The luxury market has shown remarkable resilience over the last decade, with high-end watches and fine jewelry outperforming traditional investment vehicles. But before driving to the nearest Rolex or Cartier boutique, investors seeking alternatives to stocks and bonds must grasp the advantages and disadvantages of building wealth through these assets. And, if it’s possible to invest in only one, which of the two is better?
Why Luxury Items Are Good Investments
Some of the best luxury investments boast the following characteristics:
- House reputation and market demand: Well-established luxury brands with decades or centuries of heritage have higher retail prices and resale values. Rolex, Cartier, Tiffany & Co., and Van Cleef & Arpels, for example, have built reputations that transcend fashion trends.
- Condition and authenticity: The physical state or condition of a luxury item affects its value in the secondary market. Original packaging, documentation, and certificates of authenticity can increase value by at least 20%, often more. Any modifications or damage can reduce its value.
- Rarity and/or limited production: Scarcity, or fear of missing out (FOMO), drives value in luxury markets. Limited edition pieces, discontinued models, or items with historical relevance resell at premium prices. More “mass-produced” designer items are less likely to appreciate at the same rate.
- Liquid regardless of economic cycles: Designer goods are getting more expensive every year (sometimes every month).
Getting a professional appraisal is the best way to determine how much a luxury item is worth, especially if it’s vintage or from a long bygone era. Experienced watch and jewelry appraisers in Scottsdale can inspect the craftsmanship, materials, condition, and provenance to establish the item’s current value, which can differ by hundreds or even thousands of dollars from its original purchase price. Appraisers can also confirm whether the piece is genuine and not a high-quality replica.
These professional assessments are the basis for loan calculations, with many Phoenix-based lenders advancing 40-70% of appraised value for verified luxury goods. When owners eventually sell, authenticated items with recent professional appraisals fetch higher prices and sell faster than items with questionable documentation.
Pros and Cons of Investing in High-End Watches
Luxury timepieces from exclusive brands are legitimate investments that rival many traditional financial instruments. Most models have a documented sales history, which allows buyers and sellers to estimate market value with minimal uncertainty. Other luxury categories, such as fine jewelry, rarely offer the same level of pricing consistency or transactional visibility.
Specifically, the luxury watch market benefits from several factors that support long-term value appreciation:
- Public sales records: Auction houses such as Christie’s and Sotheby’s publish final sale prices for vintage and contemporary watches. These records help buyers and sellers compare models, assess past demand, and determine whether current listings fall within fair market value.
- Mechanical complexity: Swiss and German manufacturers like Audemars Piguet, Patek Philippe, and A. Lange & Söhne spend thousands of hours producing timepieces with hundreds of hand-assembled components. Collectors pay a premium for such pieces, as technical and artisanal mastery is becoming increasingly rare.
- Limited production: Many prestigious manufacturers deliberately restrict production numbers, with some models having year-long waiting lists. For example, Rolex produces a little over one million watches annually across all models, while Patek Philippe manufactures fewer than 70,000 pieces per year.
- Active collector communities in First World countries: Watch enthusiasts and collectors maintain vibrant markets through forums, dealers, and auction houses, ensuring liquidity for desirable pieces.
Likewise, every watch investment comes with trade-offs buyers need to consider:
- Market volatility: Some models experience 20-30% price swings, at times more, based on collector interest and economic conditions.
- Maintenance costs: Luxury mechanical watches require professional servicing every 3-5 years at costs ranging from $500 to $2,000 per service.
- Authentication complexity: Sophisticated counterfeits can deceive inexperienced buyers and seasoned collectors alike. Expert evaluation is an absolute must, most especially for pre-loved purchases.
- Storage and insurance needs: High-end watches require safekeeping in vaults, safes, or climate-controlled spaces to prevent theft and damage. Insurers also assess each piece for value, risk, and documentation before issuing coverage. These protective steps add to the long-term cost of ownership.
First-time buyers make common errors that experienced investors avoid. Read “Rookie Mistakes by Aspiring Watch Collectors” if you’re thinking of investing in a luxury watch.
Pros and Cons of Investing in Fine Jewelry
Fine jewelry combines the value of precious materials with brand prestige and craftsmanship, evident in high-end pieces from renowned houses like Cartier, Tiffany & Co., Van Cleef & Arpels, and other leading brands.
Investing in jewelry has several benefits, including:
- Built-in material value: Gold, platinum, diamonds, and gemstones maintain their value even when fashion trends change or brands lose popularity. The price of gold alone has reached an all-time high of $3,300 per ounce as of August 1, 2025. Related: How to Take Advantage of Gold’s Record-High Prices
- Respected brand heritage: Best-selling jewelry houses like Cartier, Van Cleef & Arpels, Tiffany & Co., and Harry Winston continue to earn premiums for their exquisite designs and reputation for excellent craftsmanship. Signed pieces from these makers sell for multiples of their material worth.
- Broad investment categories: Buyers can choose from certified diamonds, rare colored gemstones like Paraíba tourmalines or Burmese rubies, vintage estate pieces, or contemporary designer jewelry.
- Sells worldwide, even in most Third World countries: Gold jewelry, in particular, sells and pawns easily throughout the world. Since its value follows global market rates, buyers and lenders use the same pricing references across regions.
As for the downsides of investing in jewelry:
- High retail markups: New jewelry has between 200% and 400% markups over wholesale costs. In most cases, people who try to resell new pieces receive far less than what they paid, since secondhand offers exclude retail pricing layers (e.g., marketing, brand heritage, etc.) and depend on the material’s current value.
- Security risks: Storing high-value jewelry pieces at home raises security concerns. Some collectors switch to private vaults or bank storage once their collection grows.
- Designer pieces can go out of style: What sells like Cartier Love bracelets today may not in a few years. Even signed pieces from leading jewelry brands can fall out of favor if the design no longer fits buyer preferences. The materials may still be valuable, but design-based premiums decline when demand plummets. Related: Branded vs. Non-Branded Jewelry
Takeaway: Should You Invest in Watches or Jewelry?
Watches and jewelry are both high-value assets, but not every piece will perform the same in the secondary market, especially with retail markups and shifting trends.
Luxury watches are generally easier to price, resell, and use as collateral for loans because the market closely monitors coveted brands and models. Leading auction houses and platforms like Chrono24 publish sales data, which helps set expectations. Reselling fine jewelry or using it as collateral is similar in many ways, except it primarily depends on the item’s gold content, gem quality, weight, design, and market demand. Most new pieces have 200-400% retail markups, so resale offers typically drop well below the purchase price. Nonetheless, jewelry with high gold content, larger stones, or timeless designs can still receive high offers.
Ultimately, before buying either, weigh the pros and cons mentioned in this article, consider your budget, and think about how the item might be more beneficial later on, whether for resale or a loan.