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Thread: Sensible allocation of assets

  1. #1
    Master
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    Sensible allocation of assets

    Watch collecting has turned into investing for some, not me ...

    Low interest rates are often referenced when people decide to buy a watch rather than sit on cash.

    I’ve seen some impressive collections on this forum, which leaves to wondering what proportion of people’s assets do they sink into watches?

    If you are worth a million, what size would your watch collection be?

  2. #2
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    From posts I’ve seen here previously, it varies wildly.

    Some people have watch collections in excess of the value of their house, many have watches worth more than their car, and others are happy collecting at the lower end of the market.

    Horses for courses.

  3. #3
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    With a couple of exceptions, I like to have 10x disposable savings for whatever I buy.
    It's why I trawl the H Samuel sales these days!

  4. #4
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    Quote Originally Posted by demonloop View Post
    From posts I’ve seen here previously, it varies wildly.

    Some people have watch collections in excess of the value of their house, many have watches worth more than their car, and others are happy collecting at the lower end of the market.

    Horses for courses.
    ^This^

    Sent from my SM-J530F using TZ-UK mobile app

  5. #5
    Grand Master MartynJC (UK)'s Avatar
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    This reminds me of a thread that was asking about people’s income. It didn’t end up well.
    Last edited by MartynJC (UK); 8th December 2018 at 00:50.

  6. #6
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    Quote Originally Posted by MartynJC (UK) View Post
    This reminds me of a thread that was asking about people’s income. It didn’t end up well.
    That’s why I gave a hypothetical example, I’m not asking people’s details ....


    If you were worth a million, How much of that would you tie up in watches ....

    If people are not comfortable to say then don’t.

    It’s no different to discussing how much of your stock portfolio is in Japan ...
    Last edited by Montello; 8th December 2018 at 08:57.

  7. #7
    Master Bernard's Avatar
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    Watches are a hobby, they are bought with disposable income that I can miss without having to cut down on other expenses for my family.

    I do own several cars, my watchcollection is more expensive than most of the cars. Once again, the cars are not just transport but fun as well (Daimler Century 6.0 V12 and Porsche 944 for example).

    On top of that I own 1 house myself, together with my wife I own another house. The house I own myself is an investment. Business wise I have so far made much more on that one (looking at the valuations) than on my watches and cars and in a much shorter period of time.

  8. #8
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    It's a hobby, not an 'investment.' Which isn't to say people don't like to get good value. However, I would guess that there's no clear relationship between general income/wealth and a watch collection. Depends as much on the level of enthusiasm.
    I would never see my watches as 'assets.'

  9. #9
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    Quote Originally Posted by demonloop View Post
    From posts I’ve seen here previously, it varies wildly.

    ... many have watches worth more than their car ....

    Horses for courses.
    My collection is just the one, not overly expensive, watch. However, as my car is a hand-me-down from my wife, I can proudly say the watch on my wrist is worth more than the car in my drive : - )

  10. #10
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    Unless the watch ‘bubble’ bursts, which it may, watches can be a reasonable investment, but if investment was my sole aim I wouldn’t be investing in watches!

    I enjoy owning watches and I’m happy to own a few, this is easy to financially justify because the stuff I buy (vintage/second hand) doesn’t drop in value and for me the mantenance cost is minimal. I also own a classic car that’s in the same category, it’s nice to own these ‘toys’ as a hobby that’s cash -neutral once the initial outlay has been made.

    I won’t answer the OPs question directly, but I think around 5% is a sensible maximum to have in watches. If I thought the watch market was likely to fall sharply I would sell some , but there’s a hard-core in my collection that I’d hang onto simply because I like them. I think that’s an interesting test for any collector to apply; if the values fell by 50% how many of these watches would I keep?

  11. #11
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    The bulk of any sane persons wealth should be in property that you live in, both in the UK and abroad. Forget BTL in the UK as it now more hassle than what it's worth. You need liquid assets such as stocks and shares plus a decent percent in a foreign currency in a foreign bank.

    Then you go for the fripperies such as watches and antiques etc. My attitude to watches is to buy what you like and just hang on to them.

