Note (October 2026): This article was revised because earlier wording said luxury goods such as blankets, clothes and wine reliably deliver strong returns; in reality luxury collectibles are unregulated assets whose prices can fall, and recent index data shows mixed results.
Luxury goods can be worth it as investments only selectively. A small number of rare watches, classic cars, fine wines, handbags and jewelry pieces have gained value, but most luxury purchases are not reliable investments. The Knight Frank Luxury Investment Index fell 0.4% in 2025 and rose 38.6% over ten years, and collectibles carry high costs, poor liquidity and no investor protection.
Key Takeaways
- The Knight Frank Luxury Investment Index (KFLII), which tracks 10 collectible categories, fell 0.4% in 2025 and rose 38.6% over the past decade, according to Knight Frank’s Wealth Report 2026.
- Results diverge by category: watches rose 5.1% on the WatchCharts Overall Market measure in 2025, while the Liv-ex Fine Wine 100 index fell 2.5%.
- Gains concentrate in rare, in-demand items with strong provenance; everyday luxury purchases usually are not investments.
- In the US, net gains on collectibles are taxed at a maximum 28% rate (IRS); in the UK, wine and whisky are among the assets used in unregulated investment scams, according to the FCA.
- Buy luxury goods mainly for enjoyment, and treat any rise in value as a bonus rather than a plan.
When it comes to investing, some luxury goods can hold or gain value over the long term, but returns are uneven and never guaranteed. But what are the most common luxury goods that people consider investing in? In this article we will explore some of the most popular examples of luxury items, from cars and watches to fine wines and bags, and whether or not they make good investments.
Are Luxury Goods Really Worth It?
Cars
One of the most well-known luxury investments is classic cars. Many vintage vehicles have become highly sought-after collectors’ items, with prices for some rare models rising sharply over time, although classic car values can also fall. Classic cars often represent a significant investment due to their rarity and historical significance, and returns vary widely by model, condition and history. They often require considerable maintenance costs too, so be sure to factor these into your calculations when considering investing in a classic car.
Blankets
Blankets are an unusual entry on this list, and they are better seen as a quality purchase than an investment. Traditional wool blankets are often made with centuries-old weaving techniques and can be very valuable. Investing in luxury blankets is best treated as buying for quality and long use rather than for profit: blankets are not among the 10 categories tracked by the Knight Frank Luxury Investment Index, although a well-made one can become a family heirloom.
Watches
Watches are another popular luxury item, and some models can act as a store of value. Many of the major watch brands produce limited edition models which can become very valuable over time. A well-maintained watch from a sought-after model can hold or gain value, but gains are selective: according to Knight Frank’s Wealth Report 2026, the WatchCharts Overall Market measure rose 5.1% in 2025, with the Rolex Market Index up 4.6% and the Patek Philippe Market Index up 12.1%.
Fine Wines
Fine wines have also seen a surge in popularity as a luxury investment option in recent years. Some bottles have produced strong returns, but there is no guarantee that wine will beat traditional assets such as stocks and bonds. Wine prices can fall: the Liv-ex Fine Wine 100 index declined 2.5% in 2025, according to Knight Frank’s Wealth Report 2026, so significant research is needed before investing.
Jewellery
Jewellery is another popular luxury item for investors. Investing in jewellery can be a great way to diversify your portfolio, as rare pieces with strong provenance can hold value over time; jewelry is one of the 10 categories in the Knight Frank Luxury Investment Index. However, the market for vintage jewellery can be unpredictable, so it pays to do your research before investing in any piece of jewellery.
Bags and Shoes
Luxury handbags and shoes are also becoming increasingly popular investments. Bags from top designers such as Chanel, Hermes and Louis Vuitton can hold their value well if they are well-maintained and cared for, though prices do not always rise: according to Knight Frank, Hermès Birkin and Kelly bag prices slipped 0.2% in 2025. Shoes too, especially certain styles of limited-edition trainers, can sell above their retail price, but resale prices depend on demand and are not guaranteed.
Clothes
Clothes can also be a great investment if you choose the right pieces. Investing in classic styles from top designers that are timeless and well-made is essential, as these garments are the most likely to keep some resale value; most clothing, even from top designers, should not be bought as an investment.
Are Luxury Items a Good Investment?
Whether investing in luxury items is a good idea depends on your goals, budget, knowledge of the market and tolerance for risk. Some investors prefer the safety of traditional assets such as stocks and bonds, while others are more attracted to the potential rewards offered by luxury investments. As with any investment, it pays to do your research before making any commitments and understand both the risks and rewards associated with each option.
What Do Recent Luxury Investment Figures Show?
The Knight Frank Luxury Investment Index (KFLII) is a widely quoted benchmark for luxury collectibles. According to Knight Frank’s Wealth Report 2026, the index tracks 10 categories: handbags, jewelry, coins, watches, cars, colored diamonds, furniture, whisky, wine and art.
