‘I’m buying Hermès bags to beat the stock market’

The world of investing – of index trackers, Isas and platform fees – is not the most glamorous. But it has been hugely lucrative. A decade-long bull-run in the stock market meant that for a long time, securing a 10pc return each year was a reasonable target.

Not anymore. Growing fears of a global recession have started to pull the market downwards; global stocks have dropped 12pc so far this year. With inflation running at a 40-year high of 9.1pc and paltry saving rates, investing is the only hope that savers have of preserving the value of their money. This is where a touch of glamour can help.

Hanushka Toni, a 33-year-old former marketing professional from London, invests in designer bags for a return of around 14pc a year. Ms Toni, who set up a second-hand designer bag shop with her mother three years ago, said there has recently been a shift as investors begin to take designer bags seriously as an asset class.

“I bought an Hermès Birkin bag for £15,000 two years ago,” she said. “Now it is worth around £19,000, because the market has grown that much. That’s more than a 26pc return. I now have clients who take their bag investments very seriously – they will leave it in pristine condition and never wear it out.”

But Ms Toni warned that the market is complex for the uninitiated, and those investing in the wrong brand could fall into a trap. “Birkin and Chanel bags are the main way to invest. In my experience, Italian brands like Gucci and Prada depreciate in value.”

Rachel Fox, of pawnbroker Suttons and Robertsons, said it is not uncommon for Hermès Birkin bags to have a higher resale value than their initial price. The average price of Birkins rose by 38pc in 2021, according to the investment bank Credit Suisse. Chanel bags rose by 12pc. By contrast, London’s stock market returned just 8pc.

“A Birkin or Kelly Hermès bag in a standard leather can be purchased new for around £7,000 to £10,000,” she said. “However, they can resell on the secondary market for upwards of £20,000, with some exotic-skinned bags selling for more than £60,000.”

This May, auction house Kruse GWS Auctions sold a rare Hermès Birkin bag for a record price of $630,000 (£515,278). The Himalayan crocodile bag is finished with solid 18-karat white gold and diamonds.

'I made nearly six times my money on a bottle of wine'

While designer handbags may not pique the interest of every investor, collecting luxury goods can be a helpful way to diversify your portfolio.

Rod Peel, a former engineer at British Gas who is now retired in Bolivia, has a portfolio of fine wines worth more than £1m. “I started in 2004, when I received a call from my current broker WineCap,” he said. “My best investment was in a case of Rothschild 1982, which I bought for £9,000 and later sold for £54,000.

“But that is not typical. Besides, you only make profits on the wines when you sell them. Otherwise, they sit there gaining hypothetical money. I pay around £1,000 for storage and insurance each year.”

A key attraction of investing in wine and whisky is that investors do not need to pay capital gains tax on any realised profits, because the Government classifies them as a “wasting asset”.

“It’s also very fun,” Mr Peel added. “It’s interesting to learn about the wines. You discover something new every day. I think it’s more engaging than investing in shares.”

Cameron Scott, a 78-year-old accountant from Staffordshire who is nearing retirement, has also built up a portfolio of fine wines.

“My wine makes up between 5pc and 10pc of my overall portfolio,” he said. “I like it because I can’t imagine that its value would ever fall to zero, and it helps reduce currency risk. My best investment has been in an American wine that I bought seven or eight years ago, Screaming Eagle. It cost a few thousand a bottle, and its price doubled in just three years.

“But overall I view it as a long-term investment. I don’t sell many, because I’d like to pass my wine down to my beneficiaries, rather than cash in now.”

However, Mr Peel and Mr Scott both warned that finding a trustworthy broker in wine and whisky had proven difficult. “It is not a fully regulated market, so there are a lot of rogues out there,” said Mr Peel. “At one point, I lost £37,000. New investors must do their research very carefully.”