This guide will allow you to understand how to invest in luxury watches in order to hope to profit from their resale: purchase, maintenance, gains (capital gains), conservation, taxation and insurance.
For a few years now, the general press has been talking about investing in luxury watches.
The event that got the most press was the auction of a Rolex Daytona that sold for about 1 million euros.
This has drawn attention to an activity that is affecting more and more sectors (including wine): the purchase and resale of watches for a substantial profit.
Why invest in watches?
A Rolex Explorer : without doubt a good investment...
The wristwatch is a utilitarian object that is becoming more and more a fashion and luxury item. However, we sometimes ignore that the first watches are barely more than a century old.
The history of the watch is therefore short and - like any manufacturing or industrial activity - fashions, needs and companies have evolved.
These particularities make it relatively easy to find out about the watchmaking houses to know their productions, the models they have produced, etc.
Collectors then look for certain watch models for their rarity, their manufacturing quality or other attributes linked to the history of the watch (the Omega Speedmaster went to the moon, a certain model of Rolex Daytona was worn by Paul Neuman, etc.).
The market is then classically based on supply and demand, making prices rise or fall according to the number of watches on sale and the number of buyers.
A priori, and unlike the financial markets, there was no panic among investors. The watch remains a physical object (not like a share or a bond) and can be made with noble materials such as gold, silver or precious stones.
How to invest in watches?
To invest in watches, you obviously need to buy watches.
You can buy them new, but the easiest way is to buy used models.
Indeed, if you buy a new model, you will never know if the watch will increase in value or not. New means that it is still in production (except for a limited edition) and by the time it is sold out, hundreds of thousands of watches may have been sold, which will affect its future value.
Used watches therefore seem safer and have two advantages:
They are less expensive if they are recent occasions
You can already have an estimate of the demand if the model is difficult to find
We will see later in this guide which watches can be good investments.
Note that the use of such a service seems quite risky because of its youth, even if the concept seems good.
Where to store your watches?
If you buy a few watches, you will have to store them at home.
If you decide to invest in very expensive watches, it is better to store them in a safe.
The most valuable models, which are likely to make large gains, will go into a secure safe such as those in a bank.
Luxury watch insurance
If you're going to invest in watches, you'll need to insure them against theft.
As with jewelry, cash, gold coins and the latest high-tech devices, watches are items that are stolen from homes in the event of a break-in.
So contact your insurance company to see what coverage you can get in case of theft. It may be a good idea to keep some models in a bank safe.
Should watches be worn?
This is a tricky topic that is rarely discussed in other guides, so it has a place here.
It is recommended to buy beautiful watches, from great watchmaking houses and worth a fortune. But, should you enjoy them and wear them?
This is a difficult question, because it will depend on how careful you are with your watches. But, even if you are careful, you can slip on a staircase and scratch the case or the strap of the watch - thus penalizing its future resale value!
So the best advice is not to wear the watches except for a night at home to treat yourself.
What gains (capital gains) can I expect?
This is a tricky point, because the price will depend on many things: brand, model, model year, model condition, rarity, etc.
People who bought Rolex watches in the 80s and 90s are lucky, for example. Some Omega, Patek Philippe or Audemars Piguet models can almost buy a small apartment on resale!
So, the gains are difficult to predict. But, if you invest in a few big brands, you are almost always certain to land on your feet (in 2021 anyway, that is):
Rolex,
Patek Philippe,
Audemars Piguet,
A. Lange & Söhne
In my opinion, we should be wary of some extremely expensive and recent brands like Richard Mille since we have little historical data. But in the case of Richard Mille, we have already seen a model double in value in a short period of time (RM 11-01 to name but one).
Richard Mille Massa watch
Investing in this kind of watch can be very risky and, as with any risk, the gains can be very high!
More generally, you should not be obsessed with the insane gains of recent years. There is no guarantee that you will be able to earn that much.
It's just the wood for the trees and these watches are already off the market. It is better to try to understand what made these watches so sought after rather than blindly trying to replicate the same investment on the same type of watch.
This can work, but the wise investor will focus on understanding the fundamentals and not on a few special cases.
Which watch to invest in in 2021?
Rolex GMT Master 2 aka "Batman": its value only goes up!
If you have read this section, you are probably convinced that investing in one or more luxury watches is something you want to do.
Finding the right watch that will increase in value is not easy. You have to check out auctions, watchmakers, collectors, etc.
The best way is probably to meet with members of a watch collectors' association. There are some in each region. You will be able to discuss with people who are passionate about watches and who have a great knowledge of watchmaking.
Which watches do not lose value and are a good investment?
Royal Oak: a real gem and a good investment
To talk more specifically about some models in which you can theoretically invest, I think this list should give you some hints:
Rolex GMT Master 2 "Batman": a very sought-after sure thing, so much so that there are other brands that try to produce more accessible alternatives to the Rolex GMT Master 2 "Batman".
Omega Speedmaster "Moon watch": the watch that landed on the moon (see astronauts' watches) will always be sought after by watch specialists, Omega fans and fans of the space conquest - a symbol in short.
Audemars Piguet Royal Oak 15400ST: the price can be scary, but there are collectors who are only looking for this model in impeccable condition.
Patek Philippe: the whole brand is sought after, but the Aquanaut and Nautilus models seem to be the most fashionable at the moment.
Tudor Heritage Black Bay: it seems a bit early to talk about a "must have" but the Tudor Black Bay is a model to watch very closely as it is the envy of many on the Internet.
Tudor Black Bay GMT: one of the models whose value could rise over time
Rolex, just about every model (click here to find out more): because of its (limited) production and the prices of new watches that keep increasing over the years. Rolex models in good condition - especially the classic Submariner - should increase in value in the coming years.
Other brands to consider: Breitling, Breguet, Vacheron Constantin, Patek Philippe (already mentioned, but worth remembering).
Taxation of collector's watches
Finally, we need to look at the taxation of collector and luxury watches.
First of all, with the end of the wealth tax, watches are no longer subject to this tax.
If you buy a watch abroad, you will have to count on customs duties and on the payment of 20% VAT. So, even if the price of a watch seems attractive in the USA, for example, you have to take into account this extra cost if customs gets hold of the package.
Finally, if you make a capital gain on the resale of a watch, you will have to pay a tax! But, that's the rule for many things.
The good news is that if the watch sold is worth less than 5000€ you are exempt.
This is why you should never buy a high-value watch from a private person. It is not that you will be ripped off, but that the individual is probably in good faith and may have been ripped off himself years before!
So, buying a "full set" watch, i.e. with box and paper seems to be a good idea, especially if the watch has been appraised by a professional.
Conclusion: invest in watches in 2021 to make money
Rolex: hard not to imagine this watch increasing in value!
For many people, buying and owning watches is a pleasure.
If this is your case, investing in watches is a bit like linking the useful (making money) with the pleasant (owning beautiful watches).
It's like having a hobby that makes you money instead of costing you money. But, if you are just starting out, it is best to wait until you are familiar with this emerging and very particular market. Indeed, making money with watches is not an easy thing.
In any case, you can try the experience by buying a beautiful recent Longines (the Heritage range is splendid and still affordable) or an Omega from the 60s and 70s.
You will not ruin yourself, you will have a beautiful watch, and in a few years when you will want to resell it, you will be able to see if this investment was interesting or not.
Here's the final word: remember that a watch is always worth some money on the second-hand market. So, a watch bought today for 1000€ will still be worth - at worst - 500 to 600€ in a few years if its discount has been strong. This is much better than for a classic piece of jewelry that is only worth the price of gold when it leaves the store.
In these conditions, the risk is still quite limited.
Good investment!
Комментарии