Should I invest in luxury watches?

It all started with a bang, or rather the drop of the auctioneer’s gavel. On 26th October 2017, at Phillips auction house in New York, Paul Newman’s 1968 Rolex Daytona sold for just shy of $17.8 million. What ensued was a frantic dash to snap up vintage timepieces from the likes of Rolex, Patek Philippe and the wider luxury watch market.

When you look at watches as investments, there are some obvious hurdles to overcome. Watches, unlike other investments, are subject to trends and varying market sentiments. While few can dispute the artistry and craftsmanship that is put into a luxury timepiece, they are ultimately a fashion accessory. When comparing watches to a classic car or property, their tangible value is significantly less.

On the other hand, certain luxury watches rarely depreciate in value and do not require the same level of maintenance as a London townhouse or a 1966 Shelby Mustang.

Let’s look at this another way. If you paid £5,200 for a Rolex Submariner back in 2014, the same watch today could be worth as much £9,500 or more. That’s an 83% increase in 7 years! Compared with depressingly low interest rates of around 2% that you would get at the bank, you can see why some people choose to invest in luxury watches.

So, before we get onto some useful tips about how to invest in watches, let’s summarise 3 reasons why you should be investing (Please note: while we have a passion for sharing our knowledge of the watch industry, we would always recommend seeking professional advice before investing in any large purchase):

  1. To Make Money! – There’s no need to mince our words here. Investing in watches can be a great way to make money, especially for those of you who have money gathering dust in a savings account. 

    Don’t believe me? What if we told you that since the 70’s, the price of a stainless steel Rolex has never depreciated….EVER. This is due to the demand for certain watches far exceeding the supply and scarcity always creates value.
  1. It’s an asset on the move – Some of us like quick access to their investments. The nature of a luxury watch, and the market, makes it possible to sell fast.  It’s a movable asset that can easily be converted to cash. Also, unlike cash, you can insure a watch.

    You can also wear a watch and enjoy it every day. Unlike a luxury car that depreciates after use, a second-hand watch can still be sold for a profit.
  1. To leave a legacy – Far more than simple timekeepers, a timepiece can contain history, memories, family stories and the legacy of all who have worn them. Patek Philippe coined the iconic mantra ‘You never own a watch. You merely look after it for the next generation.’ 

    High quality watches are built to last and designed with the intention of being passed down to the next generation. Rarely can an asset hold as much sentimental value as it can intrinsic value.

Now, if you are thinking of investing in watches there are a few helpful tips you should know:

  • Start with the greats – Unless you’re a seasoned investor, it’s wise to stick to what you know. When investing in watches it’s usually recommended to stick to well-known brands such as Rolex or Patek Philippe. 

    It’s hard to go wrong with a classic like the Submariner or the Nautilus. While these models may not be cheap, these desirable pieces will always have an avid following and, perhaps more importantly, a place in the hearts of investors.
  • Do your research! – As with any investment, research and solid groundwork is key to your chances of success. Often an amateur investor can make the mistake of jumping on the hype train and purchasing an expensive watch at the peak of its market value. 

    Doing your research, talking with industry experts and other investors can save you from making this mistake. There is a deluge of information out there, soak it in!

    Interestingly, before the sale of Paul Newman’s Rolex Daytona, most people regarded the Daytona as undesirable, and the watch was usually sold at a discount. The celebrity factor drove sales of this watch through the roof and now you’d be lucky enough to get on a waiting list for one at an authorised dealer and, if you do, you’ll be waiting around 5-10 years!
  • No time (pun intended) for day traders – Play the long game. One rule of economics notes that as supply falls, demand will naturally increase in turn. The same can be true for watches. Vintage watches only have a limited supply in the market which, like vintage cars, antique furniture, and wine, drives their desirability. 

    Admittedly vintage timepieces are usually priced beyond most investors, watches that are near the end of a production run are definitely worth looking into. Mere speculation of a watch being discontinued can be enough to drive up prices, so an actual discontinuation can almost be certain to appreciate your investment.

The Covid era, as with other markets such as crypto currency, has seen increased market volatility in both directions. With some watches appreciating as much as 5% in a week. So, when it comes to investing, we would always say you should buy what you like. As, unlike the pain experienced when other investments may depreciate, at least you’ll still have something to be proud of on your wrist.

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