From the Rolex to the Birkin Bag: These tangible assets are more worthwhile than stocks

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• $17.75 million for a wristwatch…
• …and 338,000 euros for a handbag…
• …are no exception when it comes to coveted collector’s items

In times when classic savings efforts no longer generate any income and borrowing costs practically nothing, not only do the prices of real estate, bonds, shares and gold rise, but of course also of alternative forms of investment and luxurious tangible assets with collector’s value. Investors are no longer just interested in ordinary gold coins, collections of stamps, paintings or art, but increasingly also in rare whiskeys, wristwatches, teddy bears, musical instruments and women’s handbags.

Rarity, age and quality always play a role

However, these real assets have certain special features compared to classic forms of investment such as shares and bonds. In contrast to a stock exchange, there is no fixed marketplace for trading rare luxury items. Accordingly, such real assets have a high volatility and very little ability to be liquidated. Furthermore, the collectible value of different pieces cannot be measured using conventional valuation methods. Although it is generally true that rarity, quality and age or vintage are among the most important price factors, other circumstances and criteria often play an elementary role.

Expensive contemporary witnesses – Rolex, Patek & AP

In the past few decades, the market for classic wristwatches has increasingly become the focus of wealthy investors. Accordingly, some models are already considered a solid investment. The value of the watch is not always necessarily related to its material content, its technical quality or its complications, but is determined by temporary demand. This is where it comes in, as well as the classic art market, often at extreme price exaggerations. Because even the post-impressionist Vincent van Gogh recognized: “I keep blaming myself that my painting isn’t worth what it costs”.

A breathtaking increase in value could be achieved with a Rolex Daytona reference 6239, for example. While the watch was valued at around $1,000 in the 1970s, it changed hands in 2017 for $17.75 million. The reason for this price explosion was the successful Hollywood star Paul Newman, who wore the watch, with a 37 millimeter diameter, a silver dial and manual winding, in the film “Indianapolis – Risk of Life and Death”.

The Paul Newman Rolex is currently the most expensive wristwatch in the world to be auctioned, even replacing the rare vintage watch Patek Philippe reference 1518 made of stainless steel, which was auctioned in 2016 for over 11 million US dollars. With a list price of 2,265 francs, the equivalent of around 2,304 US dollars, this model was still far from an eight-digit price in 1944.

Professionals rely on limited models

It is almost impossible that you can also achieve such prices with your personal watch investment, but the value of some brands and models should continue to develop very positively. Investors who now want to buy a watch as an investment should in any case rely on a well-known manufacturer such as Rolex, Patek Philippe or Audemars Piguet, which, for example, only come onto the market in limited editions.

Fine whiskeys – a short one for 3,700 euros

A study by the real estate consulting firm Knight Frank, which regularly compares a wide variety of luxury collector’s items, came to the conclusion that the international market for single malt whiskeys is currently experiencing the greatest hype. A bottle from the traditional Scottish distillery Macallan fetched around 1.4 million euros at a Christie’s auction. A short shot of this noble drop alone would be more expensive than an average family holiday at a steep price of around 3,700 euros.

The hype about rare whiskeys is unbroken

“The stunning rise in the price of rare single malt whiskeys shows that the need for new, alternative asset classes among affluent investors remains high,” said Andrew Shirley, one of the authors of the Knight Frank study. The main reason for the high prices is currently the high demand from collectors in Asia. “In particular, the number of high-end bottlings in the high-price segment has increased significantly and higher prices do not lead to a noticeable decrease in demand,” said whiskey expert Marco Jansen in his quarterly report for whiskey collectors.

The decisive factor for the price development of a bottle of single malt is, among other things, the brand of the manufacturer, the aging time in the barrel and the edition. Bottles from long-closed distilleries are among the real treasures. However, whiskey lovers who now want to make an investment in this segment should definitely go to an auction or a reputable dealer instead of the alcohol cabinet in the supermarket. Because rare whiskeys, unlike watches, have the benefit of being drunk occasionally, their rarity sometimes even grows on its own.

Vintage cars – collectibles on four wheels

According to the authors of the Knight Frank study, the skyrocketing records in the rare spirits market have now surpassed even the pricing of some vintage spirits. Nevertheless, the old vehicles are still very popular. Unique film props such as a Aston-Martin of James Bond, or the former vehicles of celebrities.

