I thought I'd write a handbag and money related post using the Chanel Classic Flap handbag as my subject since this handbag happens to be on many wish lists. However, this blog post applies to pretty much any high end luxury handbag.
It seems like there is always a price increase every few months at Chanel. It's not fair right?. Some handbags are almost double what they were 5 years ago! I've profiled the price change of the Chanel medium classic flap bag from 1955 to 2015 (see photo below) and it's just jaw dropping - Obviously $220 in 1955 is not the same as $220 in 2015 but it's definitely not equal to the almost $5000 in today's money.
So then the question arises: Given the price increases and knowing that you've always really wanted a classic Chanel handbag shouldn't you just go out and buy it right now knowing that the price is certainly going to go up again?
Let's talk about this.
Well, if your intention is to purchase the bag with the sole purpose of selling it after a few years of price increases to pocket a tidy profit (assuming Chanel maintains its allure and continues increasing prices), then yes go ahead.
However, you need to keep in mind - that if you are purchasing it as an investment piece then you need to maintain it in pristine condition and know that the more used it becomes the lower the price you can sell it for - this means a heavily used Chanel bag will most likely not fetch you the price of a brand new bag even with a few price increases. In fact you might only get a fraction of what you paid for it. Not a complete loss but still not a great investment...right?
And then you have to ask yourself - Do you really want a bulk of money sitting in your closet waiting for price increases to happen when you could very well put the money to some other use - for example:
- Pay off debt
- Invest in the stock market via mutual funds, index funds or ETFs
- Start / Boost a small business
- Self improvement - like furthering education or taking a specialized class
- Life experiences - an amazing trip with loved ones or doing something nice for family
My thoughts? No, prices increases do not justify the purchase.
I think that if you are buying a luxury item you should buy it because you truly plan to enjoy it and use it well - to me that's the whole point. And if one day you get bored of it or no longer have use for it - you can sell it and get some money back as a bonus NOT as a financial plan. This way you don't loose your mind if your bag falls on the floor by mistake or someone spills a drink on it by accident because you aren't calculating your resale value every second.
I also think that when you buy luxury you should truly be able to afford it - at which point the price or price increases won't matter that much because you won't have to think too hard about it.
Bola Onada Sokunbi
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