Can a $30,000 Birkin bag really outperform the S&P 500? Jess and Makayla break down whether luxury assets like handbags, watches, wine, and cars actually build wealth - or if they’re just expensive lifestyle purchases.
What Are Luxury Assets?
When people hear luxury assets, they often think of high-end items that might hold or increase in value over time. Jess and Makayla clarify that while these items can sometimes appreciate, they’re not true investments like shares or property. Unlike a diversified portfolio or savings account, luxury assets are illiquid – meaning you can’t quickly sell them when you need cash.
Watches: Status Symbols or Assets?
Luxury assets often include watches from brands like Patek Philippe, Omega, and Rolex. These hold value due to brand history, scarcity, and strong niche communities. Some models, like the Cartier Tank watch, skyrocketed by over 250% in 18 months thanks to social media trends. But trends fade, and these are not assets you can rely on for your emergency fund. As Jess and Makayla put it, “You wouldn’t want your emergency fund in the form of a Rolex.”
Wine and Whiskey: Liquid or Risky?
Fine wine is another luxury asset people hope will appreciate. Platforms like Live Ex trade vintage wines, with Chateau Rothschild 2000 rising from £2,000 to £19,400, averaging 13% annual growth. However, authenticity scams are common, and storage, insurance, and lack of liquidity make wine risky compared to managed funds. Jess and Makayla discuss a fraudster who brewed fake vintage wine in his apartment and sold it for thousands.
Cars: Scarcity Drives Value
Luxury cars like Jaguars, Mustangs, or the AMG G63 can sometimes hold or increase in value due to scarcity. But maintenance, storage, and a small resale market limit their practicality. Most cars depreciate quickly. Jess and Makayla emphasise that cars are expensive to own and aren’t a reliable way to grow wealth.
The Birkin Bag vs. The S&P 500
Here’s where luxury assets get interesting. Between 1980 and 2015, a study found Birkin bags achieved an annual return of 14.2%, surpassing the S&P 500’s 9.8% average. But buying a Birkin isn’t easy – you need an extensive spending history with Hermès before you can even buy one. This artificial scarcity drives resale prices up, with a basic Birkin 25 retailing at USD $12,000 but reselling for almost double. The rarest Himalayan Birkin bags can reach USD $300,000.
Despite these impressive figures, Jess and Makayla warn that Birkin bags are not practical wealth-building assets. They’re hard to buy, illiquid, and driven by brand hype rather than fundamentals.
Common Misconceptions About Luxury Assets
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They always appreciate – most do not and require pristine preservation.
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Designer labels guarantee value growth – not all items from a brand gain value.
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Physical assets are safer – risks include theft, damage, counterfeits, and high upkeep costs.
Real Wealth-Building Strategies
- Investing in yourself – build your earning potential through career growth.
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Reviewing your KiwiSaver – ensure your contributions and fund align with your goals, especially after recent changes.
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Building an emergency fund – aim for 3–6 months of household expenses in accessible cash. Luxury assets won’t pay urgent bills.
Key Takeaways
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Luxury assets include watches, wine, cars, and handbags.
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These items are illiquid and risky compared to diversified funds.
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Birkin bags outperformed the S&P 500 in one study, but practical barriers remain.
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Luxury assets require storage, upkeep, and careful resale to realise gains.
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Real wealth comes from strategic planning, not hoping a handbag will fund retirement.
Next steps:
For practical strategies to build real wealth beyond lifestyle assets, talk to Lighthouse wealth today.
If you’d like to learn more, check out these other episodes below.
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Disclaimer:
The information in this article is general information only, is provided free of charge and does not constitute professional advice. We try to keep the information up to date. However, to the fullest extent permitted by law, we disclaim all warranties, express or implied, in relation to this article – including (without limitation) warranties as to accuracy, completeness and fitness for any particular purpose. Please seek independent advice before acting on any information in this article.
