Gen Z Ditches Stocks for Birkins: Are Designer Bags the New Investment Strategy?

According to a 2024 PYMNTS Intelligence report, 79% of millennials and GenZ turn to social media platforms for financial advice, with TikTok leading the way. As younger populations deem these platforms a valuable source of financial knowledge, an emerging trend in these spaces has begun to suggest that luxury handbags could become the next major asset class for investors.

'When a man tells you to invest in the stock market but you know Hermès Birkin bags give you a better return on investment,' according to an influencer. While seasoned investors and financial experts are sceptical of making financial moves based on social media trends, a growing group of GenZers is convinced by social media financial advice on outperforming the S&P 500.

The trend has led to an influx of young women intrigued by ideas like investing in luxury fashion products such as the Hermès Birkin bag, which could be a better investment than traditional investment assets like stocks.

'Whoever says handbags aren't an investment are lying,' according to a TikTok user. 'What I'm holding in my hands [Hermès Birkin bag] is undoubtedly a better investment than the S&P 500, stocks, and gold.' Meanwhile, another channel described the bags as the 'best investment you can make.'

While several luxury products increase in value, a Birkin bag's four-decade compound annual growth rate is 5%.

However, the Sellier Birkin bag recorded a 52% year-over-year rise last year, per Elizabeth Layne, the chief marketing officer at Rebag. Furthermore, the Birkin bag price on The RealReal is averaging 34% above MSRP, an 11% rise compared with 2024.

Luxury Goods Can Potentially Complement Traditional Portfolio Performance

Madé Lapuerta's Instagram channel, Data but Make it Fashion, has become a popular avenue for GenZ women to easily track and analyse the price changes of luxury goods.

'Shopping doesn't always have to be a horrible decision [or] a horrible use of your money,' Lapuerta told Fortune. 'Caring about fashion and luxury is not a stupid thing. It's a very smart thing, and here's the information that I want to give you so that you can understand it.'

According to one of her social media posts, Lapuerta claimed she put her savings into her shoe collection during stock market corrections, highlighting the resale versus retail price of popular sneakers.

Lapuerta also detailed in a different post, which included a graph, that Birkin gained 24% in value on average compared with the S&P 500 in the last five years.

'When you really break it down, young people are very interested in investing,' Lapuerta had said. 'There's so much uncertainty in the world. People do want to make sure that they're making smart decisions, and then being able to just say it very simply, like, this bag appreciates this much in value.'

However, she sees luxury goods as a good addition to portfolios with traditional assets. 'I understand there's traditional channels. I have a great savings account that gets me interest. I invested in the S&P 500; I think that's smart. There's so many smart ways to invest your money, and [I'm] by no means telling people that the only way you can do it is with a Birkin bag.'

Luxury Item Value Could be More Volatile

While the US stock market has witnessed extreme volatility this year, it is important to understand that the value of luxury goods could heavily rely on short-term fashion trends, with the potential to change overnight.

While a celebrity endorsement or a viral video could sway price movement upwards, it remains unclear what the worth of Birkin bags would be in a decade. Furthermore, investing in luxury goods could also mean that the product must remain in pristine condition throughout the years.

According to Layne, certain items on Rebag are labelled as "Investment Piece[s]," which means the product style has exhibited 'consistent value retention, historical appreciation, and strong resale demand' over time.

'Designer bags, particularly from brands like Hermès, Chanel, and Louis Vuitton, are among the least volatile collectable assets and have some of the lowest correlations to stocks,' Layne tells Fortune. 'This can be especially important in uncertain economic times.'

Financial experts like Synovus Bank's Allyson Kiel note that most glamorous investment opportunities are often too good to be true.

By the time a new investment technique pops up on your social media feeds, millions of users are likely to have already beat you to it. 'If you heard about the latest greatest investment at a cocktail party, you probably already missed it,' she told Fortune.

Furthermore, Acorns CEO Noah Kerner echoed Warren Buffett's philosophy: 'When people are greedy, be fearful.'

'It's best to approach life with the philosophy that there is no such thing as a get-rich-quick scheme because there isn't,' Kerner said. 'Of course, there are those outliers that got rich quick by winning the lottery or somehow managed to time the crypto market appropriately, but for the rest of us, it's a terrible strategy. The only way to get rich is to get rich slow.'

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.