The Smart Girl’s Guide to Finance: Why a watch is a sound investment

If you’re looking to diversify your investments, a good watch may prove to be a prudent choice

Collecting watches has largely been a bastion of the old boys’ club. However, the rise of social media, increasing consumer awareness and more disposable income have meant that a new breed of watch collectors—including women and millennial buyers—are investing in timepieces. Often considered an essential accessory to amp up an outfit, watches are becoming a new asset in investment portfolios.  

To be sure, financial advisors will offer several places for you to park extra money—stocks, bonds, gold and real estate. But, if you’re looking to diversify your investments, a good watch may prove to be a prudent choice.  

Assessing the performance of various asset classes in their 2022 report titled ‘Collectibles Amid Heightened Uncertainty and Inflation,’ Credit Suisse and Deloitte believe watches and luxury handbags beat most other collectables when it comes to annual returns. In the same report, Credit Suisse and Deloitte found that wristwatches—and jewellery—saw “moderate single-digit returns” on average. Rolex collector watches, however, “outperformed by +8 per cent,” thus, delivering notable returns despite the pandemic-induced downturn and enduring macroeconomic and geopolitical shifts. “Rolex watches appear to be the ideal inflation-proof, all-weather stores of value,” said the report. 

Watches can signify social status or be a medium of self-expression. They also make perfect gifts for rites of passage and landmark moments in people’s lives, say Sonia Fazlali- Zadeh of Gurr Johns and Jay Makhijani, managing director, Simone Ventures Pvt. Ltd, which operates the official flagship Rolex store in Mumbai . “A watch is the only investment that you can wear, go swimming with it, and it still appreciates in value. There is no other asset in the world that appreciates like a watch does. If you look at any other investment, like art—you will spend more money on maintaining it. Most watches don’t need to be serviced for five years, so have a machine on your wrist, which is ticking at 28,800 vibrations per hour with one or two drops of oil,” says Makhijani. “Here is an asset that keeps time accurately, looks good, appreciates in value, gives you social standing when you’re at a party and, above all, is something you enjoy wearing .” 

With this guide, experts take us through the investment aspect of picking a luxury watch to help you make a more informed decision.

What to look for in an investment watch

To begin with, you have to love it. That is half the battle won. Makhijani, as well as experts from auction house Christie’s say that other crucial factors come into play that make some watches better investments than others. At the top of the list is scarcity—the fewer the number of pieces in the market, greater is the likelihood that the demand will outpace supply, making it a coveted piece. This is, perhaps, why the value of watches like a Rolex or Patek Philippe appreciates as soon as you buy it because they are so hard to score in a store. Another important consideration is the watch’s condition, especially if you buy one from the secondary market. Knowing the service history and provenance of the watch—whether it has been worked on, if original parts have been serviced or replaced, whether it has been polished—could affect its value. Beware of so-called “frankenwatches”—those which have been faked or a genuine watch that's had a part replaced.

Buy from a trusted source

Always buy from respected industry sources—an authorised dealer, a brand boutique, a reputed e-commerce site or an established auction house. However, some watches can take a while to make it to stores, so if you look at buying a watch on the secondary market, buy it from a trusted source, like auction houses (such as Christie’s, Sotheby’s, SaffronArt). A long-standing reputation in the market and an impeccable track record are a few considerations when choosing a source. Avoid “too-good-to-be-true” deals because, more often than not, they are just that. Also, find an authorised and reputable dealer who can verify a watch’s service history and provenance before you make a purchase. 

Bet on a blue-chip brand

When picking an investment watch, choose a brand that has consistently appreciated rather than a hype watch. “About 80 per cent of the watches sold at auction houses are from Patek Philippe and Rolex. That’s not to say that there are no other great brands. "In recent years, Audemars Piguet and indie watch brand F.P. Journe have emerged as contenders for this third spot," says Nair,” says Nitin Nair, associate specialist, watch department, Middle East–India–Africa–Russia, at Christie’s.

But not every expensive watch is a good investment. While there may be a momentary spike in demand for certain hype watches, which sell for a premium, the dust will eventually settle. “There’s been massive volatility in prices regarding certain watches recently, but prices for classics have remained stable. The asking price of a vintage Rolex ‘Paul Newman’ Daytona (watch) has remained constant over the last 18 months; I can’t say the same for a modern Patek Philippe Aquanaut, Nautilus or a Richard Mille,” says Nair. 

Buy what you love

No matter what the returns on the watch are, the first rule of thumb should be to buy what you love. “It’s important to find the right balance between buying something that you would cherish owning and something that’s collectable and likely to grow in value. For most, this is a passionate hobby—it would be wrong to treat this as the stock market,” says Nair. “I know collectors who took a leap of faith and bought an F.P. Journe when the company was relatively new, in the early 2000s. An early Journe wrist watch with a brass movement can now fetch up to $450,000.” Having said that, rarity, condition and provenance remain key. Every watch that has fetched a record price at auctions has ticked these boxes. Finally, before you consider an investment watch, try it on. The way the watch looks and feels on your wrist is critical.

Take care of your investment

Maintaining a paper trail is important. Proper documentation can add value to your watch in the secondary market. Collecting watches is an exciting prospect, but it requires upkeep, says Fazlali- Zadeh in her piece, ‘Watches and Jewelry: Tested Stores of Value’ for the Credit Suisse and Deloitte report. “Watches need special attention: Automatic watches are best kept on watch winders in the safe and not just flat on a shelf. If worn, they need to be serviced, but care needs to be taken with vintage watches as some parts can be replaced, polished or changed to “better the service” of the watch, but devalue it by losing its authenticity, patina and originality.” It is critical to note that if a watch is serviced, it needs to be resealed and pressure-tested to keep it water resistant. “It is also important to assess the strap and clasp – replacing a worn strap or a loose clasp is significantly cheaper than repairing a watch that has fallen off the wrist,” Fazlali-Zadeh writes. Moreover, getting regular valuations for your watches is essential to reduce the risk of being underinsured.

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