Are you ready to dive into the world of investing in watches? Now, I know what you might be thinking – investing in watches? Isn’t that just for money-hungry flippers looking for a quick profit? Well, hold on a tick, because there’s more to it than meets the eye. Sure, some folks may treat watches purely as financial assets, but that’s not the whole story. Luxury watches hold incredible value that can skyrocket over time, and that’s where the investment potential comes into play.
But here’s the thing: being passionate about watches and investing in them aren’t mutually exclusive. You can appreciate the art of watchmaking, get emotionally attached to your timepieces, and still consider their financial worth. After all, blindly pouring thousands of dollars into watches without a thought for their future value is a tad irresponsible, don’t you think?
That’s why we’re here with this guide – to show you the ropes of the investment side of watch collecting. We want to help you make more informed decisions and strike the perfect balance between your love for watches and their investment potential.
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Why Invest in Luxury Watches?
When it comes to making smart investment decisions, watches may not be the first thing that comes to mind. However, there are compelling reasons why investing in watches can be a rewarding endeavor. Whether you’re a seasoned investor or just starting out, here are three key reasons why you should consider adding watches to your investment portfolio.
Increase in Value: One of the primary reasons to invest in watches is their potential to increase in value over time. Luxury watches, in particular, have a track record of appreciating in price. There are various factors that contribute to this phenomenon. Limited production runs, exclusivity, brand reputation, and historical significance are some of the key factors that can drive up the value of investment watches. As demand for certain watch models grows and their availability decreases, their prices tend to rise.
Diversification: Diversifying your investment portfolio is a fundamental strategy for managing risk. Watches offer a unique opportunity to diversify your portfolio by adding tangible assets. Unlike stocks and bonds, which can be affected by market fluctuations, watches can act as a good hedge against inflation and economic uncertainties. By investing in physical assets like watches, you are effectively spreading your risk across different asset classes, which can help protect your wealth during turbulent times.
Passion: While the primary goal of any investment is to make money, it’s important to find enjoyment in the process as well. If you have a genuine interest in watches, investing in them can be an exciting and fulfilling pursuit. It allows you to combine your passion with your financial goals, making the investment journey more enjoyable. You can research different watch models, learn about their intricate mechanisms, and appreciate the craftsmanship behind each timepiece. Moreover, when you invest in watches, you also have the opportunity to wear and showcase your investments, adding a touch of elegance and personal style to your everyday life.
Key Considerations Before Investing in Watches
When it comes to investing in watches, there are some important factors to consider. While no one can guarantee the future value of a timepiece, evaluating these factors can help you make a more informed decision. Let’s take a look at what you need to consider:
1. Personal Value and Enjoyment
Before diving into the investment potential of a watch, it’s crucial to assess your personal liking for it and whether you find its current price justified. Investing in a watch that brings you happiness and satisfaction is already a return on your investment, regardless of its future value.
2. Scarcity
Scarcity is a significant factor that can affect a watch’s investment potential. Watches produced in limited quantities, such as limited editions or timepieces from small independent brands like F.P. Journe, tend to be in higher demand. Vintage models that were initially unpopular but have gained appreciation, like the original Audemars Piguet Royal Oak, can also be good investment candidates.
3. Condition
The condition of a watch is crucial for its investment value. While a little patina can add character, excessive damage can significantly reduce its desirability. When examining a used or vintage timepiece, check for signs of wear, such as cracked dials, rounded edges on the case, or rust and pitting on the movement. Comparing the watch to other examples in good condition can help you assess its overall condition.
4. Originality and Authenticity
Ensuring that a watch is original and authentic is essential. Counterfeit watches can be deceiving, even if they appear to be in exceptional condition. Extensive repairs or replacements, such as dial, crystal, bezel, or bracelet, can impact a watch’s value. Educating yourself about the watch’s service history and provenance, and relying on reputable dealers for verification, can help you avoid buying a fake or unoriginal timepiece.
5. Replacement Parts
The presence of replacement parts doesn’t necessarily make a watch a bad investment. Rare watches, like an original Rolex GMT-Master 6452 with a replacement bezel, can still appreciate in value. However, it’s crucial to know what parts have been replaced and adjust the watch’s value accordingly. Transparent information about replacements is key to making an informed investment decision.
