Are Chanel handbags a good investment? Sort of.
You often hear or read that Chanel bags are a better investment than the stock market or buying a home! While it’s definitely true that the retail price of Chanel bags has skyrocketed over the last few years, are they really a good investment?
Let’s define a good investment as follows: the process of investing money or capital in order to make a profit. So for a Chanel handbag to be a good investment, first you need to purchase the bag and then sell the bag for a profit.
This is where the investment part gets tricky. There is only one way you can make money on a Chanel handbag: buy the handbag, take extremely good care of it and resell it after many years.
Let’s say you purchased a Chanel medium flap in 1990 for $1,150; the retail price at that time. It’s now 2016, 26 years later and that same Chanel medium flap bag costs $6,300 Canadian dollars. If the purse is in very good condition you can resell this vintage bag on your own for $3,000 - $3,500 less your fees (PayPal or EBay) or have a reseller sell the handbag for approximately $4,000, where after their fees, on average, you would make $2,800. Yes, you made a nice profit of $1,650 but, let’s not forget it took 26 years. If you invested $1,150 in 1990 in the stock market at an average annual return rate of 6% in 2016 your investment would be worth $5,231. So, if we're talking good investments, 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? We estimate around 7 years.
Let’s say you purchased a Chanel medium flap bag in 2009 for $2,695. You could try to resell the bag yourself for $3,500 - $4,000 or put the bag on consignment and sell for $4,500 (less fees) so you would make approximately $3,150. We can see here you have made a slight profit depending on how much the bag sells for. The key to “investing” in a Chanel bag is to always invest in classics because you can only resell and make any money with bags that remain in style and the classics do. The Chanel flap bag has been around since the mid 1950’s and this classic style is more in demand than ever before.
We are not trying to discourage you from using creative accounting when persuading your spouse to buy a Chanel handbag, but we do want to provide a realistic perspective of what you can expect your rate of return to be when “investing” and selling. Our bottom line is that we think you should buy what you love, enjoy it and keep it in your arsenal when you go out and want to look your very best.
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