If you decide to buy a new watch, there are a few reasons why you could buy a new timepiece. Watches are good for aesthetic reasons, help you tell the time, and can act as a beautiful style accessory. When buying a new watch you might be thinking about buying it as an investment for the future. But are watches depreciating assets?
Most watches are depreciating assets. Although almost all watches are usually a depreciating asset, some high-end luxury watches, (like Rolex and Patek Phillipe) maintain value. This is due to high demand and relatively low supply, which is the primary indicator of a watch’s price.
Now that we know that watches are usually depreciating assets, we would like to further explain why this is the case, and how you can invest in a watch to make it an appreciating asset.
Why most watches are depreciating assets
So you’ve decided you want to buy a normal watch that isn’t a really big investment, chances are that your watch will depreciate over time. But if you buy the right watch, it might be the best investment you’ll ever make. Because some watches hold their value better than most assets out there.
So how does that work? It all comes down to the demand and supply of the watch. If a manufacturer puts fewer watches on the market then there is demand for them, the price will also rise over time.
If a watch brand is overwhelmed by its competition, but still has limited availability by bringing fewer watches to the market, it will probably retain better value over time. So, when we talk about depreciating assets, it has little to do with the build quality or complications of the product. But rather with the supply and demand of the watch brand. This is why some watches retain their value better than others.
There are also several other factors that could determine the value of your watch. After keeping it for a few years. This can be as simple as the condition of your watch. This can be an important factor and obviously can make your watch depreciate in value. It also has to do with the brand itself, some brands have a better reputation and collectability than others. Different models could play a role, and the rarity is also a deciding factor. Therefore, buying the right watch, and keeping it safe for several years will determine whether your watches are depreciating assets.
Can watches be assets
This brings us to the next paragraphs where we would like to explain how some watches could actually be incredible investments.
You’ve probably heard of people owning several watches that they see as an investment. This is actually a very smart move. We have already explained that you often have to invest a considerable amount of money before your watch can really become an appreciating asset. This has to do with the fact that it is usually the more expensive watches (luxury watches) that have a high supply and demand value.
While it is true that most watches will depreciate in value over time, some luxury watches will rise and are seen as some of the best assets in terms of investments.
There are currently (and always will be) watch brands and models for which the demand far exceeds the production. This is due to the long production time of watches. This causes the watches to rise in value over time, as these watches are not commonly available in the markets. But they are held by these luxury watch investors that we talked about at the start of this paragraph. This is why some watches can be great assets. As they will maintain and might even appreciate their value over time, making it a very smart investment.
Is Rolex a depreciating asset?
One of these “smart” luxury watch investments is Rolex watches. For example, the price of a stainless steel Rolex hasn’t depreciated since the 70s. This is also due to its high demand and relatively low production rate. This appreciation in value makes Rolex appreciate their market prices as well, causing their watches to be appreciating assets over time.
Although Rolex is seen as an asset that appreciates in value, we should mention that buying the right model is a deciding factor for it being an investment. Buying the wrong Rolex at the wrong time can still cause the watches to become depreciating assets. Therefore, we provided a list where you can check out some of Rolex’s best potential investments as of right now.
Potential investements for Rolexes:
How a watch can be an asset class investment
We now sought the differences between watches that are depreciating assets and appreciating assets. So, how can watches be an asset class investment?
Watches can become an asset class investment by investing in watches that have a higher demand than supply. Because of the high demand and low production rate, watches aren’t available in the markets, causing prices to go up at individual selling and therefore also normal market prices.
Keeping these in mind when investing in a watch is your best bet and can cause watches not to be a depreciating asset.
So, after reading this article we can conclude that watches are usually depreciating assets. This is depending on the watch and the model though. Watches are actually one of the few liabilities that can become an asset over time.
While some watches can become an appreciating asset, always be cautious with where you buy a watch and what model it is, do your research. But overall, watches are depreciating assets.
For more articles on watches, go ahead and check out our website. We have several categories that answer all of your watch queries, think about luxury watch questions, watch parts, etc. Check out our site here. Our latest article is about the service cost of a Seiko watch, read that here.