Getting that Rolex watch
Stocks, bonds, gold, properties or even cryptocurrencies are the usual instruments investors think of when it comes to investing.
In this article, however, allow us to provide an insight to one of the alternative forms of “investments”, luxury watches.
Here’s the deal,
- buy a luxury watch
- wear it for years
- sell it for a profit
Just like cryptocurrencies and the stock market, the luxury watch market is on its own bull run too.
In the year 2017, prices of pre-owned luxury watches were surging at an astonishing pace. Of course, like all other investments, there are risks involved. For luxury watch investing, the risk comes from picking the right watch at the right price (pretty much like any other investment instruments).
Here are some insights to help you get that correct watch
Top 3 brands
The top 3 luxury brands with a vibrant trading community are mainly Rolex, Audemars Piguet and Patek Philippe. Which means you can easily find a buyer or seller dealing for these brands of watches.
Models that hold value well
Sports model of Rolex and Patek Philippe hold their value exceptionally well.
Prices of these watches tend to follow the direction of the stock market. If the market is doing well, many would have more cash to buy luxury watches hence pushing up the prices. Vice versa, should the stock market crash, one can expect many people to pawn or sell their luxury watches, causing the price to decline. But overall, the volatility in the watch market is lesser compared to the stock market.
The Ultimate Checklist: Choosing the correct watch
Here are 5 factors to consider, before determining that the watch is a good investment:
Price is the number one and most important criteria for any investment. Be familiar with current market value and aim to buy your watch at a discount or fair price. At times, the key to it is patience.
The condition of the watch.
Be on a lookout for any part of the watch that is damaged? Check to see if the watch is still keeping time well? The last time you want is to purchase a damaged watch and spend a bomb repairing it!
Is the watch a full set?
Meaning does it comes along with all the original box, warranty papers and accessories during purchase. Collectors usually prefer to collect watches that are accompanied with a full set of box and papers. Watches with full set fetch significantly higher price than those with missing boxes or warranty papers.
Is the watch produced in limited numbers?
Limited edition watches or watches with a short production period tend to be more collectable as the supply is finite.
What types of watches are people generally looking for? Sports stainless steel models are definitely more in demand compared to full yellow gold models.
Similar to flipping IPOs on the stock market, the luxury watch market also allows you to do so if you are lucky enough to get your hands on two of the most in-demand models right now, they are the Rolex Daytona 116500LN and Patek Philippe Nautilus 5711/1A.
The waiting time on the waiting list in authorised dealers to get the two models is at least 5 years and many dealers have already stopped people from getting onto the waiting list. Based on the Rolex official website, a brand new Rolex Daytona retails for about S$16,660 and people are reselling them for approximately S$24,000. For Patek Philippe Nautilus 5711/1A, it retails for about S$34,000 and is being resale in excess of S$48,000!
Even their pre-owned models are selling close to the resale price of their brand new counterparts.
Risks of watch investing
One obvious risk would be one buying a fake watch that is sold as a genuine one. The solution around it is to buy a brand new watch from authorised dealers. If you are buying pre-owned, always buy from reputable second-hand dealers. If buying from a private seller, it is always good to authenticate the watch at a reputable watch store before making the purchase.
Another risk is that the watch gets damaged. The cost of servicing luxury watches is expensive. It can range from hundreds of dollars to thousands, depending on the brand and the type of movement of the watch. Servicing complicated movements such as chronograph or tourbillion is definitely going to cost you way more than a normal automatic watch.
Luxury watches provide functionality and can act as an alternative form of investment. Wear or keep your watches carefully and maybe in 10 years time, your timepiece might be worth much more than what you would expect.
Seedly Contributor: Vincent Foo
Vincent does full-time trading as a futures trader in a proprietary firm.
Constantly at the front line of risk management for his trading, he applies the same principle on his interest in the stock market and watches investments.
Editor’s note: The above is a really insightful article by Vincent Foo who is a part of our Seedly community. For readers who are interested in the lifestyle aspect of personal finance, check out Seedly’s content on Lifestyle!