6. Brand Name and Watch Type
Brand reputation can play a role in the investment potential of a watch. Brands like Rolex and Patek Philippe have historically performed well, with their timepieces experiencing steady value growth over the years. Moreover, whether a watch is used, new, or vintage can also affect its investment viability. Some watches are better to buy new, while others may prove to be more advantageous when purchased slightly used.
How to Invest in Luxury Watches
The world of luxury timepieces offers numerous opportunities. Here are some tips to help you get started with investing in watches:
1. Choose the Right Brands for Investment
When it comes to investing in watches, certain brands have proven to hold their value well over time. Consider starting your collection with the following brands and models:
Omega Speedmaster “Moonwatch”: The Omega Speedmaster series, particularly the “Moonwatch” models, is a solid investment choice. These watches have historical significance as they were worn by the Apollo 11 astronauts during the moon landing in 1969. You can find pre-owned Omega Speedmaster Day-Date Chronographs starting from $3,000 to $3,500, or explore the new model Omega Speedmaster Moonwatch 2022 New Release Hesalite 42mm, priced around $6,000.
Rolex Submariner or Rolex Steel Model 124060: The Rolex Submariner is an iconic watch known for its timeless design and durability. However, due to its popularity, finding a new model from a dealer can be challenging. Consider exploring the pre-owned market, where prices can range from $13,000 and above. The Rolex Steel Model 124060 lists for about $9,000 new, making it another excellent investment choice.
2. Choose Where to Buy
When purchasing a luxury watch, you have several options for where to buy:
- Manufacturer: Buying directly from the manufacturer ensures authenticity and guarantees the original box, paperwork, and packaging. However, you’re unlikely to find discounts when purchasing directly, and prices may be at the manufacturer’s suggested retail price (MSRP).
- Authorized Dealer: Authorized dealers have direct connections with the brands and can provide guidance and authentication services. Establishing a relationship with an authorized dealer may grant you access to exclusive waiting lists for sought-after models.
- Secondary Market: The secondary market allows you to find pre-owned or vintage watches at potentially lower prices than new ones. However, exercise caution and verify the authenticity and condition of the watch before making a purchase.
- Try Bezel: Bezel is a platform launched in 2022 that offers a curated selection of luxury timepieces from renowned brands. It provides authentication, multiple sellers, excellent customer care, and fully insured shipping. Note that Bezel is currently available only in the United States.
3. Get Insurance Coverage
Protecting your investment is crucial. Most homeowners’ insurance policies have limited coverage for personal possessions like watches. Consider specialized jewelry insurance coverage, such as BriteCo, which offers worldwide coverage for loss, theft, damage, and mysterious disappearance. Insurance costs typically range from 0.5% to 1.5% of the appraised value of your watch.
4. Care for Your Watch
Whether you plan to wear your watch or keep it for investment purposes, proper care is essential. Here are some tips to maintain its condition:
- Regular Cleaning: Use a soft, dry cloth to clean your watch and avoid harsh chemicals that could damage its finish.
- Handling Moisture: Dry your watch immediately if it gets wet, and avoid exposing it to extreme temperatures.
- Storage: Store your watch in a cool, dry place to prevent tarnishing and scratching. Consider using the original box or a soft cloth for extra protection.
- Professional Servicing: Send your watch to a brand service center for professional servicing every five years to ensure optimal functionality.
5. Proper Storage for Investment Watches
If you plan to store your investment watch without wearing it, follow these tips:
- Cool, Dry Place: Store your watch away from heat sources and direct sunlight in a cool, dry environment.
- Protection from Damage: Wrap your watch in a soft cloth or use a padded case to protect it from scratches and other potential damage.
- Consider a Watch Winder: If storing for an extended period, a watch winder can keep your watch wound and running correctly.
- Regular Servicing: Send your watch for professional servicing every five years to maintain its condition.
