Are Luxury Watches Actually A Good Investment?

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Luxury watches have developed something of a mythical reputation as an alternative asset over the past decade, with much of the momentum driven during the COVID-19 pandemic. With interest rates near zero and consumers flush with savings, demand for high-end watches surged in 2021 and 2022.

The frenzy wasn’t limited to seasoned collectors. Social media was filled with stories of buyers making thousands of dollars simply by purchasing popular models at retail and immediately reselling them on the secondary market.

But the pandemic-era boom didn’t last long. As interest rates rose and speculative demand cooled, prices across much of the secondary market retreated. The Bloomberg Subdial Watch Index, which tracks prices for the 50 most-traded timepieces by value, fell 40% over the two years following the pandemic-era surge.

While the market has since stabilized, the recovery has been highly selective. Much of the recent improvement in secondary-market prices has been driven by Rolex and Patek Philippe, while many other brands continue to struggle.

And even then, according to The Wall Street Journal, average resale premiums on Rolex watches have roughly halved since early 2024, while premiums on Patek Philippe watches have fallen even more sharply.

It’s an old market lesson on a new wrist: prices that take the stairs up have a habit of taking the elevator down.

Luxury Watches: Investment or Collectible?

Before deciding whether luxury watches fit into your investment portfolio, it’s important to ask: are they actually investments?

Unlike traditional investments such as stocks, bonds, or rental properties, a luxury watch doesn’t generate income or produce cash flow. Its value depends almost entirely on someone else being willing to pay more for it in the future.

That’s an important distinction. The S&P 500 has delivered an average annual return of about 10% since it launched, and it offers liquidity, dividends, and regulatory protections. Property investors can also earn rental income while waiting for a property’s value to appreciate. Luxury watches offer neither. The only way to make money is to sell the watch for more than you paid.

That’s why many financial professionals would argue that luxury watches are closer to collectibles than traditional investments.

Even Rolex has been keen to make that distinction. Back in 2024, the CEO of Rolex himself warned against comparing luxury watches with stocks, saying it “sends the wrong message and is dangerous.”

There’s nothing inherently wrong with speculation. Plenty of investors allocate a small portion of their portfolio to speculative assets. The important thing is understanding what you’re buying and the risks that come with it.

So, Why Do People Invest in Luxury Watches?

Part of the answer is that they offer something traditional investments don’t.

Unlike a stock certificate or a bond, a luxury watch is something you can wear. For many collectors, that’s part of the appeal. Even if the investment doesn’t perform as hoped, they still own something they value.

Some investors also see luxury watches as a way to diversify beyond traditional financial markets. Watch prices certainly aren’t immune to economic downturns, but they don’t necessarily move in lockstep with stocks or bonds. For investors looking to spread their risk across different asset classes, that can be appealing.

The best-performing watches have also demonstrated an ability to preserve and, in some cases, grow in value over long periods. Limited-production models from brands such as Rolex and Patek Philippe have historically held up better than many other luxury purchases, particularly when bought at retail and kept in excellent condition. For investors looking to buy something they can keep for many years to come, a luxury watch makes sense.

Of course, there are still risks. Luxury watches require servicing every 5-10 years, and insurance and service costs can be high depending on the model and brand.

Selling them also isn’t necessarily quick or straightforward either. Transaction costs are high and can severely cut into investment returns. Auction houses charge buyer’s fees ranging from 20-30%, and sellers also pay a commission of 10-15%. Dealer margins on pre-owned watches are another 15-30%.

Most importantly, there is no guarantee that tomorrow’s collectors will value today’s sought-after models as highly as the current generation does.

If You Still Want to Buy a Luxury Watch…

None of this is meant to discourage you from buying a luxury watch. They’re beautifully engineered and, unlike most investments, you can actually wear them.

If you’re hoping your next watch might also prove to be a sound financial decision, here are a few principles you should follow.

Start with Education, Not Expenditure

Like any collectible, investors need to do their research and really understand the market to make a good investment purchase.

Spend time researching different brands, models, and reference numbers. Browse auction archives, follow price-tracking tools such as WatchCharts, visit authorized dealers, and, if possible, handle watches in person. The more watches you see, the better you’ll understand what separates a genuinely desirable piece from one that’s simply fashionable.

Just as importantly, spend time listening to collectors. Online communities such as WatchUSeek and Reddit’s r/Watches can provide valuable insights.

Buy Scarcity, Not Just a Brand Name

Sticking to iconic brands on secondary markets is a safe bet, but not every Rolex or Patek Philippe is a great investment. Profits are highly concentrated in specific models, which all tend to share a few characteristics: limited production, strong collector demand, and difficulty buying at retail.

Scarcity isn’t accidental. Brands such as Rolex and Patek Philippe have spent decades carefully managing production, creating waiting lists that reinforce exclusivity and help certain models command significant premiums on the secondary market. Long waiting lists are part of what makes the watches desirable in the first place.

