Timepieces are attractive “alternative” investments because they are a good hedge against inflation. In fact, a good investment-grade watch can maintain at least 80% of its original value. That’s not bad considering the yearly inflation rate hovers around 2.5% – 4% per year.
An excellent investment-grade watch on the other hand will appreciate in value, potentially doubling or tripling a $10,000+ investment over a span of 10-20 years.
However, before you make any such big purchase, it’s highly recommended that you consult a timepiece expert on the matter. Also, keep in mind that when it comes to “alternative” investments, you shouldn’t invest more than 10% of your portfolio in them.
What Separates an Investment-Grade Watch from the Rest?
Anyone who’s seen Pulp Fiction knows the unique story surrounding Butch’s heirloom watch in the film. That humorous scene in the movie highlights several factors that make Butch’s watch a good investment-grade watch, such as rarity and history (although in Butch’s case, his “investment” watch loses points for condition due to its unique “storage” conditions).
Selecting an investment-grade watch with one or more of the following factors will increase its value:
- Rarity: Limited Edition watches will always command a premium. Anything 2,500 or less is considered “limited edition.” The more limited the watch is, the more valuable it will be.
- Brand: There are many luxury brands out there (Cartier, Piaget, etc.), but Rolex and Patek Philippe are the blue-chip brands that consistently appreciate in value – value which comes from the materials, time and craftsmanship required to build each individual watch.
- Controlled Distribution: Consistent pricing is also determined by the distribution network of the brand. If the watch you want is 50% less online compared to the retail price in-store, this inconsistency will affect the watch’s resale value. Generally, the best investment-grade watches won’t be discounted. They’ll sell at or near full price.
- History: Is the watch tied to any famous person, event, or did it have an interesting “history” like Butch’s watch? Documented evidence of your watch’s history will help increase the value of your investment.
- Condition: Like many mechanical devices, the physical/functional condition of a watch has a direct effect on its value. The better the condition, the higher the value.
According to Elizabeth Hsu, owner of Brightime by Championtime, these are the 5 hottest luxury timepieces to invest in (2014):
Now that you know a little more about what makes an investment-grade watch valuable, let’s get down to what makes an investment-grade watch and which ones to check out in 2014!
#1 Patek Philippe
Models to Invest In: Aquanaut and Nautilus Series
Price Range: $50,000+
“If there’s one watch brand that’s almost certain to increase in value over time, it’s Patek Philippe,” says Elizabeth.
Then again, the ridiculous price of a Patek Philippe timepiece is enough to keep it out of reach of most buyers, which is a huge reason why it holds its value so well.
They’re incredibly complex, hand-made works of timekeeping art that take up to one year to assemble. Plus, Patek Philippe only makes about 50,000 timepieces a year.
The Aquanaut and Nautilus series are an especially good choice – if you have the capital!
#2 Audemars Piguet
Models to Invest In: Royal Oak Offshore Series
Price Range: $20,000-$70,000+
Audemars Piguet timepieces share many of the same traits that distinguish Patek Philippe from competitors.
“They’re exclusive, unique in appearance, hand-made, and only a very limited number are made each year,” relates Elizabeth.
How many are made each year?
Only around 26,000 are made, making Audemars Piguet timepieces even more exclusive than Patek Phillipe timepieces on an availability level.
The Royal Oak Offshore series is particularly prized by collectors as being the ultimate stainless steel luxury watch to purchase.
Models to Invest In: Big Bang Chronograph and Big Bang King
Price Range: $20,000-$40,000+
A relatively “new” brand on the investment-grade timepiece scene, Hublot has made its way onto the wrists of many collectors.
That’s because Hublot follows a relatively simple formula, which includes expensive materials, style that mimics that of Audemars Piguet, and exclusivity (only an extremely limited number of timepieces are released per model).
“Hublot has numerous limited edition models that it releases each year, and anything ‘limited’ definitely appeals to collectors looking to get a good return on their timepiece investment,” states Elizabeth.
The Big Bang Chronograph and King models are quite popular with collectors.
Models to Invest In: ANY (the more limited the model, the better)
Price Range: $10,000-$25,000+
Yep, I’m not kidding – any Panerai watch is a good investment on the basis that every model released is “limited edition.”
Depending on which model you pick up, it can be part of a series of 500-4,000 produced that year, making Panerai an enticing brand for collectors.
“Panerai watches are very popular with collectors looking for an affordable investment-grade timepiece that provides a good return on investment, even after holding onto the watch for just a few years,” says Elizabeth.
Another reason why Panerai watches highly desirable is their timeless, elegant appearance.
Models to Invest In: Perpetual Sport Models (Submariner, GMT-Master II and Daytona)
Price Range: $10,000-$70,000+
Rolex is probably the most recognizable watch brand out there. In fact, to many aspiring watch collectors, Rolex is considered a must-have entry-level timepiece investment.
Of course, you can attribute the popularity of Rolex to great branding and an attractive, instantly recognizable appearance.
“Don’t expect Rolex timepieces to drastically increase in value in just a few years. It will take 10 years or more to see a decent increase in value,” relates Elizabeth.
Models that are popular among collectors include the Submariner, GMT-Master II and Daytona models.
A Special Note for First-Time Investment-Grade Timepiece Investors
As with any investment you’re thinking of getting into, do your research by checking out forums and wristwatch publications such as HODINKEE to educate yourself further on timepiece investment.
If you’re new to the investment-grade watch buying game, there are two VERY important things Elizabeth recommends doing to ensure your watch investment maintains or increases in value.
First, you need to keep your watch in excellent condition. That means taking it in for servicing and maintenance when you notice problems (or at least every 5 years just to be safe).
If you own a diving watch, it’s probably better that you don’t take it out with you on your next diving trip to Indonesia or Thailand.
“If you enjoy diving, it’s a better idea to buy a cheaper model to use as a diving watch (Seiko, Invicta, etc.) instead of diving with your investment,” says Elizabeth.
Second, make sure you hold onto the box, packaging materials, and the certificate of authenticity – DO NOT throw them away!
“Unless you want to lose up to 50% of your watch’s value, keep the packaging materials, because watch collectors expect to receive the box and papers when buying an investment-grade timepiece,” warns Elizabeth.
Do you include investment-grade timepieces in your investment portfolio? How have they fared as an investment? Share your experience with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!