Wearing an impressive watch is considered a status symbol because only those who are doing well financially would have the capability to purchase such high end quality watches. Not only can you wear the fine time piece – it can also pay off by gaining in value over time.
But this is only if you purchase wisely.
Unlike a stock certificate, a watch is an investment that you can enjoy wearing and showing off to others.
To achieve this goal, you’ll need to do your research in advance and buy the correct watches.
Paul Altieri, a watch expert and CEO of a leading pre-owned and vintage Rolex dealer, actually noted at least 20% annual growth in the market over the past 6 years. He thinks the growth is fueled by global interest in these watches through social media.
The following are a few things you should consider before starting your journey in luxury watch investing...
5 Key Rules to Luxury Watch Investing
Watches usually don’t gain in value quickly. You’ll need to purchase a vintage watch or be willing to keep a new watch for a long period of time before attempting to sell and make a profit.
Vintage watches also give you a clear idea of their history, historical demand and sales performance. While past performance is no clear indication of future performance, it gives you an idea of the general interest behind a particular watch.
A watch purchased as an investment should be in pristine condition. It is best to have an appraiser look at the watch to assure that all parts are original and in good working order. The value of the watch goes down drastically if it has been damaged in any way.
#3 Limited Quantity
How many were initially made and sold? A limited edition watch will gain in value quicker than a watch where thousands of copies were made. Most watches are not considered limited editions unless fewer than 2,500 were produced.
You'll notice that Rolex often reduce the supply of their watches.
A watch that has been owned by a famous person/celebrity will be considered more valuable. But this must be authenticated, for e.g. with a signature.
Only high end watches from companies such as Rolex, Seiko, Patek Philippe, Blancpain, Piaget, Cartier, and Audemars Piguet will become more valuable over time.
In general, the best brands for investment are considered to be Rolex and Patek Philippe.
A Patek Philippe will usually cost $50,000 or more so only a few are able and willing to make that kind of investment in a watch. This helps assure they maintain their value but it’s not an investment for the faint of heart.
A Rolex will vary in price from $10,000 to over $60,000. It is considered the best choice for new investors because the brand is so widely recognized. Don’t buy expecting your watch to go up in value quickly. You’ll need to hold onto the watch for at least ten years before it will go up in value.
Collectors vs Investors
There is a difference between collectors and investors. A collector will buy watches because he loves owning and probably wearing his watches. He will pay top dollar for a watch he wants even if he doesn’t believe he’ll get a return on his investment.
An investor will buy watches that he doesn’t personally like or want to wear if he feels he can eventually make money on his purchase. The criteria for making purchases is quite different if you’re investing.
Finding the Right Buyer
Remember that selling a luxury watch is only profitable if you have a way to reach other watch investors. It won’t matter what the appraised value of your watch is if you can’t find a buyer.
Obviously a luxury watch can’t be sold for a profit through online platforms like eBay. Well, you can but you need to be prepared with the shipping risks and your customer may not be willing to receive the goods through the mail.
Your local pawnshop will always offer a price lower than the full value of the watch because they are a business and needs to make a profit.
The fees associated with an auction house will drastically cut into your profits.
That’s why avid investors make connections with other buyers so they know who to contact when it’s time to sell. These connections can take years to build but will be a profitable exercise for serious luxury watch investors. Important potential prospects are not just other keen investors but also rabid watch collectors who collect watches as their serious hobbies and not investments.
Though it is possible to make money investing in luxury watches, it requires a lot of research and careful buying and selling.
It’s important to note that only a small percentage of your investment dollars should be spent on luxury investing.
For the amateur luxury investor, I recommend that it is no more than 5% of your total investment portfolio.
The rest should be in less volatile markets such as stocks, bonds, and retirement accounts.