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When is a Good Time to Invest in Luxury?

Investment is a fickle business. Make a purchase one month, and you might make a moderate profit. Purchase the next, and the proportional value of your investment could soar. That’s the nature of fluctuating markets – the key is in the timing. Luxury purchases, spanning goods such as bracelets, watches and even shoes, have become an increasingly popular way to make money grow. By 2019, some luxury brands had seen the value of their items double in just a few years. Luxury wearables look so good that the handsome profits they return can seem like a bonus – but there’s serious money on the table and it pays to understand that (literally). Chasing the highest returns requires more than some cash and a little bravery, however. You also need a deep knowledge of the markets.

Timing it right: the uncertainty bonus 

All investment tends to spike when times are uncertain, and the Coronavirus pandemic is no exception. Which? reports a spike in investment across platforms such as Interactive Investor, The Share Centre, Vanguard, Hargreaves Lansdown and Lloyds Banking Group. This is because volatility can spell opportunity in the long-term. If the value of a share – or indeed a Rolex watch – plummets, then when values bounce back, the rewards can be significant. All investments carry risk, of course – and there’s always the chance your item may not return to its pre-crisis value. However, unlike share investments, luxury items cannot disappear overnight if their parent brand collapses.

Predicting the future luxury market 

Uncertainty isn’t enough to justify investment on its own – after all, volatility can precede a quick financial recovery or a long recession. If you’re likely to want a cash return in the next few years, then you also need to make educated predictions about the future of the luxury goods market. The International Monetary Fund’s World Economic Outlook reports provide an in-depth look at the broader picture, while retail sector forecasts can help you understand how the consumer appetite for luxury goods might change. There are also contextual factors to consider, including what the future might hold for your key buyer demographic. There’s good news for luxury goods in this regard, since the world’s emerging middle class shows no sign of slowing down.

Knowing when to sell 

When you’ve decided to buy a luxury item, it’s important to plan for an eventual sale. By taking note of the types of conditions which often lead to healthy profits, you’ll be able to look out for when the time is right. Nobody knows when the market may take a hit, but generally speaking you should wait until the economy is well clear of negative growth before selling. In all cases, waiting at least two years is smart, since this time-frame gives your item time to grow in value. If you’re using the investment piece, it’s a good idea to sell within five years to ensure the model retains its original quality. When the time is right, list the piece with a secure broker such as Watchmaster, then sit back and wait for the offers to arrive. Whether you’re an established investor, a fan of luxury brands or a newcomer with big ideas, investing in luxury wearables can be more lucrative than dealing in gold. It’s serious business if you know how to buy and sell smart.

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