According to a recent study, buying a Hermès Birkin handbag could be your best bet for long term investment. The study revealed that the iconic Birkin bag far outperformed both the S&P 500 and the price of gold over the last 35 years, since the first production of these bags.
Across the 35 year period, the S&P 500 returned a real return average of 8.65% with a peak of 37.2% in 1995 and an average low of -36.55% in 2008. At the same time, gold offered an average annual return of 1.9%, equal to a real return average of -1.5%. Rising by 14.2% over the same period, the Hermès bag never fluctuated downwards once. Instead, it consistently increased and escalated by as much as 25% in 2001.
So what makes them so valuable?
The Hermès Birkin bag is seen as a status symbol for the elite and super-rich with its principal appeal lying in its exclusivity. The waiting list for a brand new Birkin can be as long as 6 years and the bags cost anywhere between US$30,000 to more than $200,000.
According to researchers, Hermès bags are considered a rock-solid investment as they consistently remain desirable even when fashion trends are constantly changing. Sure, you won’t experience the same highs and lows that you would expect with the S&P500, but there is market consistency with Birkins. Over 35 years, the Birkin has only ever experienced various levels of positive fluctuation and in 2015, a single pink crocodile-skin version sold for a record breaking US$223,000.
Of course, like all investments, there is a caveat: the study assumes that the investor didn’t make any changes over the period, meaning they didn’t capitalise on good years. There’s also the issue of portfolio diversification. A Hermès Birkin bag is an all-in investment - once you sell it the entire investment is gone. Additionally, a Hermès Birkin bag is illiquid and hence demands a return premium over investments such as gold.