There are many reasons to invest in luxury products. For some people, it is a sign of success and can indicate one’s, social class. For others, the purchase might serve as a financial investment that will increase its value over time.
However, there are drawbacks too: for example, if you’re not careful with your purchases, you could end up spending more money than anticipated on something that may not have any residual worth or resale value at all.
Making wise decisions when investing in luxury goods is key. If you’ve been contemplating purchasing any high-end product but want more information about the potential benefits and pitfalls before making a final decision, here are some luxury items to consider with great care.
A Private Jet
Big businessmen and celebrities can be seen taking off on a private jet at airports worldwide. The benefits of buying a personal plane are obvious: you can go where you want when you want in total privacy and comfort.
However, in addition to the initial purchase price, other factors need to be considered when deciding whether or not to invest in your private jet. For starters, there are many expenses involved in owning your plane, including yearly maintenance fees and the salaries of pilots and other staff members whose services you need to retain during operation (whether it’s for yourself or your entourage). The best scenario would be to only invest in a private jet if you’re a billionaire and can afford all these problems.
Another common luxury purchase is a chauffeured limousine. The perks are obvious: being driven to your place of business or around the city in relative comfort, with all the amenities you need close at hand.
On the downside, like a car, the value of a limousine decreases as time goes by, and it’s also subject to depreciation. However, if you are planning to rent out the limo as a service, then you may be able to make money from this investment.
A Rolex and Expensive Pieces of Jewelry
People consider diamonds and Rolex watches as investment pieces since there’s always a market to resell. However, this is not always the case. If you’re interested in selling your Rolex after owning it for a few years, be aware that many Rolexes are on the market. You will have to be authenticated or certified by experts so buyers can discern its value.
Diamonds lose their radiant appearance over time as wear and tear diminish their quality. However, there are ways to preserve the value of your diamonds and keep them sparkling as always. For example, you can purchase certificates that guarantee these gems’ authenticity and also monitor their wear over time with a watchful eye.
Yachts are a long-term investment because they can appreciate over time as the demand increases. However, again, be careful with your purchases and make sure you know all the facts before getting started. For example, if you want to purchase a yacht from another country where taxes increase the value of jewels disproportionately, be ready to pay extra fees at customs.
If you want to experience what it’s like to own a yacht and live on it for a few days, you can try renting a superyacht boat. This can give you hands-on experience before deciding on a big and expensive purchase. You’ll get to test the waters and know what handling and managing a yacht feels like.
Condo Units to Lease Out
If you want to make a profit from your vacation home, one of the most lucrative options will be to rent it out on a short- or long-term basis.
Buying condos in highly urbanized locations then renting or leasing them either short or long-term can be a win-win situation. Some experts even recommend making more short-term investments since these are more profitable.
If, for example, you want to invest in a high-end condo unit in New York City, be aware that it costs around $1.5 million minimum. But if you were to sell it 5 years from now after putting a lot of money into rentals and security costs, chances are that it will have gained about 30% value since the purchase.
Purchasing a condo unit in Miami Beach, on the other hand, will cost around $550k minimum for a regular apartment and about $1 million for higher-end ones. As much as this is much cheaper than NYC real estate prices, it’s important to note that you can still net annual returns of about 7% on a condo unit.
Luxury goods can be a great investment for some people. For others, it may only serve as an indicator of social class or success. It is important to think about what you are investing in and the potential drawbacks before purchasing.