  12. #12
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    When I add up all the cash I have tied up in hobbies, watches and other sports, it adds up to about 5%.

    Does not feel excessive but my other hobbies can’t be considered assets like watches as the equipment depreciates horribly. On those grounds money in watches seems sensible.

  13. #13
    Quote Originally Posted by Montello View Post
    Watch collecting has turned into investing for some, not me ...

    Low interest rates are often referenced when people decide to buy a watch rather than sit on cash.

    I’ve seen some impressive collections on this forum, which leaves to wondering what proportion of people’s assets do they sink into watches?

    If you are worth a million, what size would your watch collection be?
    Quote Originally Posted by Montello View Post
    When I add up all the cash I have tied up in hobbies, watches and other sports, it adds up to about 5%.

    Does not feel excessive but my other hobbies can’t be considered assets like watches as the equipment depreciates horribly. On those grounds money in watches seems sensible.
    It’s tricky, as a lot of us spend money on hobbies or passions that we will never get back. I used to love racing Enduros ( off-road motorbikes), which was cheaper than the M/X scrambling scene as you didn’t need a new bike every year, unless you were at the top - but it still cost quite a lot, and the money was gone. Similarly with clay shooting.

    I have friends that would never spend £1k on a watch, as it’s far too much money, but the regularly blow £100-£200 in bars each weekend.

    It’s fairly easy to build up watch numbers when you slowly buy a few £500-£1500 watches over a number of years. I’m not adverse to 0% finance, and have a watch that I bought less than half price and with 0% the other week.

    Collecting might not be the right term for most of us. Undoubtedly some of my purchases/watches are for collecting - but a lot/most aren’t.

    For example - You don’t go and buy Two-Tone watches with the intention of making money, and they perhaps aren’t the most collectible in a range. But, if you buy at the right prices, then they can come with a good saving over retail, and give a lot of enjoyment over a more common steel version (ok, ok Daytona
    , 5711 etc. etc. aside) - at least for me. Of the TT watches I do own, I can say that I am more a fan of them than their full gold versions too.

    For me, once I have paid the bills and made sure the family are taken care of then I’ll look at what I’d like to buy, or where I’d like to put cash.

    Personally, I think if you don’t have 10 times annual income tied up in watches, then I think your just an amateur ;)

    Quote Originally Posted by paskinner View Post
    It's a hobby, not an 'investment.' Which isn't to say people don't like to get good value. However, I would guess that there's no clear relationship between general income/wealth and a watch collection. Depends as much on the level of enthusiasm.
    I would never see my watches as 'assets.'
    Exactly, well to a certain degree in any case. I couldn’t just go out and buy some of the watches you have tried in the last few years for example - that would require a level of planning and restraint on my part that I rarely do/have. But once you have a certain value built up, then it’s not as difficult to sell off a few and try others, or consolidate to a more expensive/priced watch etc.

    I still think about buying a Supercar - but then I’d really need a new house, bigger garage etc. etc. - it would add lots of annual expense, I might worry about parking it on the street. At least with a nice watch I could wear a long sleeve if I wanted to be even more discreet, but most
    people wouldn’t recognise a £100 from a £100k watch.
    It's just a matter of time...

  14. #14
    Grand Master MartynJC (UK)'s Avatar
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    Quote Originally Posted by Montello View Post
    Watch collecting has turned into investing for some, not me ...
    not myself either. They are not investments they are luxury items.

  15. #15
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    Quote Originally Posted by Mick P View Post
    .... You need liquid assets such as stocks and shares plus a decent percent in a foreign currency in a foreign bank....
    Don't forget the bag of gold sovereigns and shotgun, which should form a key part of any sensibly diversified investment portfolio.

  16. #16
    Everyone's circumstances are different and proportion of assets in watches is irrelevant and dependent on circumstances.

    For example a billionaire could buy all the watches he could want with spare cash. More expensive watches than most of us but still a low percentage.

  17. #17
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    Quote Originally Posted by LorneG View Post
    Don't forget the bag of gold sovereigns and shotgun, which should form a key part of any sensibly diversified investment portfolio.
    A forest as well; very sensible investments.

