As Generation Z seeks financial guidance on social media, luxury handbags are being promoted as the latest sought-after investment. An influencer remarks, “Why invest in the stock market when Hermès Birkin bags offer a superior return on investment?” However, industry experts express skepticism.
Venturing into finance-focused TikTok, also known as FinTok, may provide persuasive money management tips. Amidst a wealth of advice, unconventional methods to outperform the S&P 500 are presented. While seasoned investors may find this proposition challenging, especially in today’s volatile market, it captures the interest of Gen Z individuals who are exploring new avenues for financial growth. Particularly, young women are being encouraged to consider investing in luxury fashion items like the Hermès Birkin bag as potentially more lucrative than traditional investments.
Some claim that luxury goods have seen significant value increases; for example, the Birkin bag has demonstrated a 5% compound annual growth rate over 40 years, with a Sellier Birkin bag experiencing a notable 52% year-over-year jump in 2024. These trends indicate growing interest in luxury resale, with items like the Birkin selling at a premium above their manufacturer’s suggested retail price.
Nonetheless, financial advisors caution against disregarding established investment practices for unproven alternatives, highlighting the potential risks for those lacking expertise in the field.
Integrating data into the discussion of fashion, Madé Lapuerta emphasizes the importance of informed decision-making. Through her popular Instagram account, “Data but Make it Fashion,” she provides insightful analysis on luxury goods’ price fluctuations, catering to a growing audience of Gen Z women seeking accessible financial information. Lapuerta’s background in consulting and data science allows her to challenge traditional notions of luxury fashion as frivolous spending, asserting that it can be a savvy investment choice.
Although Lapuerta’s comparison between luxury fashion and financial investments may raise eyebrows, she aims to empower individuals to make informed choices. By presenting data-driven insights on luxury items’ appreciation rates relative to conventional investment vehicles, she encourages her followers to consider the potential value of fashion as an investment asset, despite challenges such as entry barriers and liquidity concerns.
The idea that fashion can be a profitable investment is gaining traction, particularly among young people looking to make smart financial decisions in an uncertain world. While traditional investment channels like savings accounts and stock market index funds are popular choices, some are exploring luxury goods as an alternative option. For instance, a $10,000 investment in an S&P 500 index fund a decade ago would now be worth over $30,000 due to compound interest, while the value of a luxury item like a Birkin bag can vary greatly depending on factors such as color, condition, and demand.
However, investing in luxury goods comes with its own set of complexities. The value of these items is often tied to fleeting fashion trends, making it difficult to predict their long-term worth. Additionally, establishing relationships and navigating the resale market can be time-consuming tasks for potential investors. Despite these challenges, some experts argue that luxury goods from renowned brands like Hermès, Chanel, and Louis Vuitton can serve as stable assets with strong resale demand and value retention, making them a potentially valuable addition to a diversified portfolio.
While some platforms offer financing options to make luxury purchases more accessible, experts caution against straying too far from traditional investment strategies. It’s important to be cautious of glamorous investment opportunities promoted on social media, as they may not always be reliable. Ultimately, sticking to tried-and-true investment principles and conducting thorough research before venturing into newer investment avenues is recommended by financial advisors.
When a new investment trend appears on your social media feed, chances are many others have already discovered it. According to Fortune, if you’re hearing about the latest hot investment at a cocktail party, you may have already missed the boat. Noah Kerner, CEO of financial services firm Acorns, follows the advice of Warren Buffett, emphasizing caution when others are being greedy. Kerner stresses the importance of avoiding get-rich-quick schemes and instead advocates a slower, more sustainable approach to building wealth.
By focusing on fundamental principles such as saving more than you spend and taking advantage of employer 401k matching programs, you can achieve significant financial growth while minimizing stress. Kerner and others in the industry highlight the benefits of starting early on this journey, allowing for a longer runway to accumulate wealth over time. This advice, originally shared on Fortune.com, underscores the value of patience and discipline in achieving financial success.
