she is extremely knowledgeable, approachable and down-to-earth. Her positivity combined with her amazing expertise make her the BEST luxury Youtuber out there… and trust me, I’ve seen them all. She is honest with her reviews and also gives you details about the bags from these popular fashion houses and answers any questions you have during her famous Minks’ Mondays — it’s become a part of my weekly routine to watch her and start my day!).
So what does all this mean for you?
You can buy a $5000 Chanel bag today, enjoy it for 5–10 years to come. Then, when you feel you no longer enjoy it and want to sell, you can actually sell it anywhere from 75–90% of its original price. Bags from early 2000s and 2010s still sell for close to $4000–5000 on these luxury shops. Keep in mind that back then, the prices were much lower, which means if you were to sell your Chanel bags today, the chances are that you will likely end up selling them for almost the same price you bought them for with their annual 20% price increases. Granted, these consignment stores get their cut, but the more expensive the item, bigger your cut. You may end up with 80% of the total selling price.
Basically, you get to enjoy a fabulous designer bag for many years and sell it and end up getting back most of the money you paid for even after enjoying it for all those years.
While many items depreciate in value (hello, cars?!), these items from fashion houses, Chanel, Hermes and Louis Vuitton, appreciate in value. After all, there’s a reason why all three consistently make the world’s top 100 most valuable brands.
If you think about your cost-per wear, and even if you were to wear the bag only half a year for 5 years, that comes out to be $5000/910 (182 days x5) — it’s literally only $5 each time you wear it and if you think 10 years, it’s $1. Rather than spending $100, $200 or $300 on bags and buying the often, why not make a significant investment up front and actually make money in the long run?
I know some of you might be thinking: “I can NEVER justify spending that much money on a bag” “I’d rather travel with that money”. These are all valid points. You should always pay all your bills, expenses and take care of everything. I still travel several times a year, put money in real estate, retirement plan and etc. I believe in first investing in experiences such as traveling and time with family, absolutely 100%. After taking care of these “tier 1” finances, and if I have money left, that’s where I look into additional investments. You do what makes sense for you. DO NOT go into debt by any means to do so. I am suggesting that you consider these designer handbags as alternative investments only when you have the means to do so and if it makes sense to you financially. I am also not saying you will strike it rich, but if you can make hundreds, even thousands while enjoying beautiful luxuries in life, why not?!
And if you checked off everything in your monthly budget and this makes sense to you, let’s go SHOPPING!
Stay tuned for upcoming articles on luxury fashion, travel and more!