Bottoms Up: Investing In Rare Whiskey, Designer Handbags, And Classic Cars

(Source: Knight Frank Luxury Investment Index, Real Assets Adviser, April 2021. Graphics Mari Adam)

You already know that residential real estate and the stock market have racked up solid price gains over the past year, but they are far from topping the investment charts. Luxury goods like art, classic cars, and fine wine have set even more ambitious price records, despite the uncertainty caused by the pandemic.

In 2020, luxury goods were among the most popular collectibles coveted by wealthy international investors. The global market for art alone topped over $64 billion in 2019, but did pull back slightly in 2020 as in-person auctions and gallery sales were sidelined in early 2020 by the pandemic, only to pick up later in the year as sales moved online.

Prices for designer handbags, a top collectible, were up 20% in 12 months, according to the Knight Frank Luxury Investment Index. One reason for the strength in luxury bags, sporting brands like Chanel, Louis Vuitton, and Hermès? Handbags are traded easily over online auctions, which were unaffected by COVID.

Rare whiskey, fine wines, and vintage champagnes showed high demand as well. No surprise, say experts at Knight Frank, confirming that “drinkable investment asset classes have always done well in a downturn.”

So what luxury items generated the decade’s top price returns, according to elite bankers and wealth advisors? Check out the breakdown above showing the top five luxury investments over the past 10 years.

The Takeaway: Stocks, bonds and ETFs are nice, but some well-heeled investors (including a few of our clients) prefer to put at least some of their money into vintage Mustangs, fine wine, or collectible jewelry they can actually wear. Not only do they get to enjoy their purchase, but as the chart above shows, they can even turn a tidy profit!

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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