Are Luxury Watches a Good Investment?

The short answer to this question is that they can be. Picking a watch that will hold, or even increase, its value over the years is more of an art than a science. Some collectors lose money, others make millions, and many more land somewhere in the middle, making small but steady profits through buying and selling luxury watches.

If you're just looking to make a quick buck, watch collecting may not be for you. No matter how carefully you follow this or any other advice, there are no guarantees that your luxury watch will make you money. So why risk it?
For one thing, it's tangible. As Christie's vice president told Bloomberg writer Katya Kazakina, people like having an investment they can wear and enjoy. A luxury watch is a status symbol. Having one on your wrist gives you a certain reputation, and that doesn't change even if the watch doesn't bring in the money you had hoped it would.

For another thing, vintage watches are part of history. Collectors enjoy the craftsmanship of the casing and the intricacy of the gears. While technology chases after the latest innovation, watches are often prized for their time tested mechanics. But not all vintage watches are treated equally. Men's watches are considered classic testaments to fine workmanship. Ladies' watches are more often seen as jewelry, and don't get the same reaction out of watch enthusiasts.

Time Magazine warns prospective collectors that the watch market is unpredictably fickle. Rolex is so successful partly due to their marketing, but also because James Bond wears one. At any given moment, a prominent collector or pop culture icon can make a decision that influences the entire industry.

That's one reason why Jack Forster strongly encouraged New York Times readers to focus on buying watches that they would enjoy owning. Unforeseen swings in the market could have you hanging on to a watch for much longer than you had anticipated, waiting for its value to rise.

This unpredictability makes buying new watches especially risky. Even buying from a leading brand like Cartier can be a disappointment. Some models hold their value extremely well, while others decline rapidly. Buying older watches is one way around this obstacle, as you can look back over their history to see if they have risen or fallen in value.

If you are determined to buy new, Rolex watches are the safest bet. Of all luxury brands, they are the most likely to bring a solid return on your investment. Their Sports watches, particularly the Submariner and the Daytona, have done the best over the years are most likely to continue improving into the future.

The third brand most likely to guarantee a profit is Patek Philippe. The problem for most new collectors, however, is that they are so expensive. Yes, if you manage to acquire a Patek watch, it will very likely make you money. Unless you have a very large discretionary income, however, you may not be able to start out with a Patek.

This is especially true if you are looking to buy a vintage watch. There is no clear definition for when a watch becomes vintage, but generally collectors become interested once it is around 20 to 30 years old. Because these watches have already established their reputation, they are a much safer investment than new models. On the other hand, the fact that they are already proven shows itself in their price tag. If you are hoping to make money in your investment, you probably don't want to start with such a large outlay.

A middle of the ground approach is to buy pre-owned, which would be any used watch that isn't yet old enough to be called vintage. They are cheaper than either new or vintage models, and have enough of a track record to give you a good idea on how well they will hold their value. Of course, to make top dollar, you will have to wait until they become vintage before seeing any return on your investment.

When buying used, don't search for perfection. Watches that have been dinged up by use can be restored by professionals like Thomas Perazzi of Christie's in Geneva. A properly restored watch can more than triple in value. And in many cases, restoration is not even needed. While the American market prefers a watch to be in brand new condition, many European and Asian markets are willing to overlook a few flaws to preserve the original parts of the watch.

In short, the value of luxury watches is in a near constant state of fluctuation. If you have the passion of a collector for well made timepieces, buying the right Rolex, Cartier, or Patek can turn a fascinating hobby into a lucrative investment. If you are just looking for a safe and easy profit, however, it's best to look elsewhere.