The ultra-wealthy spend a lot of money on luxury goods because they’re hard not to love. But are rare whiskey, designer handbags, and other expensive items also good investments?
High-end watches and expensive art can be smart additions to your portfolio, but only if you know what you’re doing. Here’s what you need to consider when investing in luxury assets.
Key Takeaways
- Invest in luxury goods with a track record of appreciation.
- Build a strong traditional portfolio before considering luxury goods as a secondary investment.
- Success in luxury investing requires expertise and connections—ensure you have the knowledge to buy, sell, and authenticate assets properly.
What I’m Telling My Clients
There’s something satisfying about owning tangible assets, especially when markets are uncertain. But luxury investments shouldn’t be on your radar if you’re not financially secure. You should first build an ETF-based portfolio of stock and bond investments and then consider diversifying it with alternative assets (e.g., venture capital, private equity, cryptocurrency) and luxury goods likely to be appreciated over time.
Focus on categories with proven track records and avoid purchasing items just because they’re expensive or popular. Pieces with historical significance, limited availability, or unique craftsmanship are your best bets. Also, make sure to build sufficient market knowledge and industry connections. Without them, it will be harder to find qualified buyers later.
Today’s market shows that art, jewelry, and watches are appreciating while previously popular investments like rare whiskey are declining.
Tip
Do your research and make sure there’s a strong authentication process before you purchase luxury goods.
Here’s what you can expect from investing in luxury items, according to the 2024 Wealth Report by Knight Frank:
| The Knight Frank Luxury Investment Index Q4 2023 | |
|---|---|
| Luxury Goods Category | Investment Performance |
| Art | +11% |
| Jewelry | +8% |
| Watches | +5% |
| Furniture | -2% |
| Handbags | -4% |
| Classic Cars | -6% |
| Rare Whiskey | -9% |
The Bottom Line
Luxury goods can be a good way to diversify, but making them your main focus is risky. Anyone considering these investments should start with a solid traditional portfolio first. Once you have established financial security through these more conventional ways, you can consider expanding into luxury goods that have a proven track record of appreciation.
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