From The Straits Times    |

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There are lots of ladies in Singapore who have a weakness for designer handbags. Heck, Singaporeans are even starting to name their kids Chanel and Prada. Now, imagine if these designer handbags weren’t just a big waste of money, but investments instead?


Yes, you heard that right. Some designer handbags can actually end up accruing in value and being sold for more than they were bought for years down the road. It might sound like a fantasy for any handbag addict to imagine that she can buy all the handbags she wants and STILL find herself sitting on a goldmine later on in life.

But before you grab your credit card and rush to Chanel, here’s the caveat: the vast majority of designer bag purchases not only do not qualify as investments, they rapidly actually lose their value once you step out of the boutique, much like Lamborghinis. In other words, they might make you look rich, but they’ve actually just made you lose a ton of money.

If you’re concerned about the resale value of your bag, know that there just a few very rare situations in which the bag might actually prove to be an investment rather than a heap of tired, out-of-fashion leather. Still, those who are stubborn enough to go ahead should take note of the following.

Limited edition or rare bags are more likely to accrue in value

If you think anyone is going to want to pay more than a pittance for that monogram Coach bag your parents bought you as a reward for doing well in your O levels, you’re sadly mistaken.

However, there is an exception when the bag is a limited edition or rare model. Unfortunately, that often means a diamond-encrusted Hermès Birkin bag, or a Goyard made from the skin of some extinct serpent. Yes, we’re talking about very expensive, rare bags. On the other hand, don’t expect to make money on a classic Louis Vuitton Speedy.

Note that investing in limited edition pieces is a risky gamble, since not all accrue in value. That is very much dependent on the brand’s future trajectory, as well as how tastes evolve in future.

Research the historical prices of a particular brand’s bags

Everyone knows the Chanel flap bag. You know, the one that hangs off your shoulder on a chain, often with quilted leather.

The value of those bags has increased 70% in the past 6 years, largely because thanks to the growing China market there are more and more consumers willing to fork out the money for them.

Those made 30 years ago can now sell for more than 3 times the price today. On the other hand, that’s also because they retailed for less than 500 SGD back then, while the modern version of the same bag costs more than 10 times as much today. They were also in much shorter supply back then, while these days you can usually find an authentic Chanel in any given MRT carriage.

Whether these bags will continue to accrue in price is anyone’s guess. But you’d better research the trajectory of a brand over the years before buying their bags.

Remember that virtually all brands will see some degree of increase in price over time thanks to inflation. But how much a brand can increase the price of its goods really depends on demand and supply. In other words, if the gods of fashion smile on the brand and it becomes more popular, you’re in luck, otherwise too bad. For instance, while Chanel handbags have rapidly increased in value, Proenza Schouler bags have been seeing falling demand, according to online retailer Tradesy.

In addition, you’ll lose a bit of the value due to wear and tear and the fact your piece is second hand. You will need a fairly generous rise in value in order to make money on top of what you paid.

Go for brands that don’t sell their bags online

Some brands maintain online stores that enable customers all over the world to purchase their wares on the internet, while others require you to make a trip down to the store.

While shopping at the former sounds infinitely more convenient, there is evidence to show that bags from brands which don’t sell their products online tend to have a higher resale value. This is possibly because products that aren’t retailed online are usually kept in shorter supply. When you later try to sell the bag on the second hand market, it will be relatively rarer than if it had retailed online.

Keep the bag in perfect condition

Of course, it goes without saying that the better condition your bag is in, the more you can sell it off for later. Being a fashion item, any damage or wear and tear can make a bag’s value plummet drastically. Even if you take very good care of your bag, so long as you use it there is bound to be a bit of wear on the leather or fabric.

How you store the bag is also important. Other than keeping it in its dustbag, making sure it’s not suffocating under a pile of other bags heaped on top of it and never, ever letting it get wet, you want to ensure it doesn’t get damaged by humidity. Singapore’s weather can really ruin leather, suede and other materials as well as encourage the growth of mould, so it’s a good idea to minimise the humidity in your storage space as much as possible.

Considering how much these bags cost, you might be better off buying a drybox to store them in, or purchasing dehumidifiers like Thirsty Hippo. A cheaper way is to store them with silica gel, although you should take care to change the pellets regularly once they’ve reached their limit.

Finally, it’s important to note that the vast majority of designer handbags fall in value over time, whether you use them or not. So, by all means, if you can afford to lose the money should the worst happen, buy that one bag you’ve always dreamed of owning. But note that the fickle world of fashion means these are mighty risky investments, and no matter how chic you think that bag is right now, there’s a good chance it will be worth very little a few decades from now.


The original version of this story was published in Moneysmart on November 18, 2016.

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