When it comes to luxury investments the Hermès Birkin is a no brainer, but how does it compare with the ever popular and fairly secure S&P 500?
The S&P 500 (Standard and Poor's 500) is a stock market index, tracking and trading on the stock performance of 500 leading publicly trading companies in the U.S. Due to its depth and diversity, the S&P 500 is widely considered to be one of the best gauges of large U.S. stocks, possibly even the entire equities market. The 500 companies within the index represent the largest and most liquid companies in the U.S. - from software companies and technology, to manufacturers and banks.
The Hermès Birkin needs no introduction, but for those of you who are new around here, it's not just a bag but a symbol of class, wealth and luxury. The highly coveted, but extremely exclusive Birkin is one of the best luxury investments out there, alongside highly sought out watches and decadent jewels. Fresh from the box, a Birkin 25 (dependant on leather and hardware) can range from upwards of $10,000. Whereas, a more exclusive Himalaya Birkin (with or without diamonds on the hardware) can range 30x more. In a recent auction, a special edition Birkin was sold for over $300,000. The company itself loses out on a large profit gain once sold in store - a newly acquired Birkin can sell for almost triple after the original point of sale. The pre-loved, or second hand market see's not just Birkins, but Kelly's, Constance's and other exclusive leather goods from the French fashion house, sell way above its RRP.
A joint study between Credit Suisse and Deloitte, published in October 2022, found that the value of the Birkin bags increased by an astounding 38% on average that year. In comparison to this, the S&P 500 rose about 16.3% during that same year.
In January 2016, a study by Baghunter found that the value of a Birkin rose about 14.2% on average between the years 1980 and 2015. Baghunter compared the Birkin with the S&P 500 and gold, however the Birkin came on top, with the value of gold rising around 2% on average over those 35 years. Whereas the S&P 500 increased by 9% on average.
The exclusivity and scarcity of this bag has caused spikes in investment, especially with new money claiming this bag as a symbol of wealth and status. Alongside stocks and property, luxury goods have also made a claim at being a steady investment.
As of late, the S&P 500 on average returns around 7% - 10%, whereas Birkins can have a return over double that, at 15% per year. Birkins in auctions alone rose up in price by 42%.
Is it time to ditch the stock market and invest in luxury?
Comparing stocks of prominent U.S. companies, to the leather goods of a luxury fashion house as an investment has been quite fascinating. Data and numbers don't lie, however when choosing investments a diversified portfolio is what will make your money go further.
This is not professional financial advice, the purpose of this post is to inform and report.
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