How do you turn the purchase of a purse with a four-figure price tag into a sound financial decision in a recession? That’s the task luxury brand marketers and fashion magazines have right now, and their solution is to spin luxury purchases as an “investment.” But is it a good investment? Not really.

Lesley M. M. Blume at The Big Money noticed this phenomenon, and investigated its roots, and whether it’s actually true.

Luxury-goods experts point out that in troubled times consumers have tended to purchase jewelry, which has a perceived inherent value-meaning, you believe that if you needed to sell that diamond in a pinch, you’d get around the same amount of money that you spent on it initially. (More on this delusion below.) Those peddling today’s luxury products as “investments” seem to be trying to import this perception-that aura of undiminished perpetual value-to the realm of leather handbags and other luxury goodies as well.

If you think of high-end items in classic styles as an “investment” in the sense that they last for years (or at least a few seasons) then perhaps they are. If a designer suit helps you get a higher-paying job, then it can be an investment in that sense. Otherwise … “investment” isn’t quite the word to use.

Luxury as an Investment? [The Big Money/Slate]

(Photo: bioclastic)

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