Updated 17 March 2022
For young people who don’t feel that traditional investing is for them, investing into luxury brands and the growing resale market is fast becoming a popular alternative.
Here’s what you need to know about this alternative asset.
Investing into luxury and streetwear brands is becoming a popular alternative to buying stocks, shares and other financial products.
There’s growing demand among young people for high-ticket, collectible items of clothing, with a resale market that allows people to sell these exclusive items on for a profit. As such, brands and their items are being touted as a new, alternative asset class.
From platforms that allow young people to buy shares in rare trainers to a growing resale market that lets people buy and resell rare and luxury clothing, young investors are turning investing in shares and commodities on its head.
It’s no secret that young people are becoming increasingly distant from traditional investment products. And while nearly 80 percent of millennials in the US aren’t invested in the stock market, younger demographics are increasingly being tempted by alternative investments.
Partly behind this disincentive to invest is the notably reduced income young people receive from investing. According to Credit Suisse, young people are set to only receive a third of the earnings from stocks and shares that their parents enjoyed.
The ongoing economic fallout of the pandemic has also had a notable impact on young people’s material fortunes. In short, young people see less reason to invest in stocks and shares and have less disposable income to risk.
But in brands, rare items, collectibles and luxury purchases, a new asset class is appearing. Where in previous generations, young people may have put their money into shares to earn a handsome return, today’s young generations spend big money on luxury and rare items.
An investment into a rare pair of shoes could be seen in one of two ways.
First, many people will invest the money, preserve all the tags and store the shoes in their original boxes for several years so they can sell them for a larger sum of money in the future. For example, a 2009 pair of shoes created by Kanye West and Louis Vuitton was priced at $960 – today they are valued at $10,000 a pair. In little over a decade, the shoes increased in price more than 10 times over – a notable performance for any investment.
Another example could be the Jordan 1 Retro High Dior, which was originally sold for $2,000 in 2020 and is already selling for over $11,000 in just two years.
Alternatively, not every investment is done for a financial return. Many people invest into luxury goods as staples that will last for many years, rather than buying cheaper items and having to replace them every few months or years.
What sets price tags soaring is the concept of authenticity in fashion. Not every pair of trainers or handbag is an investment. In fact, if the item has been as much as unboxed, de-tagged or used in any way, it could be worth less to other buyers. Only the rarest, limited-run items have an investment value as they are perceived to be the most authentic goods.
So while getting your hands on one of these exclusive brand items could lead to generous returns in the future, they’re also extremely difficult to find and buy.
With only a few thousand, sometimes even a few hundred, of these rare items available globally, finding and buying them is extremely difficult and even impossible for most people.
Bots, artificial intelligence and algorithms are increasingly being used to snap up items within milliseconds of them coming on to the market, making the items available to the average person even more scarce.
Even finding these rarest goods can be extremely tough, so unless you’re one of the lucky few, it’s unlikely people can plan their financial futures around rare brand items.
But this isn’t to say investing in brands is a gimmick. Young people are keen to plan for the future and are showing a growing awareness for taking their financial future into their own hands, with brands simply a way of achieving this.
From platforms such as Rares, which introduces the concepts of shares and ownership over rare trainers to young people, to Depop, which helps young people buy, sell and sometimes make a profit of second hand and luxury clothing, brands have emerged as a new asset for some young people to invest in.
If you’ve invested in a rare brand item, you should pay close attention to keeping the item as original and authentic as possible.
Some ways to do this include:
Not wearing the item to keep it in as pristine a condition as possible
Keeping all tags attached
Keeping the original boxing or packaging
Storing the item in a cool location, away from sunlight, moisture and the elements
Pay close attention to the materials of the item – is it sensitive to humidity changes? Can it be left alone for an extended period of time?
Investing in brands and rare items may not be the most traditional investment, but there is no question that some people are turning it into a profitable success.
If you’d like to know more about how to take steps to secure your financial independence, find a financial adviser on Unbiased and start planning for the future.