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Can Branded Bags Ever Be A Good Investment?

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Eugenia Liew

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There are lots of ladies in Singapore who have a weakness for branded bags. Heck, we’re even starting to name our kids Chanel and Prada. Now, imagine if these designer arm candy weren’t just a big waste of money, but investments instead?

It might sound like a fantasy for any designer bag addict to imagine that she can buy her dream bag and still make money from it later on, but it’s true – some pieces accrue in value and end up selling for several times their original purchase price.

Here are two bags that have withstood the test of time, and then some.


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Branded bags known for their investment value

1. The Hermes Birkin or Kelly bag – 14% to 16% year-on-year price increase

When it comes to designer bags, Hermes is in its own league. For most people, Chanel is the sky. Hermes adds a zero to the price tag – the bags can cost as much as US$150,000. In fact, the most expensive handbag sold is a vintage 10-year-old Hermes Birkin that was auctioned off for £162,500 (~$285,583.30) in June this year.

Of course, not every Hermes bag is worth that much. And while most Hermes bags generally appreciate in value, the most coveted and valuable one is the Birkin and Kelly. Since 1980, the bags’ average annual return is about 14% to 16%.

Much of the hype comes from how exclusive and scarce the supply is. You can’t just waltz into a boutique and buy the bag. There are forum threads and handbag blogs that actually discuss the strategies and tactics for buying a Birkin/Kelly because it seems that even if you have a 10 grand to spend, you need to pull strings and prove your “worth” to cop the bag.

2. The Chanel 2.55 or Classic Flap bag – 70% price increase from 2010

Featuring puffy black quilts and a CC clasp, the Chanel 2.55 is perhaps the brand’s most iconic piece. It’s THE investment piece to get: many branded bag enthusiasts have studied the price history of this bag since its debut in 1955, and the prices has never dipped once. In 1955, it sold for US$220 (~S$303.68). Today, it is selling for S$7,990, which is 25X more.

For over 60 years, the Chanel bag has steadily appreciated regardless of the economy, which is more than anyone can say for a lot of other “investment products”. There were some years when the increase was marginal and only adjusted for inflation, but the prices actually increased by more than 70% from US$2,850 in 2010 to US$5,900 today.

Compared to the Hermes Birkin and Kelly, the Chanel investment is a much more achievable target.

 

So I should invest in branded bags then?

Eh… Not exactly. It’s important to set your expectations straight, and I’m sorry to say that it isn’t realistic to shop your savings empty and expect to be sitting on a goldmine 10 years later.

The vast majority of branded bags not only do not qualify as investments, but they rapidly lose their value once you step out of the boutique. You know, kind of like Lamborghinis.

So in general, as long as your arm candy retains most of its value and can be resold at a decent price after you’re bored of it, you’re good. Don’t expect a profit; that’s a bonus.

Here are some tips to help you choose your handbag investment piece.


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1. Pick the designer carefully and research its price history

There’s no knowing the future, but you can make a good guess based on the past. Of course, a large part of it depends on how well you take care of your “baby” (more on that later), but some branded bags are known to have lousy resale value, regardless the condition of the secondhand bag.

Some of those that hold up quite well include Hermes, Chanel, Dior and Celine. In contrast, Balenciaga, Mulberry and Proenza Schouler seem to depreciate quickly.

 

2. Consider taking a gamble on limited edition or rare bags

We’re talking about very expensive, rare bags with diamond-encrusted clasps and leather from some extinct serpent or something. Case in point: the Hermes Birkins that break records at Christie’s auctions are all limited edition pieces.

However, it’s prudent to note that investing in limited edition pieces is risky business. It is very much dependent on the brand’s future trajectory, as well as how tastes evolve in future.

Also, it’s more likely to work for super high-end, established brands. I wouldn’t hold my breath if you’re eyeing a seasonal it-bag from a contemporary designer – those go in and out of fashion in a heartbeat, and will very quickly become a heap of tired, out-of-fashion leather.

 

3. Play safe with classic designs and colours

The only reason why some bags end up profitable is because the brand or bag somehow managed to stay relevant after 10, 20 or 30 years. It’s hard to predict so far ahead, but if you want to play safe for at least the next few years, invest in a classic design or colour.

There’s no hard and fast rule for this, but I personally enjoy shopping for good second hand deals, and I’ve realised that classic colours like black and beige tend to retain their value better. Seasonal colours like red, blue and yellow are typically harder to sell, and I’m guessing it’s because they’re hard to match.

In terms of design, every brand has a few models that they make year after year (e.g. the Balenciaga City, Chanel Flap, etc). Invest in those: They’ll be easier to sell and are likely to fetch a good price because they’re still on the shelves.

That’s all there is to picking the investment handbag. Now, here are some tips for after you swipe your credit card.

 

4. Keep your branded bags in pristine condition

As mentioned, it goes without saying that the better condition your bag is in, the more you can sell it off for later.

We all know it’s hard to care for these bags without compromising functionality. I’ll even go as far to say that as long as you use it, there is bound to be a bit of wear and tear somewhere.

But whether it’s softened leather or severe scruffing, these damages can cause your bag’s value to plummet drastically. Here are some tips to extend your bag’s glory days:

  • Store your bag in its original dust bag.
  • Stuff your bag with paper so it doesn’t lose its shape.
  • Don’t let your bag get wet.
  • As much as possible, keep your storage space clean and dry. Humidity encourages mould growth.
  • Regularly clean and condition your bag with a good leather cleaner and conditioner.

 

5. Keep all the original accessories and receipts for proof of authenticity

These days, there are many peer-to-peer selling platforms for people to sell their branded bags. The most popular one is Reebonz (there’s White Glove and Closets), and the benefit of it is that Reebonz authenticates the bags for the buyer so there’s no question of authenticity. The problem is that they take a cut for their service.

If you want to sell it on platforms like Carousell and Gumtree where you deal directly with the seller or buyer, then make sure you keep the receipts and care cards. Most buyers have doubts on authenticity, and will ask for it for peace of mind.


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And that’s about it! One final note: the world of fashion is a fickle one and investing in a branded bag will always be risky. Don’t count on it to give you stellar returns.

Not to be a Debbie Downer, but my advice is to only buy that dream bag if you’re sure you can afford to lose the money should the worst happen.

Would you ever invest in a branded bag? Share your thoughts with us in the comments below.

 

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Eugenia Liew

I’m a 90s millennial who’s starting to realise that #adulting is more expensive than it seems on Instagram. When I’m not writing for MoneySmart, I’m usually playing with drain-dwelling stray cats or shopping at Sephora.