The luxury goods industry has a value of over USD 3 billion. A luxury good is an asset made to a high standard and often attached to a large brand. Investing in luxury goods often leads to an excellent return.
How do you know the right time to invest in such goods? This depends on the kind of luxury item you’re considering and the demand for it on the market.
Learn when you should grow your luxury goods portfolio below.
When Demand is High
If you’re a long-term investor, you’ll understand the basic principles of supply and demand. Simply put, as prices increase, consumers are less inclined to buy.
However, when Veblen goods are in demand, their price also increases. Many luxury goods are Veblen goods because consumers view them as being higher quality when they are more expensive.
Therefore, it makes sense to buy a luxury good when demand for that particular good is high. You can then sell for a profit, or wait until demand increases again to drive the price up even further.
When Something New Comes on the Market
Those who curate luxury goods are always on the hunt for the latest trending items. From the newest sports car to designer watches, adding new pieces to your luxury goods portfolio means you can sell them later for high prices.
Luxury goods often become Veblen goods as soon as they are released. As collectors seek to purchase them once they are available to buy, they often come on the market at very high prices.
To increase the value of your luxury goods portfolio, you should purchase brand-new luxury goods as quickly as you can. This will enable you to sell them back to the consumer at increased prices so that you make a profit.
When You Spot Something Rare
A rare luxury good is seen as valuable simply by virtue of being unique. Owning rare items is a status symbol that suggests a person has both wealth and a taste for finer things. If you can get your hands on rare luxury goods, you can expect to sell them for a nice profit.
Rare items are also Veblen goods. They often appear at auctions, where collectors wage war to get their hands on them even for hefty prices. Don’t let a rare piece slip through your fingers if you’re fortunate enough to find one.
Some rare luxury goods may have a rich and long history to them. You can increase their value by holding onto them for a long time and selling them years after you have purchased them.
One Luxury Good Can Boost Your Portfolio
Purchasing a luxury good for your investment portfolio will help increase your wealth. Rarer items can accumulate value over time, while Veblen goods can be sold for high prices when demand for them is high.
When you buy a luxury good for your portfolio, you should aim to make as much profit on it as you can when it comes time to sell. Therefore, like any other investment opportunity, you should purchase low and sell high.
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