    Not only do you get some trees you can chop down every once in a while, birds and small animals that you can practice your shotgun skills on, and a place to live if the whole world goes tits up, but they're weirdly exempt from CGT, IHT, VAT, corporation tax and income tax. Once upon a time, the EU would even pay you every year if you threatened to cut it down. Every smart person should have at least one forest in their portfolio. They're also difficult for someone to pinch and easy for the 'it all burned down by accident' insurance claim - both of which can be tricky with a Lamborghini.

  18. #18
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    I've stopped smoking, I don’t gamble, I don’t go out drinking (but I’m happy to have the odd glass or two of wine with my meals), I’ve paid my mortgage off, my private pension matured last year so drawing on that and not paying in to that anymore but still working, I’ve given up golf and fishing so I guess I would be happy spending that money on my latest hobby, watches, if it weren’t for the bloody wife.......

  19. #19
    Master PhilipK's Avatar
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    Quote Originally Posted by Omegamanic View Post
    It’s tricky, as a lot of us spend money on hobbies or passions that we will never get back.
    There's a very interesting book called The Millionaire Next Door: The Surprising Secrets of America's Wealthy (the ISBN is 0-671-01520-6 if you want to find a copy). It describes the differences between what they call UAWs (Under Accumulators of Wealth) - those who spend their money on experiences and things which will not grow in value - and PAWs (Prodigious Accumulator of Wealth) - those who spend their money on appreciating assets.

    My biggest issue is that it only focuses on accumulating wealth, and not on the enjoyment (or increase in quality of life) that you can receive from spending money, but it's an interesting read nonetheless.

  20. #20
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    Quote Originally Posted by PhilipK View Post
    There's a very interesting book called The Millionaire Next Door: The Surprising Secrets of America's Wealthy (the ISBN is 0-671-01520-6 if you want to find a copy). It describes the differences between what they call UAWs (Under Accumulators of Wealth) - those who spend their money on experiences and things which will not grow in value - and PAWs (Prodigious Accumulator of Wealth) - those who spend their money on appreciating assets.

    My biggest issue is that it only focuses on accumulating wealth, and not on the enjoyment (or increase in quality of life) that you can receive from spending money, but it's an interesting read nonetheless.
    The biggest asset in most peoples life is the house they live in. Not only is it a good investment, you tend to be happier living in a large house in a good area than say living in a grotty little place in a dumpy area. Therefore it makes sense to buy the best house you can afford. Also buying a house abroad means that generally you will make money and will also enjoy the experience of living there whilst on holiday. Stayin in hotels is ok but staying in your own place is much more pleasurable.

    The obvious loss maker for most people is the car, so you have to decide how you play that one. I usually buy new and hang onto it for about 8 years and I once held onto one for 12 years before giving it to one of my sons.

    The same applies to best English shotguns, buy them whilst you are relatively young and when you get too old for tramping around the countryside, pass them onto your kids. That is a good example of an appreciating asset that gives you years of pleasure, just like Rolex watches do.

    Unlike Lorne G, I don't bother with gold, the stock exchange nearly always out trumps it, but both are equally boring.

    My weakness is that I buy things and rarely, if ever, sell them.

  21. #21
    Quote Originally Posted by Mick P View Post
    The biggest asset in most peoples life is the house they live in. Not only is it a good investment, you tend to be happier living in a large house in a good area than say living in a grotty little place in a dumpy area. Therefore it makes sense to buy the best house you can afford. Also buying a house abroad means that generally you will make money and will also enjoy the experience of living there whilst on holiday. Stayin in hotels is ok but staying in your own place is much more pleasurable.

    The obvious loss maker for most people is the car, so you have to decide how you play that one. I usually buy new and hang onto it for about 8 years and I once held onto one for 12 years before giving it to one of my sons.

    The same applies to best English shotguns, buy them whilst you are relatively young and when you get too old for tramping around the countryside, pass them onto your kids. That is a good example of an appreciating asset that gives you years of pleasure, just like Rolex watches do.

    Unlike Lorne G, I don't bother with gold, the stock exchange nearly always out trumps it, but both are equally boring.

