So you've got some cash to burn and you're thinking of treating yourself to
something nice. Before you drop a small fortune on an impulse splurge, check
out this list of luxury items that lose value faster than a sports car
accelerates. We talked to experts who revealed why some of the most coveted
status symbols on the market today are terrible investments. Within a year or
two, you'll be lucky to sell any of these for half of what you paid. Keep
reading to find out which glitzy goods you should avoid if you want your money
to retain any value. Spoiler alert: if it's flashy, pricey and depreciates the
second you buy it, it's probably on our list. Consider this your reality check
for overpriced extravagances. You've worked hard for your money, so don't throw
it away on stuff that won't last.
Luxury Cars - High
Depreciation Makes Them a Bad Investment
Luxury cars are prestigious, but they lose a huge chunk of their value the
moment you drive them off the lot.
If you're buying a high-end vehicle as an "investment," think
again. According to experts, luxury cars can depreciate by up to 60% in the
first 5 years of ownership due to their steep initial price tags and quickly
evolving technology.
For example, a $100,000 BMW 7 Series may only be worth $40,000 after a few
years. While the luxurious leather seats and state-of-the-art features may seem
appealing now, newer models with updated tech will soon replace yours and
crater the resale value. Unless you plan to keep it for 10+ years, you'll end
up selling at a loss.
Luxury electric vehicles like the Tesla Model S also drop in value rapidly
due to increasing range and functionality of newer models. The 2019 Model S has
already lost over 35% of its initial MSRP.
The exception is limited edition, rare luxury cars with timeless styling
like certain Porsche, Ferrari or Rolls-Royce models. But for most people, a
luxury vehicle should be viewed more as an extravagance than an investment.
You're paying a premium for an incredible driving experience and status symbol.
If you want an investment that holds value, you're better off looking at
collectibles like art, antiques, vintage items or property. While a luxury
vehicle may turn heads now, its flashy appeal will fade as swiftly as its
resale value. Unless money is no object, stick to more affordable reliable
rides and invest your money elsewhere.
Designer Handbags -
Styles Go Out of Fashion Quickly
Designer handbags seem like a status symbol and solid investment, but the
reality is their value drops like a rock. Unless it's an iconic, limited
edition piece, that $5,000 purse will be worth a fraction of the price in just
a year or two.
The reason? Fashion trends change with the seasons, and last season's 'it'
bag is old news. Brands frequently release new collections to stay on the
cutting edge, and consumers want the latest and greatest. Your once coveted
handbag gets tossed aside for the newest style.
You also have to consider depreciation from use and condition. No matter how
carefully you treat it, a handbag loses value simply by being carried and
aging. Small stains, creases, or other signs of wear and tear significantly
impact the resale price.
Limited Lifespan
On average, the lifespan of a designer handbag is just 3 to 5 years before
it's considered outdated. Some brands like Chanel and Hermes retain more value
over time due to their iconic, timeless styles and superior craftsmanship.
However, you'll still lose 50-70% of the retail price when reselling even these
premier brands.
While enjoying a luxury handbag from time to time is fine, purchasing them
primarily as an investment is ill-advised. The depreciation is just too rapid.
Instead, consider investing in other areas like the stock market, real estate,
or valuable collectibles with a proven history of long-term price appreciation.
Your future self with thank you.
Jewelry - Minimal
Resale Value Despite High Retail Prices
Jewelry may seem like an investment, but the truth is most pieces lose a
significant amount of their value the moment you walk out of the store.
Minimal Resale
Value
Jewelry typically has a very low resale value, often only 10-30% of the
retail price. This is because most pieces are not rare or unique enough to hold
value over time. The materials and gemstones themselves don’t appreciate much
either. Gold and silver may increase slightly, but not enough to offset the
initial retail markup.
Diamonds are one of the worst investments. Their prices are largely
controlled by the diamond industry, not the free market. And while
high-quality, investment-grade diamonds may hold some value, the stones in most
jewelry are too small or low in quality to be considered investment diamonds.
The only exceptions are extremely high-end, prestigious pieces from renowned
designers, mint condition vintage pieces (at least 50-100 years old), and
pieces containing very large, high-quality stones, especially colored diamonds
and gemstones. But for the average consumer, jewelry should be seen primarily
as an extravagance, not an investment.
In the end, you’re usually better off enjoying your jewelry for its
sentimental value and beauty rather than hoping it will gain value over time or
provide a return on your investment. Very little in life holds its value
perfectly, so try not to get too caught up in the sunk costs. Buy what you love
and will cherish for years to come. That’s the real “value†of jewelry.
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