Investors who speculate on capital growth by investing in a classic car instead of driving pleasure should primarily focus on sports models and limited editions or unique equipment. In Germany, historic makes by Porsche, Mercedes and Ferrari are among the most sought-after models.

No ongoing income, but ongoing costs

In contrast to a bottle of whisky, however, the maintenance of a classic car is very expensive and time-consuming. In addition to insurance, regular care and a reasonable garage, there can also be high costs for original parts. Furthermore, even with the old vehicles, it is difficult to predict which model might be in demand in the future. As a consequence, as a layman, you should always consult an expert or automotive expert.

String instruments – music to the ears of investors

The very special tangible assets with investment character also include historical and handmade musical instruments. Above all, the products of the Italian violin makers Giuseppe Guarneri and Antonio Stradivari are at the center of the passion for collecting. It is not uncommon for enthusiasts to spend several million euros on such stringed instruments, but they are not a sure-fire success.

In 2014, the auction house Sotheby’s wanted to sell one of the rare Stradivarius models for around 45 million US dollars, but could not find a buyer. Since the special stringed instrument belonged to the violinist Peter Schidlof, who died in 1987 and paid around 81,000 US dollars for the model in 1964, the experts at the auction house saw the high price as entirely justified. For example, the Stradivari violin called “Lady Blue” from 1721 reached a purchase price of over 12 million euros. With historical instruments, however, not only the manufacturer plays a prominent role, but of course also the sound quality and who played on or with the instrument.

Steiff bears – the cuddly returns

Teddy bears with button in ears are no longer just toys in children’s rooms, but have long been the stars of auction houses. In 2002, a collector bought the Steiff teddy named “Happy” from 1926 for around 156,000 euros. Such high auction results are not uncommon, so a similar bear from 1912 changed showcases for almost 150,000 euros. Of course, not every old Steiff bear can make such sums, but well-preserved pieces from the 1930s and 1950s often fetch between 25,000 and 30,000 euros. However, high prices can still be achieved with special models from before 1970. Even the bears from the 1990s have increased in value tenfold to date. As with all collector’s items, the rarity and age of the stuffed animal also count, of course, as does its condition and quality.

Handbags – from chic accessories to expensive collector’s items

While men are more interested in watches, women attach more importance to handbags. The performance of some women’s handbags is in no way inferior to that of men’s watches. The coveted Himalayan model of the Birkin Bag changed wardrobes at an auction for a record price of 338,000 euros. This makes this exclusive women’s handbag, which has been produced by the French luxury brand Hermés since 1984, the most expensive handbag in the world. With an annual edition of two copies and a version in matt white crocodile leather, as well as an 18-carat gold buckle and over 200 diamonds on the handle, the Himalayan Birkin Bag is also something like the Bugatti Chiron among handbags.

However, investors who may be speculating on an increase in value do not necessarily have to invest a six-figure sum. Because of the very limited number of pieces, the prices of the standard series models of the Birkin Bag, which are available on the secondary market from as little as 8,000 euros, are also increasing. While the Hermés Birkin Bag is the best investment in handbags, rare models from Gucci and Prada also occasionally fetch five-figure auction results. In contrast to stocks, it is very difficult to identify undervalued handbags or bags with potential.

An asset class for absolute professionals

The diverse examples show impressively that stocks are not always the best investment. In contrast to the collector, art dealer or rarity dealer, the share buyer does not need a great deal of prior knowledge or comprehensive expertise or considerable start-up capital. This circumstance makes investing in stocks much more lucrative than the daring purchase of supposed collector’s items.

“If you want to make a profit, you really have to be very knowledgeable. Simply buying something rare and then waiting for the value to rise doesn’t work,” publicly sworn art expert Frithjof Hampel told WirtschaftsWoche. Consequently, it is very difficult to predict the performance of different collectibles. “When zeitgeist and tastes change, an entire market can change dramatically,” the art professional continues. Investors who want to invest their money in lucrative material goods should not only bring the necessary change with them, but also a lot of time and leisure.

Pierre Bonnet / finanzen.net

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