Are Expensive Watches A Waste Of Money

Luxury watches

First and foremost, people can purchase luxury watches for a variety of reasons. The most obvious reason: being a symbol of success. No matter where you are in the world, luxury watch brands such as Rolex or Patek Philippe are well known for their prestige, reliability, quality and the ultimate symbol of status.

But what about investing in luxury watches? Do they increase in value?

The simple answer is yes. Luxury watches can be considered good investments. The not-so-simple answer for investing is — it depends . Here's are a few factors that influence the value of watch investments:

Supply and demand

Like stock prices, the value of a commodity depends on its supply and demand. When you own a luxury watch, your ability to sell it ultimately comes down to its market demand and whether someone would be willing to buy it.

However, unlike stocks, you cannot liquidate your asset at any time.

Watches are collector items, and their buyers thrive in a niche market. There could be more demand or interest in one watch model over another and depending on the luxury watch model you own, it could be worth more or less than you'd expect.

"The law of supply and demand is a theory that explains the interaction between the sellers of a resource and the buyers for that resource. The theory defines what effect the relationship between the availability of a particular product and the desire (or demand) for that product has on its price. Generally, low supply and high demand increase price and vice versa." — Investopedia

The brand

The brand of watch matters when it comes to the best resale value. Luxury Swiss watch brands tend to be the most popular and attractive. Rolex is one of the brands known for its best resale value and popularity. Patek Philippe and Audemars Piguet are equally solid choices too!

Though there are plenty of other luxury watch brands out there — and I do encourage you to do more research if you're interested — and most luxury Swiss watch brands happen to be great investments.

Low production numbers

The above reason may seem obvious, but it drives home the fact that supply and demand will largely influence the value of your luxury watch.

If you own a watch from a popular brand and the production numbers are low or the model has been discontinued, then it has a higher chance of increasing in value in the future.

Building on the idea of low production or discontinued models is the idea of limited edition or special/unique models. Though a tried and true model can help establish its baseline resale value, rare or special qualities can set certain watches apart from the others.

The devil is in the details.

Small details or minor changes can greatly increase the value of a watch, making it worth significantly more than the original model design simply because it's unique. A great example of this is the Rolex 'red' Submariner, which offers the 'Submariner' text in red lettering. Small but important details such as this would greatly increase the value of a watch but could be overlooked by less experienced collectors.

Popular models

Again, this idea of supply and demand. Some watch models have proven themselves to be very popular or valuable over the years. The Rolex Daytona, Rolex Submariners, Patek Philippe Nautilus, Audemars Piguet Royal Oak and Audemars Piguet Royal Oak Offshores are just a few examples.

Luxury sports watches also happen to be a great choice for the best resale value too!

Popularity equates to high demand, and a higher demand for a certain watch model could increase the resale value of a particular watch if supply is low.

Materials

You would think that gold luxury watches would offer a better resale value, but there is some difficulty in liquidating this asset simply because it's an acquired taste. It's difficult to sell. It's not popular. It's not in high demand. It will take time to find a buyer to sell it to.

On the other hand, stainless steel sports watches are a classic and popular choice. Watch collectors just love stainless steel sports watches! It's not a surprise to note that some of the most popular and desired watch models happen to be Rolex, Patek Philippe and Audemars Pigeut stainless steel watches.

Go with the flow, and follow the money. If you're looking to invest in a watch simply for its resale value, consider stainless steel over gold watches.

Condition

Another important factor that influences the resale value of a watch is its condition. If your watch is heavily worn or damaged, these slight imperfections can negatively impact its overall value — and vice versa.

As with any luxury second-hand item, the better the condition, the higher the resale value.

Time

Last but not least, time is an important factor when it comes to the resale value of a luxury watch. Just like purchasing a car, the moment you purchase your watch it will decrease in value. However, over time, and depending on a variety of other circumstances, the value of your watch could increase.