Birkin bags: Pricey purses or smart investments?

I can’t remember the first time I learned about Birkin bags. Knowing my TV-watching habits, it was either from an episode of “Sex and the City” (Season 4, Episode 11) or “Gilmore Girls” (Season 6, Episode 6).

In the former, Samantha tries to buy a Birkin bag straight from the store, only to be told there’s a shocking five-year waiting list. In the latter, Rory is given a Birkin bag by her wealthy boyfriend Logan — not realizing what the bag means as a status symbol.

But a Birkin is more than just a fancy purse — it’s also an investment. On average, the value of a Birkin bag has increased about 14% per year - while the S&P 500, the stock market benchmark, increased about 10% on average. 

So what makes a purse a potentially better investment than the 500 biggest companies in the U.S.? 

First off, what the heck is a Birkin bag?

If you’re not tuned into pop culture, here’s a quick primer on what a Birkin bag is. Named for actress and singer Jane Birkin, these stylish and roomy purses were first made by Hermès — a French leather producer with a storied history dating back to the 1830s — in the 1980s. Since then, they’ve become a status symbol.

Buying a Hermès bag is not like buying any other kind of luxury bag. If you want to buy a Louis Vuitton, Gucci or Prada bag, you can simply visit the showroom or the retailer’s website and purchase one immediately. 

However, buying a Birkin bag is much more complicated. According to Dallas-based stylist Bobbi Schwartz, you need to pick a specific Hermès store — ideally one near you — and buy other items there before you can be added to the waitlist for a Birkin. Often, the pre-spend before getting your coveted bag is two times or more the cost of the bag. And no, shopping online at Hermes.com doesn’t count. 

“It’s really about creating a solid relationship,” Schwartz said. “You cannot walk into that store and try to get a Birkin bag.”

If you want a Birkin bag right now, you can always buy one from a second-hand seller like eBay, The Real Real, Poshmark or even an auction house like Sotheby’s. The challenge with this is that the market is flooded with counterfeits. You will want to make sure to have a bag authenticated before buying it. 

Like any other kind of good, Birkin bags are subject to the laws of supply and demand. Because Hermès does not produce enough Birkin bags to cover demand, exclusivity remains high year after year, which protects value.

Also, Birkin bags are much more expensive even compared to other designer purses. You can buy a purse from one of the afore-mentioned designers for a few thousand bucks, but a Birkin bag starts at about $10,000, and the price can go much higher if you are interested in an exotic leather. 

How to protect your investment

First, if you have a Birkin bag, make sure it’s insured. Your renters or homeowners insurance can provide coverage if it’s damaged in a fire, tornado or hurricane. Of course, you will usually have to pay a deductible to file a claim. The size of your deductible will depend on your specific policy.

However, it may not be covered if it’s stolen. Rob Baker, part owner of Lowder Insurance Agency, said he called three major insurance providers and none of them said they cover purse theft as part of a homeowners policy.

“If it’s stolen, you’re out of luck,” he said.

If you want to get your Birkin covered for theft, you may have to search for a boutique or specialty firm to get insurance.

So should I buy a Birkin or invest in the S&P 500?

Birkin bags are less liquid than most types of investments. If you want to cash in on your investment, you’ll have to find a specific buyer. Depending on what you price it at, it can take hours, days or even longer to sell. If you sell a Birkin bag through a third-party retailer, they’ll also take a cut of the proceeds. 

For example, the Real Real currently takes a 30% cut if you sell anything for more than $5,000. Some people — depending on the color, size and condition of their Birkin — may lose money on the resale market, especially when considering commissions.

Selling an investment is generally much simpler. If you want to cash out shares of an index fund or stock, you can simply visit your online brokerage or investment company’s website and click “sell.”

Buying a share in the stock market is much more accessible, solely because you can start with as little as a few dollars. You don’t need $10,000 to begin investing. With fractional investing, you can buy a share of an index fund for only $5. But you can’t buy a scrap of a purse — you have to have the entire amount.