When investors think of alternative investments, they typically consider hedge funds, private equity, structured products, derivatives, or cryptocurrencies. But recently, a more unexpected asset has entered the spotlight: the Hermès Birkin bag.
Luxury resale platforms like Rebag and Baghunter report that Birkin bags have averaged a 14.2% annual value increase, outpacing the S&P 500’s long-term average return of roughly 10.5%. Like other collectible assets—fine art, vintage cars, and rare wines—luxury handbags can outperform traditional markets. However, this growth tends to unfold over long periods and is usually limited to select high-demand items. Success in this space requires a discerning eye for selecting assets with long-term appreciation potential.
Investors eyeing collectibles should also understand the dispersion of returns—a financial concept referring to the variability in returns across a group of assets. In markets like luxury goods, only a few items deliver outsized gains, leading to high dispersion, meaning a wide range of outcomes. While standout sales may dominate headlines, they don’t reflect the average performance—most items won’t deliver exceptional returns.
Beyond performance variability, collectibles come with notable costs and complexities. These markets are often niche, with access restricted to those with prior purchase history or those paying for premium membership tiers on specialized platforms. Transaction costs can be high, and investors must account for storage, security, and maintaining documentation and authentication. Collectibles are taxed less favorably than traditional investments—capital gains are taxed at 28% versus the 15% to 20% long-term capital gains rate applied to stocks, bonds, and real estate.
So why do some investors still pursue collectibles despite the hurdles and uncertain payoff? For one, they can offer portfolio diversification, as collectibles often have a low correlation with traditional markets and may serve as a hedge against inflation. But perhaps more compelling is their intangible appeal: status. Owning a Birkin, a vintage Rolex, or even an original Thomas Kinkade painting is a flex—it signals prestige and exclusivity.
Despite the allure, it’s crucial to recognize that collectibles are unreliable for long-term financial planning. You’re not going to retire on a Nike sneaker collection. Traditional investments provide liquidity and pricing transparency—you can sell stocks tomorrow, even in a down market. Not so with a rare handbag or collector car. These assets lack real-time pricing and are troublesome to transact. Much like a home, their value may appear stable because it isn’t marked to market daily—but that doesn’t mean it’s immune to decline or easy to sell.
At the end of the day, are we investing or are we merely justifying discretionary purchases? For the wealthiest investors, collectibles may be part of a lifestyle portfolio. But for the majority, they’re indulgences, not investments. And while technology has made it easier to enter collectible markets, it’s best to regard them as a hobby with a potential upside. If you’re passionate about an item and can afford it, buy it—but enjoy it for what it is, not just for what it might be worth someday.
If you have questions on adding alternative assets to your portfolio, the experts at Henssler Financial will be glad to help:
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- Email: experts@henssler.com
- Phone: 770-429-9166
Listen to the April 12, 2025 “Henssler Money Talks” episode.
This article is for demonstrative and academic purposes and is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