    My weakness is that I buy things and rarely, if ever, sell them.
    Im not so sure you are able to speak for the happiness and contentedness of everyone living in a smaller house in a less affluent area than you.
    It's just a matter of time...

  22. #22
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    Quote Originally Posted by Omegamanic View Post
    Im not so sure you are able to speak for the happiness and contentedness of everyone living in a smaller house in a less affluent area than you.
    True it was a sweeping statement but I have a small apartment in Spain (now up for sale) as well as a fairly large villa. The happiness factor is much higher when living in the villa for obvious reasons. But yes you could be unhappy living in a mansion and very happy living in a smaller house.

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    Quote Originally Posted by Mick P View Post
    True it was a sweeping statement but I have a small apartment in Spain (now up for sale) as well as a fairly large villa. The happiness factor is much higher when living in the villa for obvious reasons. But yes you could be unhappy living in a mansion and very happy living in a smaller house.
    What return did your Spanish place make?

    Personally I prefer hotels about a thousand times more than a second home. A hotel is anywhere in the world you fancy, has clean sheets every day, nice meals that you don't have to cook, a chap that'll mix your favourite cocktail and no annual property tax.
    Last edited by LorneG; 8th December 2018 at 22:35.

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    I’ve never understood the attraction of holiday homes, I always prefer new holiday venues.

    Also, seems a liability sat empty far away.

  25. #25
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    Quote Originally Posted by PhilipK View Post
    There's a very interesting book called The Millionaire Next Door: The Surprising Secrets of America's Wealthy (the ISBN is 0-671-01520-6 if you want to find a copy). It describes the differences between what they call UAWs (Under Accumulators of Wealth) - those who spend their money on experiences and things which will not grow in value - and PAWs (Prodigious Accumulator of Wealth) - those who spend their money on appreciating assets.

    My biggest issue is that it only focuses on accumulating wealth, and not on the enjoyment (or increase in quality of life) that you can receive from spending money, but it's an interesting read nonetheless.
    I’ve happily believed in the past that spending on watches was relatively harmless. It wasn’t just self-indulgent spending, it was also a pleasant way to motivate saving. Better than blowing it on cars and watching them fall apart, or seeing it disappear in days on luxury holidays. In retrospect though, I never thought much about inflation, or servicing, or what would have happened if I’d put the money into ISAs instead. The short answer is it would have doubled (assuming shares as opposed to cash ISAs, and preferrably not including this year). This doesn’t really worry me as I happen to enjoy watches and bought a few keepers at the right moment - it would worry me more if I was starting now. Not everything can be an investment though, you have to enjoy life too. But the man maths that justified the purchases was probably largely rubbish!
    Last edited by Itsguy; 8th December 2018 at 18:30.

  26. #26
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    Quote Originally Posted by Montello View Post
    I’ve never understood the attraction of holiday homes, I always prefer new holiday venues.

    Also, seems a liability sat empty far away.
    I am retired which makes a difference. The Spanish place gives me 5 months of sunshine every year and with my own car out there, it is a very cheap way of relaxing compared to spending 5 months in a decent hotel.

    Also my sons and their families can use it whenever they want and between them they usually spend all of July and August out there getting a freebie holiday.

    The wife and I also had a week in Italy early in the year plus a cruise up the Danube and we have a couple of weeks in India coming up early next year. So having a holiday home does not prevent us from going elsewhere.

  27. #27
    I don't remotely see my collection as an investment, but for the more expensive watches I do deem them to be assets - like anything you own of a decent value, be it a car, shareholding, jewellery etc. Others spend money on expensive cars, whereas I don't - most have their weakness of choice. My justification comes from trying to seek-out inherent value, and good re-sale also, whether that be buying new at hefty discount, or second-hand when most of the depreciation sting has been drawn. And never at the expense of priorities. Others will approach things differently, which is totally fine, it's just how I personally help to justify this odd hobby.

  28. #28
    Grand Master MartynJC (UK)'s Avatar
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    Quote Originally Posted by Mick P View Post
    I am retired which makes a difference. The Spanish place gives me 5 months of sunshine every year and with my own car out there, it is a very cheap way of relaxing compared to spending 5 months in a decent hotel.

