Hence, being a curious listener and a little excited, I couldn't hold myself to ask more.
This is one of my first time seeing a young person in real who's interested in this topic and having goals.
Surprisingly, another fan of Robert Kiyosaki!
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| Rich Dad, Poor Dad - Robert Kiyosaki |
"I'm interested to get some investment before my savings is eroded by inflation and is looking to buy assets"
As a curious audience.. I asked: What type of asset are you looking to get? Property?
"Nah. Property is a waste of money. It's a liability"
Another fan of Robert Kiyosaki I thought.
"...I'm looking into getting a Rolex in 2 years time. I believe that they're a really good investment and milestone. I've read from a book that we must buy asset and not liability!"
I'm stunned for a moment
Upon hearing so.. I decided that I should remain silent and continue eating my noodles.
I believe that this fella here would have read the book - Rich Dad, Poor Dad, and have understood that there is 2 column in your balance sheet - Asset & Liability.
According to the book, an asset is something that puts money into your pocket while a liability is something that takes money of out it.
And to get rich, one simply get more 'asset'!
Applying the actual definition to an asset, indeed, Rolex is a tangible asset and it does hold it's price well over the years. One must not forget that Rolex is a luxury consumer goods and to keep it well running, you're requireed to send it in for servicing.
Aside that, you've to keep this 'asset' of yours in a good condition in order for you to cash out your 'profit' in the future! This servicing here will cost you money and it does not put money into your pocket.
Arguably, yes. The servicing you're looking at is your 'cost', and by selling it in the future, provided at a big gain, you will not be seeing anything out of this asset apart from the ticking hands. Any knock and dings while you're wearing it, will in fact take cents out from your pocket.
Throwing all this aside. Any seniors who bought a Rolex many many years ago at $1000 or 2000. May see that the same model now cost $10,000.
We must not forget that $1000 or 2000 back then is relatively 'big' too!
Hence, your purchasing power did not change!
Similarly to some who includes the value of your HDB in the list of your 'assets'!
For the duration that you're staying in it, this HDB does not put money into your pocket!
Probably.. unless you rent a room out.
Not forgetting our HDBs in Singapore has only 99 years of lease!
How now!?
To my friend above, it is pretty much a milestone in some sense that you've gotten your 'first luxury watch', 'I've earned my first 5 digits in my life' or probably a terrible way to say it is 'I've spent the first 5 digits I've earned in my life'.
Perspective is important.
As a human, I do love Rolex watches and would gladly get one in the future, as a luxury good to pamper myself.
Not an 'asset' in which I have to hope and pray for the value of it to go up in order for my gains to be 'realized'.
Another thing to remember about 'realizing your gains' is that, when you sells it in the future, this is marked as a pre-owned product, and the market here is different.
There's definietly some rare or limited Rolexes that will probably be a really good investment in due time. As time is a very important factor in investing, there is no certainty in investment.
I know there's many who believes that Rolex is an investment.
I'm not an watch expert here.
But a Rolex to me. Is merely a watch.
As a person who love watches, I do have my weak spots too.
But, for now. A Rolex is definietly not for me :)
Nonetheless, if I happen to have one, I'm clear on what I expect from my Rolex.
No money. Can pawn Rolex watch. Lol!
ReplyDeleteHi UncleCW,
DeleteIndeed. No money, pawn it. Should be able to get some bowl of rice to sustain for awhile! Haha
Hi Sleepydevil
ReplyDeleteSome people see that as alternative investment. I’m not expert in this field hence cannot comment but I have friends who are invested in art paintings as well. It’s hard to debate these things until proven otherwise.
Hi B,
DeleteAlternative investment.. well. I’m no professional too in this field especially when It comes to watches.
I view it more as a luxury consumer goods than an investment if I ever happen to have one.
Everyone has it strength. Mine, unfortunately, does not goes to art paintings as well! Haha!
i was wondering if there is a point in showing the appreciation in nominal and real adjusted. it would seem that the asset does appreciate quite nicely in real terms
ReplyDeleteHi Kyith,
DeleteReally honoured to have you here! :)
I’ve obtained the chart from Google somewhere but I did not manage to find a link back to it. Base on the chart, it looks relatively beautiful and increasing steadily over time for a Rolex based on price level In real terms, which might be in the eye of experts or investor of this asset.
