Handbags as Alternative Investments - Part 1


Our aim this week is to demonstrate that the purchase of certain luxury handbags are indeed alternative investments since their value appreciates over time.

Before we begin...

 

       

Understanding the Psychology behind collecting luxury items of interest...

Spending money on items such as cars, art, musical instruments, technology seems like an entirely normal decision. Somewhat unfairly, when spending or investing money on a luxury handbag the invariable question most people ask is: WHY HANDBAGS????

Why would anyone spend 10x on a handbag when there are many other cheaper options to choose from?

         

Interestingly, the purchase of luxury goods is often categorised as a long-term commitment. These types of purchases should not be categorised as impulsive consumerism as the exercise often includes the experience of other users during the fact-finding phase.

Handbags as alternative investments:

  • It is important to point out that not all handbags can be labelled as alternative investments. There are certain characteristics that need to be fulfilled in order for a handbag to qualify as an investment piece.

  • It is important to note that the domain of alternative investments needs to be distinguished from traditional investments. A traditional investment is typically characterised as the investment objects that collectively build a portfolio. Common examples are shares, bonds, property and cash.

  • Alternative investments, therefore, do not include the traditional asset classes as described above and are also known as non-traditional investments. Common examples of alternative investments include watches, paintings, along with commodities such as gold and diamonds to name a few.

“Why would someone invest in an alternative asset?” you may ask.

Alternative investments have the potential to deliver higher returns and can, at times, be uncorrelated to some of the assets classes listed above. For example: If you decided to invest in a property in Cape Town and a Hermes Birkin handbag, should the value of your property decrease, the value of your investment-grade handbag will remain unaffected

Trying to determine the value of an alternative asset is also complicated as it is a niche investment category and therefore held by a smaller percentage of investors

Alternative investments are considered to be beneficial to a longer-term investment portfolio when the advantages of controlled risk, superior returns, and the benefits of diversification are taken into account.

 

 

How cool is it to know that some luxury handbags CAN be an alternative store of value for you in the long term? You can certainly enjoy daily use of your handbag whilst knowing that it is actually appreciating in value.

This is definitely having the best of ALL WORLDS!!! 

 

 

Catch us next Monday as we tackle PART 2 of the #HauteMoneyMonday series. Be a part of the community. Be a #MHHGirl 

 


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