The KFLII closed 2025 down 0.4%, which Knight Frank described as a year of stabilization after two years of losses. Over the past decade the index rose 38.6%. Knight Frank’s category figures draw on third-party sources such as WatchCharts, Liv-ex and LUXUS.
| Measure (as reported by Knight Frank, Wealth Report 2026) | Change in 2025 |
|---|---|
| Knight Frank Luxury Investment Index (all 10 categories) | -0.4% (up 38.6% over 10 years) |
| WatchCharts Overall Market (watches) | +5.1% |
| Rolex Market Index | +4.6% |
| Patek Philippe Market Index | +12.1% |
| Liv-ex Fine Wine 100 (wine) | -2.5% |
| Hermès Birkin and Kelly bags | -0.2% |
These figures show why luxury goods are not a single asset class. Knight Frank noted that buyers in 2025 favored rarity, cultural significance and provenance, so an average index rise does not mean a typical item bought at retail gained value.
Luxury Goods vs. Traditional Investments
Luxury collectibles behave very differently from stocks, bonds or funds. The main differences are summarized below.
| Factor | Luxury collectibles | Stocks, bonds and funds |
|---|---|---|
| Income | None; value comes only from resale | Dividends or interest are possible |
| Selling | Usually through auction houses, dealers or private sale, which takes time | Usually sold quickly on an exchange |
| Costs | Storage, insurance, authentication, servicing and seller fees | Fund charges and trading fees |
| Pricing | Depends on condition, provenance and demand | Quoted publicly every trading day |
| Investor protection | Wine and whisky schemes are not regulated by the UK FCA | Regulated products and providers |
| Enjoyment | You can wear, drive or drink them | None |
How Are Profits on Luxury Goods Taxed?
Tax can reduce the return on a luxury item, and the rules differ by country.
- United States: According to IRS Topic 409, net capital gains from selling collectibles, such as coins or art, are taxed at a maximum 28% rate.
- United Kingdom: According to GOV.UK, Capital Gains Tax may be due on a profit from selling a personal possession for £6,000 or more. A private car is excluded unless it was used for business, as is anything with a limited lifespan, such as clocks, unless used for business.
Rules change and depend on individual circumstances, so check the current guidance from your tax authority or a qualified adviser before you sell a valuable item.
Luxury Investment Scams to Watch For
Wine and whisky are among the assets used in unregulated investment scams, according to the UK Financial Conduct Authority (FCA). The FCA also warns that even if an offer is not a scam, investing in a product it does not regulate means you will not be protected if something goes wrong, and you could lose all your money.
The FCA’s ScamSmart guidance lists these warning signs:
- The offer is unexpected.
- You feel pressured to act quickly.
- The offer sounds too good to be true.
- The offer is said to be exclusively for you.
- The caller flatters you or speaks with authority.
In the UK, the FCA directs people to report anything not regulated by the FCA to Report Fraud on 0300 123 2040.
How to Decide if a Luxury Purchase Is Worth It
- Buy what you would enjoy owning anyway. If the price falls, you still have something you value.
- Research the specific model or vintage. Index averages hide large differences between individual items.
- Keep full paperwork. Boxes, receipts, certificates and service records help prove authenticity when you sell.
- Add up the holding costs. Include insurance, storage, servicing and the commission charged when you sell.
- Limit the share of your savings. Collectibles pay no income, so keep core savings in regulated products that suit your risk profile.
- Avoid unsolicited “investment” offers. Buy through established auction houses, authorized dealers or merchants you have checked yourself.
For related reading, see why some buyers treat a Chanel handbag as an investment, the top luxury watch brands, the most expensive wines in the world and whether a gold investment makes sense.
Frequently Asked Questions
Are luxury goods a good investment?
Luxury goods are a good investment only in selective cases. The Knight Frank Luxury Investment Index fell 0.4% in 2025 and rose 38.6% over ten years, but gains concentrate in rare items with strong provenance rather than typical retail purchases.
Which luxury goods held their value best recently?
Watches were among the stronger luxury categories in 2025. According to Knight Frank, the WatchCharts Overall Market rose 5.1% and the Patek Philippe Market Index rose 12.1%, while the Liv-ex Fine Wine 100 fell 2.5% and Hermès Birkin and Kelly bags slipped 0.2%.
Is fine wine a good investment?
Fine wine can gain value, but it can also fall: the Liv-ex Fine Wine 100 index declined 2.5% in 2025, according to Knight Frank. The UK FCA lists wine among the assets used in unregulated investment scams, so be wary of unexpected offers.
Do you pay tax on profits from selling luxury items?
Often, yes. In the US, net gains on collectibles are taxed at a maximum 28% rate, according to the IRS. In the UK, Capital Gains Tax may apply to personal possessions sold for £6,000 or more, though private cars and items with a limited lifespan are excluded unless used for business.
Are luxury investments regulated?
Wine and whisky investments are not regulated by the UK FCA. The FCA warns that if you invest in products it does not regulate, you will not be protected if something goes wrong and could lose all your money.
