As a finance major, I feel like it’s my duty to analyze the question of the day, is it financially irresponsible to purchase a luxury bag today. Chanel, Hermes, Louis Vuitton are constantly raising their prices, Since 2020 at least once a year, Chanel makes big headlines with their price increase. A luxury bag used to be a nice splurge, but does spending over $10k for a bag even make sense anymore?
What is the Opportunity Cost of purchasing a luxury bag?
I’m big on opportunity cost, which in simple terms means what are you giving up to buy this bag, you could be purchasing stock, saving for retirement, or simply purchasing a cheaper alternative bag. For many people, (not everyone), I realize it is financially irresponsible to purchase a brand new Chanel bag / Hermes bag at over $10,000.
For example, let’s say you invested that $10,000 into the stock market, you get a return of let’s say 8%, that’s $800 you made in the market. Use the gains to purchase a vintage luxury bag, and leave the $10,000 invested in the market.
When did luxury bags get so expensive?
In my opinion, I saw the luxury market really start to increase the price of bags by a crazy amount in 2020, and it’s been continuing that way ever since. The truth is, it’s not only luxury bags that have increased in price since 2020, it’s everything. The key difference though, is that luxury bags have increased at an astronomical rate. What used to be expensive, just feels so out of reach now.
When does buying a luxury bag actually make sense?
In my opinion, buying a luxury bag over $10,000 only makes sense when you can purchase the bag and not worry about the cost of it, and can afford to replace it without stressing about it. That number of course will be different for everyone. Think about it this way, if you spend a majority of your liquidity on a bag, will you be scared to wear it in fear of damaging it because it was so expensive? That’s the question you should be asking yourself.
Is buying a Vintage Luxury bag a smarter financial decision?
Buying a vintage luxury bag is absolutely a smarter financial decision. Outside of Hermes quota bags and limited edition bags, you can purchase luxury bags 50-90% off the retail price. My favorite places to get vintage bags, includerar Fashionphile, Rebag, and TheRealReal. I also found several vintage stores in the area that are worth checking out.
Final thoughts
The harsh truth. My conclusion is yes, for most people it is financially irresponsible to purchase a bag over $10k, invest that money into the stock market, use the gains to purchase a luxury vintage bag. Listen, I love a luxury bag as much as the next person, but I also love making financially sound decisions.
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