    Also my sons and their families can use it whenever they want and between them they usually spend all of July and August out there getting a freebie holiday.

    The wife and I also had a week in Italy early in the year plus a cruise up the Danube and we have a couple of weeks in India coming up early next year. So having a holiday home does not prevent us from going elsewhere.

    We have similar plans coming up. I can hardly wait to hand in my resignation (you can't actually retire now) - however, we are heading for Portugal as our base.

    Martyn

  29. #29
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    With the increase in values recently, and especially on sports Rolex, watches are seen as a safe place to put money. At the moment, I have a larger collection than I really want to as they don’t all get enough time on the wrist, but I also know that the money is relatively safe and probably increasing in value more than if I just had the money in the bank.

  30. #30
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    My guestimate is between 5 and 10%.

  31. #31
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    Quote Originally Posted by LorneG View Post
    Personally I prefer hotels about a thousand times more than a second home. A hotel is anywhere in the world you fancy, has clean sheets every day, nice meals that you don't have to cook, a chap that'll mix your favourite cocktail and no annual property tax.
    Quote Originally Posted by Montello View Post
    I’ve never understood the attraction of holiday homes, I always prefer new holiday venues.

    Also, seems a liability sat empty far away.
    I can’t sleep or relax properly in hotels. Having a home in each of the places where I spend time has enhanced my quality of life enormously. On the other hand I hate holidays.

  32. #32
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    I don’t see watches as an investment currently but I do see them (2x Rolex)as a relatively safe and liquid way to hold value which offers me far more enjoyment than sitting in a bank. I do think that I would struggle to spend a lot of money (e.g £10,000) on a watch which I would struggle to sell if at a pinch but that is due to being relatively young without a large cash contingency in place.

  33. #33
    Quote Originally Posted by draftsmann View Post
    I can’t sleep or relax properly in hotels. Having a home in each of the places where I spend time has enhanced my quality of life enormously. On the other hand I hate holidays.
    I usually travel with my own pillow when going across Europe on tour each year, or in Australia. Little comforts can make a big difference - but nothing quite like having your own place to relax in at the end of a journey.

    If funds allow, it has to be the preference - unless it is a just a one off holiday to a particular country/place.
    It's just a matter of time...

  34. #34
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    Last edited by jambobbyb; 22nd May 2019 at 10:25.

  35. #35
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    Quote Originally Posted by Mick P View Post
    I am retired which makes a difference. The Spanish place gives me 5 months of sunshine every year and with my own car out there, it is a very cheap way of relaxing compared to spending 5 months in a decent hotel.

    Also my sons and their families can use it whenever they want and between them they usually spend all of July and August out there getting a freebie holiday.

    The wife and I also had a week in Italy early in the year plus a cruise up the Danube and we have a couple of weeks in India coming up early next year. So having a holiday home does not prevent us from going elsewhere.
    That’s different to a holiday home, I’d love to winter in the sunshine, apart from a bit of skiing.

    Lucky you, although it’s probably not luck.

    I’m restricted by responsibility to elderly parents.

  36. #36
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    talking about investments and money on a watch forum is just out of place, I think

  37. #37
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    Like most have replied, my watches aren't investments but they also shouldn't lose me any money either... at a rough guess I'd say I've got about 4% of my net worth in them.

  38. #38
    as with most people most of my 'assets' are tied up in property (i mean the london flat i live in, not some investment portfolio). of the remainder i've a fair chunk in equity ISAs but with the S&P still near an all time high, and everywhere else stagnant and/or volatile, i still have a large amount sitting in cash- which is of course being gradually eroded by inflation. i'm not buying watches as an investment but it seems harmless to put some of that into SS rolex dabbling..

  39. #39
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    I like watches.

    I also like the idea of building up a collection that I can pass on to my children. I have several of my father's and grandfather's watches which give me a huge amount of pleasure when I wear them...Call me nostalgic, but doesn't get much better for me. I venture to suggest that my children might get the same enjoyment in due course.

    I am however mindful of not paying over the "odds" for a particular watch as anything I buy (apart from a car) should be able to hold monetary value if nothing else. If they all got stolen tomorrow though, it wouldn't impact my lifestyle...Where as losing my house would.

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