The Smart Girl’s Guide to Investing in Luxury Handbags

We round up sage advice from experts to help you navigate the process of buying an investment-worthy handbag

While this is not the financial tip you’re likely to pick up at the golf course or at a family dinner, it’s one you’re definitely going to love. Collectibles such as luxury handbags–yes, you read that right–are emerging as sound financial investments.

Assessing the performance of various types of asset classes in their latest report titled Collectibles Amid Heightened Uncertainty and Inflation, Credit Suisse and Deloitte reflect that luxury handbags and watches beat most other collectibles when it came to annual returns. Handbags from luxury brands Hermès and Chanel received a special mention in the report as alternative investments that delivered notable returns even amid the pandemic-induced downturn and enduring macroeconomic and geopolitical shifts, providing, unexpectedly, the most effective shield from rising inflation.

Run that past a financial advisor and chances are that they will pull out a bouquet of Excel sheets vouching for traditionally more reliable, mainstream asset classes such as gold and real estate. To give the devil its due, not all handbags are created equal. However, pick the right one and it can offer “significant diversification benefits,” experts say. According to the report, in 2020, the returns on collectibles sold were exceptionally good. For instance, Chanel bags were up +11.8 per cent and Hermès’ Birkin bags up by +38 per cent. In 2021, the returns for Chanel handbags were up by 24.5 per cent, a trend that was “likely boosted by the scarcity of Lagerfeld-designed bags.”

‘Passion’ investments are gaining popularity as people are looking for alternative investments to put their money with better interest rates. “Collectible Handbags is a sector that is seeing a significant increase in value,” says Lucile Andreani, Head of Department, Handbags & Accessories, Auction & Private Sales, EMEA, Christie’s, explaining that the phenomenon of the “It Bag” ended with the financial crisis in 2008, when shoppers started looking for pieces that would hold value over time.

The COVID-19 pandemic has cemented this view, changing what women want from their handbags. Consumers are walking past that shiny carousel of trendy Instagram stars to head straight towards the classic, iconic pieces from established luxury brands such as Hermès, Chanel and Louis Vuitton to build their collections, preferring to put their money into objects of lasting value rather than fleeting indulgences.

We speak to experts who help you navigate the process of buying an investment-worthy piece of arm candy. They also offer you a few tips on how to keep that investment safe.

Buy from a trusted source

As with all investment-worthy asset classes, go to a trusted source. While a savvy buyer is undoubtedly on the hunt for a good deal, always buy from industry- respected sources, the experts at Christie's say. Whether it is purchasing from a brand outlet, or at an auction, a vintage boutique or even an e-commerce resale site, do your due diligence and buy from a trusted source. Be wary of “too-good-to-be true deals,” for more often than not, they are just that. It is also crucial to keep every piece of documentation that comes with your purchase, as they come handy during valuations and repairs.

Develop an eye for detail

Quality should be the top consideration, whatever the brand may be. Impeccable hand-crafted goods will always command a premium over assembly-line constructions. Do your research and consider what that piece is worth on the secondary market even if you don’t anticipate selling it in the future. The value it holds on the secondary market will be an indicator of how good your investment is. Moreover, a well-made piece will stand the test of time, making it a worthy investment should you sell it on the secondary market or choose to hand it down to the next generation. Pay special attention to the bag’s hardware and manufacturing, as it will always be among the highest indicators of value, say experts.

Pick a winner

Always pick the top performers rather than a maverick. Brands such as Hermès and Chanel have consistently proved to be good picks. “They are coveted and collectible on the primary market, which leads to bags that are valuable on the secondary market,” says an expert from Christie’s. “The iconic Birkin and Kelly bags by Hermès, for example, have enjoyed a ‘must-have’ status in fashion and pop culture for years. Chanel bags, particularly the flap bag, have enjoyed a similar status in pop culture. Over time, and especially in the last two years, the growing scarcity of these fine, hand-crafted items has augmented their value as collectibles,” says Minal Vazirani, co-founder and president of Saffronart, a leading international auction house. “For example, the cost of a classic Chanel flap bag has risen by 60 per cent since 2019 and the company plans to limit a buyer’s annual purchases, contributing to a growing secondary resale market value,” she says.

Quality, quality, quality

“I would recommend saving up for the bags of your dreams that would be timeless and look for the best quality, something that you can enjoy a lifetime and pass to the next generation,” says Andreani of Christie’s. The best haven for your investment is the leader in the secondary market for handbags–Hermès. “The most collectable pieces are classic models such as the Kelly and Birkin, as well as limited-edition, rare and runway pieces from the 1990s and early 2000s when Jean-Paul Gaultier was creative director. Chanel pieces from Karl Lagerfeld’s tenure are highly collectable. We are seeing a renaissance of vintage-style handbags on the primary market, which is driving sales on the secondary market,” she says, recommending a black leather Kelly 28 or 32 or a brown leather Birkin 30 or 35, that are classic and absolutely timeless.

At Hermès, pick from the Birkin, Kelly and Constance. At Chanel, bet on the classic flap bag. When it comes to Louis Vuitton, the classic pieces, especially with the Vuitton monogram and pieces from its iconic travel collection, will continue to hold their value, say experts at Christie’s. At Dior, the go-to piece would be the Lady Dior bags in a classic colour and material, while at Fendi, the Peekaboo bag would serve as a good buy.

Maintain the value of your investment

To be sure, “there’s a growing resale market for bags, given the current scarcity and the growing interest (and move) towards sustainable fashion that creates longer term value,” says Vazirani. So while you enjoy your investment, be sure to pay extra attention to maintaining it. The condition of your bag will determine its value in the secondary market. At the recently concluded Saffronart’s Online Auction of Art and Collectibles (on behalf of Directorate of Enforcement), June 2022 , a 2003 Hermès Birkin estimated at ₹ 3-6 lakhs was sold for ₹ 11,09,920. Meanwhile, a 2015 Hermès Kelly, estimated at ₹ 4-6 lakhs, went under the hammer for ₹ 12,91,360.

To begin with, maintain a paper trail. Proper documentation can add value to your bag in the secondary market. Store your bags properly; ask for expert advice on how to maintain your purchase. This would entail everything from sending your bag to a handbag spa to storing it with appropriate packaging. The condition of a bag’s interiors are just as important as its exterior during valuations. So invest in an insert organiser, and steer clear of loose pens and lipsticks–the faintest mark can reduce a bag’s resale, says an expert from Christie’s.

Stay true to yourself

Whenever you want to invest in a handbag, invest for yourself and buy something that you can enjoy for a lifetime. It’s important that your handbag collection is an extension of your style and personality. “Buy a colour you like and that suits you. If you like red, and usually have colourful bags, focus on something that suits you and that you will enjoy the most,” says Andreani.

Cherry-pick the winners

Source: Andreani for Christie’s

₹ 1-5 lakhs

Buy a Hermès Evelyne or a Bolide.

₹ 5-10 lakhs

Pick a Birkin, a Kelly or a Constance in leather; preferably limited editions.

₹ 10 lakhs+

Go for a Hermès Kelly, Birkin or Constance in exotic materials such as crocodile, alligator, lizard and ostrich.

Also Read: The Smart Girl’s Guide to Finance: How to plan for your retirement fund

Also Read: The Smart Girl’s Guide to Investing in Jewellery

Also Read: The Smart Girl’s Guide to Choosing Insurance