Is The Hermes Birkin Bag A Good Investment?

Is the Hermes Birkin a good investment

Let's talk about the extremely expensive Hermès Birkin handbag and discussions about the Hermes Birkin Bag Investment!

The iconic Hermes Birkin and Kelly bags are considered the pinnacle of luxury handbags. Particularly the Birkin bag. And it seems like every media outlet has reported that a Birkin bag investment is better than stocks or gold.

Well here comes little old me, a reformed handbag junkie, to disagree! Let's get into it!

Hermes Birkin Investment: A Good Idea?

According to Time Magazine, "The Birkin bag outpaced both the stock market and the price of gold in the last 35 years— a time period chosen to reflect the date when Birkin bags were first produced in 1981. They say that the annual return on a Birkin was 14.2%, compared to the S&P average of 8.7% a year and gold’s -1.5%".

While the above information might be correct, in theory, the reality is that this handbag is really not a better financial investment. Below are 5 reasons why!

1. You need to get your hands on a Birkin first and preferably more than one

Yup. I'm sure you've heard how difficult it is to purchase one of these babies from Hermes. As a status symbol for the rich and for celebrities, Hermes Birkin bags are hard to get a hold of.

We can only guess that the demand is driven by exclusivity and scarcity. So, as much as you want a Birkin bag investment, you can't just walk into a Hermes store to buy one.

When one becomes available, their established clients get them first. This means you most likely have to wait, as you establish your own client profile.

You may get your hands on a Birkin once you build a relationship with a Hermes sales associate. But you'll most likely need to spend a lot of money with them to build up your spending history in order for them to call you when one is available for purchase.

What about buying from resellers?

Don't feel like waiting? Well, you can go the reseller route. However, the problem there is that the resale markup can be anywhere from ~50% to 100%. Yes, you read that right! Your Hermes Birkin investment can cost you astronomical prices.

Don't believe me? Just google "Reputable Hermes Birkin Resellers" or something along those lines and check out their resale prices.

Between all the additional spending and crazy reseller fees, you can kiss that 14.2% annual return on your Birkin bag investment goodbye.

Plus you'll need at least a few of these luxury handbags if you really foresee yourself retiring comfortably on your Birkin investment.

14.2% of let's say ~$12,000 for a non-exotic leather Birkin (Not crocodile, Lizard or Ostrich) will only be $185,000 after 30 years. Certainly not enough to retire on if retirement itself on average lasts 25 to 30 years.

2. Not everyone can shell out $10k+ outright for a Birkin investment

And we are still talking about just one Birkin bag here. Investing in a Hermès bag requires you to pay the retail price upfront. And this retail price really depends on the size of the Birkin bag and the type of leather. There's no contributing on a monthly basis for the next several years.

You miss out on the power of compounding (you have to rely on the original purchase price to increase in value). And there is never, I repeat, never a Birkin sale where you will be able to get it for a cheaper price. Curious about why the Hermes Birkin is so expensive? We break it down in this article.

3. Insuring your Birkin bag investment will cost you

Because if you are going to spend this amount of money on an expensive handbag as an investment, you sure as heck better insure that investment. God forbid your house burns down or it gets stolen.

Then what? Personal article insurance can run you anywhere from hundreds to thousands of dollars a year depending on the value of what is being insured.

4. You need to keep your Birkin bag pristine

To maintain its value, the handbag has to be in perfect, like-new condition, especially if you want to sell it. This is because, in order to get the return on your Hermes Birkin investment, you actually need to sell it.

A well-used handbag is not going to get you the same resale value as a brand new bag. Simple and short.

5. Selling your Birkin investment can be challenging

First of all, there's the whole issue of authenticity. Sure you bought the bag at the Hermes store (or from a reputable reseller) but you can't sell it back to Hermes!

Unless you are a professional handbag seller or consignor you are going to have to prove the authenticity of your Birkin bag. It means you need to have kept all your paperwork intact. And you must be able to vouch for the authenticity of your Hermès Birkin bag.

Some purchasers will even go as far as to ask for documentation from actual authenticators. And, of course, that costs money, too.

Secondly, you need to be careful about where, how, and to whom you sell. You have to make sure you don't get scammed and you get your payment in full.

Thirdly, as an individual reselling a handbag (aka a non-professional handbag seller), a lot of buyers and resellers will try to take advantage of that fact. Many will try to lowball you or take ridiculous commission fees off the selling price.

A reputable consignment service will charge you anywhere from 15% to 40% of the sales price of your item. Sure, you avoid the stress of authentication but hey everyone wants to make a profit.

Again, 14.2% from your Hermes Birkin investment.....not so realistic.

So again we ask - Birkin bag investment: Good idea? Maybe not!

Like I've said in my previous handbag and fashion posts, designer handbags, and expensive clothing are in my opinion, wardrobe investments and not financial investments.

You buy them because you love them, you expect them to last you a long time. Over the long run, using the whole "cost per wear" logic, perhaps they can even save you money.

If eventually you choose to sell your expensive items and you earn a profit, great! But it should not be the strategy behind your investment portfolio.

Is there anything wrong with owning a Birkin? Absolutely not. If it's something you love and can afford without impacting your life and financial goals, buy the bag you love!

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