Unfortunately, my mind behind me is telling me that, despite the well appreciated real value of a Rolex, as a noob in this area, I can’t picture it well as an investment vehicle.
Sports model rolexes tend to have high demand and retain value well. Best bang for buck will be pre-owned models like submariner, sea dweller, gmt master, daytona. Shld get from reputable shops who can confirm grade of watch with papers & authenticity of internal parts ... some may have used generic non-rolex parts for repairs etc. Once serviced properly, a pre-owned rolex can last easily 20+ yrs w/o another servicing as long no damage e.g. dropped on floor, water damage etc.
ReplyDeleteHi Unknown,
DeleteThanks for the cool recommendation. Personally, probably due to my age, I actually fancy the sport models such as Submariner and Daytona quite a little.
Seems like it would probably be a smart choice to own a Submariner!
As a young watch lover, the idea of having a Rolex is pretty far fetched.
Considering the beauty of this Swiss watch, I agree on the part on generic non rolex parts for repair to look out for when getting a used Rolex, as a normal consumer will not be able to notice.
I’m astonished. 20+ years without servicing is really impressive. Meaning to say this watch would probably need less servicing a human probably do. Haha!
'Upon hearing so.. I decided that I should remain silent and continue eating my noodles. '
ReplyDeleteLOL! I can imagine you being all eager to talk about investments and stuff and then.... Stunned like vegetable.
Hi Wife Say I Niao,
DeleteAt that point of time, I decided that, my noodles will probably not taste that nice if I'm engage in a 'debate' between our perspectives.
I'm not an expert in this field of 'investing' and my perspective towards owning a Rolex watch differ pretty much from this friend here.
And you're right. I'm stunned like a vegetable upon hearing that. Haha!!!
The "returns" from a Rolex should be from other non-financial aspects such appreciation of its heritage/history, mechanical watch movement, relative robustness etc. There are also many watch aficionados that turn up their noses at Rolex as they think it is overhyped and mass produced with so-so generic movements that only appeals to impressionable amateurs mainly male & testosterone-filled, haha.
ReplyDeleteSpeaking of robustness, yeah as long you don't abuse it, a good quality mechanical watch can last many decades. My dad's rolex (old man datejust) has never been serviced since he bought it in the early 1980s. My automatic Seiko diver's watch also hasn't been serviced since I got it 20 yrs ago ... still same accuracy as when I got it.
I recommend the annual "geary" -- Global Investment Returns Yearbook -- if you're interested in the long-term real returns of various global assets. Produced originally by 3 finance profs at Cambridge & London Biz School, now in collaboration with Credit Suisse.
They have a PDF summary at https://www.credit-suisse.com/corporate/en/articles/media-releases/credit-suisse-global-investment-returns-yearbook-2018-201802.html
They got art, jewellery, stamps, gold, silver, wine, violins, diamonds, rare books, cars, but no watches!! Haha ... so I used jewellery as proxy instead ... long-term real return of 2.95% --- better than just price appreciation of developed markets residential property! Of course if you add in leverage & rental income, property should be better.
Global equities has been 5.22% real return, bonds 2% and short-term Treasuries at 0.8%.
Hi Spur,
DeleteIt had been some time since I last see you around in this space here! Nice to have you back once again.
As usual, thank you very more for the comprehensive and informative comment here. And I do agree on the part that a returns from Rolex should be from some non-financial aspects.
The PDF summary from Credit Suisse is really interesting. Now I guess I've something new to follow up about - The Global Investment Returns Yearbook!
From the summary, I'm astonished to see that arts has also return relatively decently with an appreciation rate at 3.7%
I guess for common Rolex watches out there, it might be hard to score a 2.95%. Probably when the model/make carries more history to it with limited pieces produced, this is when, the annualized return rate for this asset would be increased.