That said, not all limited-edition watches come with premium price tags. Scarcity only works when buyers believe the shortage is real and not just a marketing tactic, and they still want the watch badly enough to pay a premium for it.

Do Your Due Diligence

The market is rife with ghost listings, where dealers post fake listings for watches they don’t actually have, often set to cheaper prices, with the goal of luring in prospective buyers. Once a collector makes contact, they’re told the watch has already been sold or is no longer available, and are then steered toward other, often more expensive, pieces.

It’s what Ben Horesh, the CEO of watch-market analytics platform EveryWatch, describes as “looking for a fish in a pond full of hooks.” Of the 5.4 million listings that EveryWatch tracks, Horesh estimates that roughly 975,000 are dormant, meaning the listings seem unusually cheap or have remained online for far longer than comparable watches.

As with any significant purchase, if a deal looks dramatically better than everything else on the market, it’s worth asking why.

Request that the dealer send current photographs; some collectors will ask for a picture of the watch set to an unusual time, like 3:24. Verify the serial number and service history, research the seller, and don’t be afraid to walk away if something doesn’t feel right.

Don’t Confuse Rising Retail Prices With a Stronger Market

Luxury brands regularly increase their retail prices, whether because of inflation, higher production costs, currency movements, or tariffs. But a higher list price doesn’t necessarily mean existing watches have become more valuable.

The Wall Street Journal reports that Patek Philippe recently increased US retail prices by around 22%, yet despite those higher prices, the secondary market has not kept pace. As such, average resale premiums have narrowed significantly. In fact, Patek Philippe’s average premium over retail has fallen from around 38% to 11%. Rolex’s average resale premium has also roughly halved since early 2024.

The lesson here is not to judge a watch’s investment performance by comparing it with today’s retail price. Compare it with what buyers are actually willing to pay.

After all, it’s the resale value, and not the manufacturer’s price tag, that determines your return.

Think Long Term

Even the best-performing watches rarely appreciate in a straight line.

Like the stock market, the luxury watch market experiences cycles. Periods of rapid price appreciation are often followed by corrections, sometimes lasting several years. The post-pandemic boom and subsequent pullback are a reminder of that.

That’s why experienced collectors tend to have a much longer investment horizon. They rarely buy watches expecting to flip them within a few months. Rather than worrying about where prices will be next month, they focus on whether a watch is likely to remain desirable over the next decade.

The models that have generated the strongest returns have generally done so because demand gradually outpaced limited supply over long periods, and not because they happened to be the hottest trend of the year.

Buy Something You’d Actually Enjoy Wearing

This applies to any collectible you’re hoping to purchase. Buy a watch because you genuinely want to own it, and not because you’re chasing after a trend. If it appreciates over time, that’s a welcome bonus. If it doesn’t, you’ll still have something you’ll enjoy every time you fasten it to your wrist.

Most Watches Aren’t Good Investments

Before you rush out to finance a Daytona, remember that the watch market is a lot like Hollywood. We hear about the handful of overnight success stories, but we rarely hear about the thousands that never make it. Many luxury watches lose value the moment they leave the authorized dealer, much like a new car leaving the showroom floor.

If your primary goal is building long-term wealth, you would probably be better served by a diversified portfolio of assets such as stocks and bonds.

Our bottom line: Collect watches if they bring you joy. But don’t buy them as investments unless you already have a large, diverse portfolio of traditional assets like stocks, bonds, and mutual funds, and perhaps some real estate, as well as alternative assets like PE investments.

We’ll say it another way: if you own your home free and clear, have no credit card debt, and can afford to buy and hold watches indefinitely, then go ahead and knock yourself out. But if that’s not you, then our view is that “investing” in hard assets like watches (or rare coins, comic books, stamps, fine wine, NFTs , or sports memorabilia) is dumb.

These things have no inherent value; they are worth what a collector will pay, and collector demand can be fickle. Can you find statistics that support the notion that some of these assets appreciate faster than the stock market? Absolutely. But most gains are made by very high-end collectors and professionals. Don’t get us wrong: if you enjoy collecting something as a hobby and simply recognize that your hobby may turn out to be lucrative, wonderful. But don’t mistake a hobby for an investment or speculation for investing. (We published a piece about that– Speculation Nation: Who Ya Gonna Call — Your Broker Or Your Bookie?).

On the other hand, tangible assets can be an appropriate investment class. And our point above about the lack of inherent value? Well, the same could be said for many precious metals and jewels: they’re only valuable because everyone agrees they’re valuable. If you want to collect something, consider land. As the old expression goes, ‘they’re not making any more of it,’ and you can rent land out or grow food on it. Financial Poise has published several articles about investing in real estate, including farmland.