Is Investing In a Designer Handbag a Good Idea?

Is Investing In a Designer Handbag a Good Idea?

So you've come to the conclusion that you want to buy a designer handbag. Congrats! One of the best investments you can make is a well-chosen luxury handbag.

Now after a few years, ordinary purses have little value. For a few dollars, an old no-name bag might be sold at a thrift store or on eBay. Other bags, such as Chanel, however, tend to keep their value for a long time, and in some circumstances, even appreciate in value. Should you buy a designer handbag only for the purpose of making a profit?

What Is a Good Investment?

An investment is really just the process of purchasing something that will increase in value over time and provide you with a return, regardless of the type of investment you make. This means that you spend money to make more money; the goal is to make a profit rather than just break even on your initial investment.

A smart investment is one that not only makes you money but also allows you to take risks and aligns with your own objectives. You must examine the risks and determine whether your investment is viable; if there are too many hazards, the venture may need to be reconsidered.

What constitutes a good investment is subjective, but the primary goal of any investment is to generate a profit. The idea is to get the most bang for your buck.

Luxury Bags as Investments

Designer handbags have been a coveted product for decades, resulting in a steady supply and demand. From the Dior Saddle to the Balenciaga City bag to the traditional Chanel flap to the Hermes iconic Birkin, the designer handbag has evolved into more than just a fashion statement.

Designer handbags, like paintings, watches, and antiques, have become what appears to be an exclusive collecting item, but do they make excellent investments? So, let's look at the benefits and drawbacks and leave it up to you to decide. 

Handbags as Investments

Designer handbags may not seem like the most apparent way to diversify your investments in a world of stocks, bonds, property, and more, but they're definitely worth looking into.

They currently exceed art, historic automobiles, and rare whiskies in terms of financial potential, according to Art Market Research (AMR). Some bags, such as those from Hermès, Chanel, and Louis Vuitton, have seen an average price increase of 83 percent in the last ten years.

To put that in perspective, coins have climbed by 21%, first-edition books by 42%, and watches, the presumed king of stylish investments, have only increased by 72%.

According to the research, more than 3,500 luxury handbags were auctioned in 2019, bringing in a total of £32.9 million.

Which is the most coveted? Of course, there's Hermès' crocodile-skin Himalayan Birkin, which has long been regarded as the world's most collectible handbag. In 2016, the record-breaker, white gold and diamond hardware Birkin, sold for 2.8 million Hong Kong Dollars (about $372,600).

The ten most valuable Hermès handbags ever sold at auction were all crocodile-skin Birkins.

However, the bag's value increase (93 percent in 10 years) falls short of the Hermès Kelly's (famous for being renamed in honor of Grace Kelly), which has increased by 129 percent. Similarly, the price of Chanel flap bags has increased by 132 percent.

While people invest for a variety of reasons, those with cash to burn frequently purchase designer handbags for a quick return on investment. The more difficult it is to obtain a bag—whether because it is a limited edition or simply more expensive than its trademarked counterparts—the more prized it becomes.

Due to the extremely restricted manufacture of Hermès bags and years-long waiting lists, collectors are often willing to spend two-to-three times the retail price as soon as a bag hits the resale market.

Of course, there are a significant number of people who are devoted to their handbag collections, which can easily reach millions of dollars and refuse to sell them once they have them.

Designer handbag flippers, in layman's words, have supply and demand on their side for the foreseeable future.

Even though the world was in lockdown during COVID, Christie's last designer handbag auction sold out, raising £1.34 million ($1.67 million).

Pros of Investing in a Designer Handbag

  • When purchasing a designer bag, you may be able to resale it for much more than you paid for it, depending on the rarity, designer, and market worth. Only certain designers, like Hermes, Chanel, and Louis Vuitton, benefit from the secondhand market.
  • Popular resale websites such as eBay, Vestiaire, and Grailed are excellent choices. ​​Handbags can sell for up to 40% more than the original price, depending on how rare they are and how good their condition is.
  • You could become one of the few owners of unique pieces of fashion history, depending on the rarity of the handbag. If you're a fan of fashion and history, buying vintage or one-of-a-kind handbags means becoming one of the world's few owners.
  • These bags have the ability to last practically a lifetime, depending on the materials used, which is why so many people buy luxury handbags. For example, Chanel's traditional flap bags are made of leather, which is extremely robust and can tolerate a lot of abuse without causing hardware damage.

Cons of Investing in a Designer Handbag

  • The key to any successful investment is to keep your expectations in check. Finding a buyer for a luxury purchase can be difficult because the luxury resale market is not only exclusive but also has its own set of challenges.
  • If you have your heart set on a unique or limited-edition handbag, be prepared to wait a bit before purchasing it. There is normally a waiting list for the bag, which can last anywhere from 4 to 10 years depending on the item's exclusivity.
  • If you're one of the fortunate few who can afford a rare luxury handbag, the hard work is merely beginning. If you plan to resell the bag in the future, be sure it's in good condition. Any hardware damage or structural deterioration can reduce the bag's resale value by hundreds of dollars.