From rare and exclusive trainers to high-statement pieces, investing in fashion has become a way for young people to invest in alternative assets.
But with people investing hundreds, if not thousands, of pounds on rare fashion accessories, is investing in fashion a serious investment or a gimmicky fad?
Why are people investing in fashion?
With young people increasingly distancing themselves from traditional forms of investing, bitcoin, technology and fashion are fast becoming popular replacements.
While investing vast sums of money into luxury and popular street brands aren’t commonly known as popular investments, there is a growing market for buying, preserving and then reselling items for a potentially larger amount of money.
While fashion items may be more of an alternative way of spending money, these assets have serious profit potential.
For example, a rare shoe collaboration between Kanye West and Louis Vuitton, which first retailed for $960 in 2009, today sells for over $10,000. In another case, the Jordan 1 Retro High Dior, first selling in 2020 for $2,000, already sells for over $11,000.
Thanks to the rise of fashion resale websites and peer-to-peer platforms such as Depop and Vinted, young investors and entrepreneurs are turning the exclusive fashion industry into an alternative way of making money for themselves.
With the global fashion resale market estimated to be worth $84 billion by 2030, it’s clear that investing in fashion is having its day.
How does investing in fashion work?
In most cases, turning fashion items into an investment relies on people buying exclusive and rare items, holding on to them for several years and preserving their brand-new condition, in order to sell them for a larger return.
Of course, not every item has an investment value, meaning that a lot of the time only the rarest and most exclusive items are able to rake in large profits.
However, this market isn’t reserved exclusively for luxury brands and statement pieces. Vintage brands can also fetch a very good price, with items from brands like Lacoste and Tommy Hilfiger also seeing a surge in demand.
Resale platforms are helping turn young, fashion-minded people into entrepreneurs. Whether you’re looking to buy some high-tag items to sell on, or want to build a large portfolio with smaller margins, there is money to be made in the fashion resale market.
What is a good fashion investment?
When it comes to assessing whether something could be a good investment or not, there are some key factors that could impact the price of your fashion investment:
- Brands: The more recognizable the brand, the more demand there will be. Keep an eye out for premium fashion houses, such as Chanel, Louis Vuitton and Prada, as well as vintage brands such as Lacoste and Tommy Hilfiger.
- Authenticity: Authenticity plays an important role in the exclusivity of fashion. Instead of buying lots of more affordable pieces, investing more money into longer lasting items is becoming more popular. If you can find some timeless jewellery, handbags or shoes, you could be on to a winner.
- Condition: While most items that are almost new or worn once can still fetch a high fee, even one wear can knock half the price off your item. If possible, ensure your investments are in the best possible condition.
- Storage: Make sure that your items are stored correctly. If possible, store your items in the original box or packaging and that wherever it is being stored won’t compromise the condition of the item. Some materials may react poorly to humidity changes or need regular care, for example.
- Keep all tags: While it might be many people’s instincts to remove tags, keeping the original tags attached can help you get the top price.
- Understand the materials: Some luxury items, such as jewellery, can contain precious gemstones and metals that will drastically impact the price at which you could sell something on.
The key to the resale of any item is its condition. If you buy an expensive jacket that isn’t in good condition, you will find it difficult to sell it on for more than you bought it – unless you’re prepared to restore and preserve some of the materials.
Is fashion a good investment?
The fashion resale market is growing rapidly. But it’s hard to say if investing in fashionable items with the ambition of selling them on for more money is an effective investment strategy.
The major challenge many aspiring alternative investors will face is getting their hands on a profitable item in the first place.
With only the rarest, most exclusive or most sought-after items likely to make you money, you need to try and find, or be the first to buy, a rare item. This is no easy feat in itself.
This being said, it isn’t uncommon for many people to find potentially profitable pieces in their parent’s wardrobe or somewhere else much closer to home.
As long as you have the permission, you could find some exclusive brands and items for free.
So whether you’re investing in luxury items or are lucky enough to find one yourself, fashionable items and brands can help you take steps towards a secure financial future.
Although fashion is an alternative asset, and there may be more stable, better-yielding investments elsewhere, demand for vintage and luxury fashion is very high and could potentially help you make some money.
Not every investment works out, however. Before spending your money on a luxury item, make sure you’ve taken on the right financial advice and are confident when it comes to using your money safely.
Speak to a financial adviser to make sure you have the best advice for achieving your money goals.