Bags, watches, shoes—are alternative investments worth it?

In 2020, the prices of many traditional assets went up after the pandemic dip. However, traditional assets are not the only things that have seen a rise in prices and a high ROI, from watches to bags to shoes and even alcohol. Even Pokemon cards, alcohol, keyboards, and NFTs seem like an investment opportunity. For instance, rare whisky bottles have outperformed the S&P 500 in the last decade.

In this article, we'll look at some of these alternative investments, their intrinsic value, current market state, and whether each of these alternative investments are worth jumping into.

Handbags

Handbags  seem to be the biggest investment trend post the pandemic worldwide. Handbags were always considered a luxury, especially from famous brands such as Chanel, Louis Vuitton, Burberry, Prada, Dior, Yves Saint Laurent, Dolce & Gabbana, and Hermes.

Hermes seems to have the upper hand in terms of handbag investment, especially with their Birkin bags, which are the most difficult bags to get as a first-hand product, requiring you to spend six- to seven-digit amounts on their store and qualified to be in their VIP list to only be considered and put in a waiting list of three years or more.

In 2022 in Paris , auction house Christie's sold a Birkin bag for 176,000 Euros (S$256,600). One of the most expensive handbags, the Diamond Himalaya Birkin, sold for over US$400K (S$540k). Despite the high price, most resellers and people in the industry know that the Birkin Diamond series are not meant to appreciate in value to be resold.

For handbags, the mark-up percentage depends on the demand (type of skin, size, colour). Generally, markup percentage ranges from 50 per cent to 100 per cent. However, it is not easy to gauge the prices of the resale market if you are not experienced. Therefore if you are just dipping your toes into the market, it is recommended to find a consigner.

There are a few websites to try and consign your handbags; one of them is The RealReal, an online and brick-and-mortar marketplace for authenticated luxury consignments. Alternatively, you can check Carousell for market prices.

Watches

Watches seem to be a popular investment for both men and women in the current market. According to Business Wire , the global market for Watches and Clocks is projected to reach a revised size of US$73.4 billion by 2027.

One crucial point about watches you have to consider is the watch's movement and mechanism, which is one of the most significant intrinsic values behind a watch's current price. The first movement is the quartz movement, which is the least desirable watch for enthusiasts; it utilises a battery as its primary power source and is commonly found in many cheap watches to tell time.

The watch's different types of mechanical movements are valuable, ranging from manual to automatic. Other factors past watch movements include their intended purpose, how long they last, how sorted out and rare they are, etc.

There are many different watch brands: Rolex, with their Submariner, GMT Master and Daytona; Patek Philippe, famous for their sports models like Nautilus and Aquanaut; Audemars Piguet; Richard Mille; Blancpain; Omega and much more.

Sneakers

Sneakers are also an excellent alternative investment for young people, with hypebeast culture and scarcity marketing pushing the value of the sneakers up. There seems to be a rising demand for sneakers, as the volume of sneakers is expected to amount to 1.7 billion pairs. By 2027, with the Sneakers segment expected to show a volume growth of 16.7 per cent in 2023.

A few brands, such as Supreme, are infamous for creating scarcity for their sneakers. However, most sneakers hold their value, such as Air Jordans, Tom Sacks and Yeezys. And most of these sneakers are made by famous brands such as Nike and Adidas. The highest bid for a size 12 Nike Air Force 1 Low Louis Vuitton Monogram Brown Damier Azur on StockX (as of July 28, 2022) can go up to S$215,775, with a size 7.5 sold on July 21 for as much as S$117,530.

Other than the shoe's condition, the box's condition is equally important. A dent box can lower the value of the entire shoe by up to 30 per cent. Therefore, you must know how to take care of the shoe and box if you plan to sell them.

Some websites can check out the demand for shoes, such as StockX and NovelShip. Overall, shoes are more accessible to enter the market than watches and handbags due to their less exclusive and more price transparent brands. However, due to the lower barrier of entry, they do not fetch a reasonable markup.

Other forms of investments?

Other than handbags, shoes, and watches, other different commodities can be traded in the market as long as there is a niche market putting value in them. For example, Yu-Gi-Oh! And Pokemon cards tend to be the most famous card games to trade, with some rare cards trading for thousands, with the most expensive Pokemon card sold to famous YouTuber Logan Paul in July 2021 for a whooping S$5,275,000. People are also invested in the fragrance market, the alcohol market (such as wine and whiskey - learn more about wine investing), cigars, vinyl, and art. 

Do note that unlike traditional investments, where the prices and demand for the assets are more discrete and transparent, gauging the prices of alternative commodities is more of an art rather than a science, requiring you to have years of experience and relevant research to be able to ride on the trend. This requires you to be highly invested in the market, and therefore you should find a commodity you have a vast interest in to jump into the market better.

Conclusion

Alternative investments have their own advantages in being more resilient than traditional investments, connections are extremely important to get all these investments. However, do note that there is a steep learning curve and lots of research to be able to get a reasonable return on investment overall.

ALSO READ: A beginner's guide to alternative investments: Luxury watches

This article was first published in ValueChampion.