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January 29, 2024

Are watches the new gold rush?

Once mere timekeepers, Mike Coady of Skybound Wealth discusses what this means from an investment point of view

With a number of timepieces becoming coveted collectibles and some pieces on resale websites for over three times the retail price, middle east news outlet Arabianbusiness.com caught up with Mike Coady from the multiple award-winning Skybound Wealth to find out why this traditional safe haven of the alternative investment world is ticking up at a fast-rate.

Once mere timekeepers, these high-end timepieces have become coveted collectibles with Hublot, Audemars Piguet, Richard Mille, and Rolex catching the eye of investors. But does this really make watches a good investment?

Financial planner and wealth adviser, Mike Coady commented:

“When considering watches as an investment compared to other types of investments, it’s important to acknowledge it’s a niche market. Unlike traditional investments such as equities, bonds, or property, watches are collectibles whose value can be more subjective and influenced by factors like rarity, brand prestige, and fashion trends.”

Undoubtedly, watches do hold potential for profits, and similar to any other asset class, a well-informed decision is the key to making a good investment. For instance, a vintage Rolex Submariner bought for a few hundred dollars in the 50s can fetch tens of thousands today. However, this form of investment might not be the right choice for those looking for short-term gains.

Watch comparison: Retail vs Resale

“Rolex watches, for instance, have shown an impressive average return on investment over five years. Specific models such as the Rolex Submariner ‘Kermit’ have seen their value more than double in a relatively short period. Patek Philippe and Audemars Piguet have led the luxury watch market in ROI, with certain models like the Patek Philippe Nautilus 57116A and the Audemars Piguet 15202ST seeing significant growth,” Coady detailed.

Richard Mille 35-02 Rafael Nadal

In a nod to one of the brand’s most famous ambassadors, tennis player Rafael Nadal, Richard Millie has made several light-weight watches for the sportsman including the Richard Mille 35-02 Rafael Nadal which having originally retailed for $145,000 in 2016, can now range anywhere up to $500,000.

There are of course no guarantees as Coady explained:

“The appreciation in value is not guaranteed and can be slower compared to more conventional investments. Also, the liquidity of watches as an asset is lower, meaning they might not be easily convertible to cash when needed,”

Investing In A Watch And Wider Financial Planning

The lack of liquidity, speculative nature, and absence of income generation make watches less suitable for critical financial objectives like retirement or education funding.

“When considering luxury watches within the broader scope of financial planning, such as retirement, home ownership, or funding children’s education, a cautious approach is advisable. Luxury watches, while potentially appealing to enthusiasts, may not align well with traditional financial objectives for several reasons,” Coady said.

The risk and volatility associated with watch investments, coupled with maintenance and insurance costs, suggest a misalignment with traditional financial planning principles focused on stability, risk mitigation, and predictable growth.

“Luxury watches lack liquidity, making them less suitable for individuals who might require quick access to funds for emergencies or other significant financial goals. The value of luxury watches can be highly speculative, subject to market trends and fashions, unlike more traditional investments like equities or bonds, which are based on underlying economic factors. The volatility and speculative nature of watch investment make it a risky endeavor for most individuals,” he explained.

So, Are Watches A Good Investment?

“In summary, while luxury watches can be a fascinating and rewarding hobby, they typically do not align well with core financial planning goals for most individuals. Focusing on more traditional and stable investment vehicles is generally advisable, particularly for essential long-term objectives,” Coady concluded.

Don’t let time pass you by. Speak to a Skybound Wealth Adviser today to learn how a diverse portfolio is key to successful investing.

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