you should really only consider luxury investments once you are an advanced investor.
The Right Expertise
Investing in luxury assets and brands requires a set of skills, mindset and the kind of knowledge that makes it an ill-suited place for the beginner who wants to get started as an investor. Because of the patience and extensive knowledge of both the specifics of the products and the market you’ll require, you should really only consider luxury investments once you are an advanced investor with an established portfolio and have all your basic investments covered.
Investments in luxury items can be a great investment in particular because of their tendency to appreciate in value, but it is something that simply cannot be succesfully done without the right expertise. There are many physical luxury assets that increase their value over time, such as jewelry, fine art, designer handbags, vintage wine and luxury properties.
In addition to making the right investments, the timing of luxury investments are equally important. If you like art, for example, then consider looking for a good investment as well as a piece of art you will enjoy in your home or office. Even if you appreciate something like a good bottle of wine, you could consider finding a few to collect and “lay down” for a few years. It can be exciting to wait see what happens to their value.
Are you at that stage in your life where you are ready to retire and downsize? Then an ideal luxury investment could be trading in your current home for a luxury condo – this could enable you to have not only a luxurious living space but could also be a long-term luxury investment opportunity.
One of the major perks of investing in luxury goods themselves is that their value don’t tend to fluctuate like the stock market itself, making it an attractive alternative to the latter. For example, in 2014, jewelry outperformed prime London properties and at some stage in 2016, a luxury handbag even proved a more profitable investment than gold. An investment in luxury items also comes with a certain prestige, and luxury goods offer the possibility of solid cash gains in the long run.
But it is precisely the prestige and exclusivity of products that make them a luxury, as was acknowledged by the European Court of Justice is 2017, when it ruled that luxury brands have the right to stop popular retailers such as Amazon to sell their products, thereby essentially protecting the integrity of their products.
And since luxury is all about prestige and exclusivity, being a successful luxury investor of course also means being aware of the possible dangers of luxury investments, such as the manufacturing of counterfeit gemstones, and the use of online means of retail to sell any and all kinds of counterfeit goods. Like precious stones, art is another one of those luxury products that are often counterfeited or forged. When it comes to purchasing art, the golden rule is to always double-checking authenticity before purchasing. But it goes without saying, of course, that attribution in itself is not to be confused with authentication.
When purchasing luxury property, it is once again exclusivity, rather than the price itself, which ultimately defines value. As Mark Fitzpatrick, the CEO of RUHM Luxury Marketing points out, it is vitally important to always consider those aspects of the property that can’t be changed, such as the path of the sun, the location of the ocean or airline flight paths.
In other words, when investing in luxury, some of the most basic principles are:
- Don’t get to carried away by an item or investment’s price, but rather pay immense detail to its rarity, allure and exclusivity.
- Be cautious of counterfeit or fake items marketed as luxury goods and always double-check for authenticity.
- One of the unique advantages of investing in luxury goods is the tendency of such goods to appreciate in value over the long run. Do thorough research to get not only the choice, but also the timing of your investment right in order to maximize not only the financial reward, but also the personal satisfaction of your investment. In this regard knowledge of the market as well as patience is key.
Investing in Luxury is an art in itself, which, like any investment, needs to be carefully and cautiously approached. But in the end wise luxury investments can result in priceless rewards and investment satisfaction in a unique way that other investments simply can’t.
Paul Russell is co-founder of Luxury Academy London, a multi-national training company with offices in London, Mumbai and Visakhapatnam. Luxury Academy London specialise exclusively in the luxury industry and deliver training in leadership, communication and business etiquette training for companies and private clients across the globe.
Prior to founding Luxury Academy London, Paul worked in senior leadership roles within luxury hospitality. A dynamic trainer and seminar leader, Paul has designed and taught courses, workshops and seminars worldwide on a wide variety of soft skills.