6. Selling Your Watch
When it’s time to sell your watch, consider the following options:
- Pawn Shops: If you’re after a speedy sale, pawn shops can help. Just remember, they might not pay the highest price for your timepiece.
- Auction Sites: Websites like eBay offer you a chance to reach a larger audience. But remember, patience is key – let the market set your watch’s price.
- Luxury Watch Retailers: If your watch is high-end, luxury retailers could give you the best deal. Be warned though, they can be picky about what they buy.
Don’t forget to check out specific websites such as BobsWatches if you own a Rolex, or CircaJewels, which carries a range of jewelry and watches.
Watch Investments: Other Options
1. Buy Stocks of Watch Companies
Are you a watch enthusiast but not quite ready to purchase one directly? Why not consider investing in watch companies’ stocks instead? This could be an exciting way to delve into the watch world without breaking the bank.
There are a lot of luxury watch brands, right? But did you know that many are still kept within families? Even so, the stock market offers plenty of chances to get involved in this industry.
Take Watches of Switzerland, for instance. This high-end watch retailer is up for grabs on the London Stock Exchange. In just the past year, its stock price has rocketed up by an impressive 160%. So, you might say investing here could be like striking gold!
And then there’s Chronext, an online luxury watch marketplace. They’re planning to go public too, though they’ve hit a bit of a snag and had to delay their debut.
What’s intriguing about family-owned luxury brands is their focus. They tend to care more about quality and lasting value than just quick wins. This mindset makes them potentially appealing for investment. It’s kind of like picking a fine vintage wine that improves with age. You might just find such an investment choice to be rewarding in the long run.
2. Invest in Funds
If you’re wondering whether there are funds dedicated to watch investments, the answer is currently limited. Unlike real estate, where retail investors can easily invest through Real Estate Investment Trusts (REITs), there aren’t widely available watch-specific investment funds due to regulatory restrictions in most countries.
However, it’s worth noting that wealthy collectors sometimes form private “funds” among themselves, pooling their resources to acquire watches. These private funds are usually exclusive and not accessible to the general public.
3. Fractional Investing
Fractional investing in watches is an exciting new approach to investing that lets you buy a small slice of a watch’s value, rather than the whole thing. This idea is especially appealing because it lowers the cost of getting started – you can often invest with as little as €50.
In Europe, platforms like Koia are popping up. They offer fresh ways to invest in watches and other items. Here’s how it works: the platform either buys high-value watches outright, or gathers funds from a crowd of investors to purchase specific timepieces. As an investor, you’re putting your money into the company that owns the watch, and that gives you a share in the underlying asset.
Of course, like any investment, fractional watch investing has its ups and downs. On the downside, you won’t actually get to wear the watch because it’s kept safe and secure. Also, since this kind of investment is still pretty new, the range of watches you can invest in might be a bit narrower than the wider market.
But on the upside, the low entry cost opens the door for a lot more people to invest in watches. It spreads the risk around, allowing for a wider mix of investments. Plus, the companies that offer fractional investing services typically take care of all the fiddly bits, like storing the watches, insuring them, and curating the collection. So, you won’t have to worry about any of those hassles.
The Bottom Line
In simpler terms, buying watches can be both fun and profitable. It’s something that can be enjoyed by those who like investing and those who love watches. There are some key steps you can take to make the most of your investment.
Firstly, always buy high-quality watches from well-known designers and trustworthy sources. This ensures that the watches are genuine and hold their value. The materials used in the watch, like gold, gemstones, and diamonds, can also add to its value.
It’s also crucial to get your watch insured. Look for an insurance company that specializes in jewelry, like BriteCo. They can cover the cost to replace your watch if anything happens to it.
Starting a watch collection can begin right in your hometown, with a visit to local retailers. Keep an eye out for watches that draw you in and then find out what they’re worth if they’re pre-owned. The internet is a helpful tool for this, plus you can ask for advice from salespeople or join watch groups on social media. If you spot a watch that has been going up in value, it might be a good investment.
Lastly, remember that buying watches isn’t just about making money. It’s also about appreciating the beauty and skill that goes into making them. So, enjoy your watch hunting, and hopefully, your investment journey will be profitable and full of timeless style.
