Should I buy a watch as an investment?

Investment Watch

An investment in the traditional sense of the word is something which gives you a financial return on your investment. Investing in watches is a poor choice if financial return is your objective as the success rate of investors in watches is very extremely low. Most enthusiast collectors or would-be investors do not make a profit on their watches.

One common mistake of those new to watch collecting is to consider a watch as an investment just because it is expensive. Watch collecting has advantages over other hobbies, in that the collection retains some of its value and Is relatively liquid at the right price.

If you consider enjoyment as a good return on investment and you enjoy watches, then learning about what makes watches tick is something you might want to consider. The return will not be financial but the pleasure of having a masterpiece.

A stylish timepiece on the wrist is a token of accomplishment. Big Brand watches such as Rolex manage their brand image intensly because those characteristics would be attributed to the holder of their watch. True watch enthusiasts look beyond the outside and appreciated the inside of a watch even more.

Should I buy a watch as an investment?

If you are after financial returns, the answer is a clear no. If you have developed a taste for watches and you can afford them, with going into debt then start your collection slowly, and make sure your first mistakes are not expensive!

Analysis:  Should I buy a watch as an investment?

Strengths

  • Mechanical watches retain their value more than electronic watches. Electronic watches change as fast as technology does. Most retain limited value after more technologically advanced watches are released.
  • There is a market for second-hand watches, at the right price most especially from known big brand names.
  • Watches have the potential to be an emergency fund when needed; pawn shops will exchange money for watches at a discount. Unlucky tourists caught in remote border posts have used their watches to ease their way out of difficult situations.
  • Potentially there are other items which also retain their value such as knives, guitars, whisky, porcelain dolls, gold bullion and silver bullion. Each one of those has some particular advantage, but a watch has some unique qualities: A watch can be can be worn every day and carried through airports. Watches of the right kind are like an emergency fund on your wrist. Jewellery might match some of these characteristics, but they attract attention, and they do not tell you the time.
  • Watches can be inherited through generations, making a time peace part of the family history, This is the case from grandfather to father and then to son. A watch which has been worn by a father and the grandfather/s before on special occasions has a lot of emotional value attached to it. Women, tend to transfer jewellery through generations rather than watches.

Weakness

  • Watches do not produce any return, on the contrary, mechanical timepieces are required to be serviced regularly, and the price tag to do so is not cheap. This is one of the things you need to check before buying a watch.
  • Watches well above the $1,000 price tag,. tend to retain their value best.
  • Buying a watch is an emotional experience. If you are investing in the pleasure a watch can give you that’s fine. If you are looking for something that will retain part of its value in the long term, then emotions can get in the way of a rational investing decision.
  • There are other more secure investments (interest from bank accounts) which can give you some guaranteed return (even if it is sub 1% yield)
  • If you are still considering watches as an investment, despite that most collectors / investors do not make money from watches. Then you need to invest a lot of time to research the current trends and possibly how they will evolve in 5, 10, 15, 20, 30 or more years. This is no easy task.
  • Some watches are fake. Especially vintage watches, be careful when considering if you are buying a watch as an investment.

Opportunities

  • If you like watches, you can become a watch repairer or dealer; watches will always be in demand.
  • The possibility to make a profit (or avoid massive losses) in watches comes from very long term investing and very good research.
  • In rare occasions, pawn shops can price their watches incorrectly. If you are lucky, you can find an under priced timepiece in flea markets.
  • Becoming an expert in one brand is easier than becoming an expert in many.

How do you buy a watch as an “investment”?

1) Research and decide which designs and styles you like.
2) Consider on which occasions you will wear the watch. For example everyday use or special occasions.
3) Identify the qualities you want in a watch and then find the brands which have those qualities.

Examples of watches under $1000, which might retain their value in the future.

  • Go Solar Seiko
  • Citizen eco-drive

Big brand name watches

  • Rolex (Submariner)
  • Omega
  • Patek Philippe

Vintage / Second-hand watches

  • Preowned, Vintage and second-hand watches can keep their value much better than new watches.
  • Adding a ding to a second-hand watch is less painful. Emotionally then doing the same to a new one.

Some examples of Pre-owned, Vintage watches

  • Perrelet Seacraft 777
  • Stowa and Oris (cost around sound 1k)
  • Speedy Pro,
  • Submariner,
  • Daytona,
  • Santos,
  • PAM000

Gold watches: A watch can retain its value better, if some parts of it are made in gold.

Threats

  • Predicting which watch will be more valuable in the future is very difficult, if this was not the case a lot of investors would buy the piece and increase supply this wold reduce the future price and any potential profits.
  • On the way to becoming a watch aficionado accept you will make some mistakes when considering if you should buy watches as an investment, you will pay too much for some of your first timepieces.
  • It might be difficult to find parts for secondhand or vintage watches; this might hold you from wearing them.
  • You might grow out of your watch passion, leaving you with a nice collection of watches in which you have a very moderate interest in.

Conclusion

Should I buy a watch as an investment? This article is a primer on the topic, it is intended to give you some bearings on your idea of “investing” in an expensive watch. Check out these excellent resources for more information:

 

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