People who aspire to be rich always search for new investments that will shoot up their money. Shopaholics, on the other hand, spend money on fancy things that seem to serve them no monetary returns.
A new study conducted by Baghunter, however, finds that it's better to be a shopaholic as an Hermès Birkin bag is a better investment than gold or shares in the stock market.
The investigators compared three types of investments. The first one is the S&P 500, which represents the total return features of the stock market. The second one is gold, a quintessential commodity for investors. Lastly, the authors looked into the value of an Hermès Birkin bag, which is a tangible and collectible luxury property.
The results of the analysis show that from 1980 to 2015, gold had an average annual return of 1.9 percent, equating to a real return average of -1.5 percent. The stock market was more feasible with an 8.65 percent real return annual average during the same time period. However, the crown belongs to Hermès Birkin handbags as their average annual increase in value boomed at 14.2 percent.
What's more interesting is that unlike gold and the stock market, the value of the luxury handbags never fluctuated. The value of the Birkin handbags just consistently and steadily increased over the years, and is expected to double in 10 years.
The main question now is "How on earth did an Hermès bag reach that high-priced status?" One reason is scarcity. The bags are always out of stock and may only be seen carried by high-profile celebrities in the likes of Victoria Beckham and Pharrell Williams.
Hermes says the process of production is tedious and lengthy. The bags are made from premium animal skins that are hard to harvest. The luxury pieces are also hand-sewn by trained artisans in France.
"As a whole, the study findings show how stable the ultra-luxury industry has been over the past 35 years when compared to more traditional investment opportunities," says Baghunter founder Evelyn Fox. She adds that despite the economic turmoil and recession, luxury items such as Hermès Birkin handbags do not drop in value.
The infamous Hermès Birkin bag was created in 1981. The bag was named after British actress and singer Jane Birkin, who suggested to Hermès' then-CEO to offer a bag with pockets.
Photo: Wen-Cheng Liu | Flickr