Why Your Chanel Handbag Is Not An Investment
Many people ask me about Chanel as investments. There is so much floating out there about how, “Chanel bag’s are better investments than a home”. I am here to call complete and utter ‘BS’ on that, Chanel bags are not a better investment than a home. Let’s start with the basics, what exactly is an “investment?”
As defined by Google an investment is, “the action or process of investing money for profit or material result.” So, in order for a Chanel handbag to be an investment you would A) Need to purchase the product and B) Need to sell that same handbag for a profit.
This is where I see many people with a very misguided understanding of what it means to purchase a Chanel handbag as an investment. Typically, there is only one way you can make money on a Chanel handbag that is A) Buying the handbag and taking extremely good care of it and reselling it after many years or B) Making a savvy resell purchase that you can resell at a later date for more the same or more than you paid for your initial purchase.
Let’s say you purchased a Chanel medium flap in 1990 for the retail price at that time of $1,150. It’s now 2016, approximately 26 years later and you can now easily sell the bag on your own for $2,500 - $3,500 less your fees or have a reseller sell the handbag for approximately $4,000, where after fees (an average of 70%) you would earn $2,800. Yes, you made a nice profit of $1,650 but, let’s not forget it took 26 YEARS to make that profit. If you were to invest $1,150 in 1990 in the stock market at an average historical return rate of 6% in 2016 your investment would be $5,231.79 to date. So, if we're talking investments? I'll stick to the stock market.
So, what’s the break even point when selling a Chanel handbag? Meaning, when does the handbag move from liability to asset? With current inflation and and Chanel’s absorbent price increases it’s safe to say the lucky number is 7 years.
Using the above example, let’s say we purchase a Chanel medium flap bag in 2009 for $2,695. We could try to resell the bag ourselves for $3,000 - $3,500 or put the bag on consignment where we would earn $4,200 - $4,500 (less fees) so approximately $2,800 - $3,150. We can see here we’ve either broken even or made a slight profit depending on how much the bag sells for. The key to investing in a Chanel bag is to always invests in classics and buy a bag with the intention of enjoying rather than reselling for a profit.
This post is not to discourage those who use fuzzy math when persuading their spouses to buy a Chanel handbag. Rather, a realistic perspective of what you can expect your rate of return to be when selling. Point is? Buy what you love & enjoy it!