When inflation is high, most people tend to cut back on their purchases.
Investment is a plan. (Photo: Unsplash)
According to Daily Journal, some people amass expensive items, such as investment jewelry. Consider a Rolex watch, a famous Jean-Michel Basquiat piece of art, or a Birkin handbag. An investment piece is anything that is regarded as classic or high-quality that increases in value.
Due to high demand, among other things, the luxury market has a tendency to be more resilient than other industries during economic uncertainty. So, is this period of inflation a good time to buy luxury items?
Since March 2022, the U.S. Federal Reserve has increased interest rates 11 times in an effort to curb inflation. Since interest rates are at their highest level in 22 years, borrowing costs have gone up and expenditure on non-essential items has decreased.
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Although Americans have reduced their spending, there is still a high desire for luxury products.
According Nasdaq, study by J.P. Morgan estimates that despite large price increases, the market for luxury products will grow by 7% year over year in the fourth quarter of 2022.
Luxury brands raised the price of their products by almost 17% in 2020 and the beginning of 2021 in reaction to decreased sales during COVID-19, according to a 2022 analysis by KPMG International. Given that price increases normally range from 5% to 10%, this drop is notable. The price increases may have benefited both luxury corporations and consumers who had previously invested in these products.
Gloria H. Gill, a retired woman who we spoke with on Facebook Messenger, claimed that in the past seven years, the worth of her enormous classic Chanel purse has more than doubled. In 2016, Gill paid $4,800 for the bag in Paris. It is currently worth roughly $10,000 on the market.
There are hazards with every investment, of course. Your money could be able to earn a higher rate of return somewhere else, as Huston points out. Additionally, it’s possible for your item to be lost, destroyed, or difficult to sell again.
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