Why Luxury Watches Are Not Suitable for Asset Protection (Patek Philippe, Audemars Piguet, Vacheron Constantin, Richard Mille)

Why luxury watches are not well suited as a defense against a property tax or deposit freeze

A watch is easy to carry, since you simply wear it on your wrist, and popular rare models can sell for more than you paid, letting you make a profit. Those are attractive aspects, but for the reasons below, luxury watches carry risks as a way of protecting your assets.
*Of course, being able to buy a top-tier luxury watch is a wonderful thing in itself, as long as it is done by lawful means.

*This article is an English version of our Japanese column, adapted for foreign residents of Japan and international investors.

1. The risk of being sold a fake

Truly high-end, top-tier luxury watches cost tens of millions to hundreds of millions of yen each, so there is a risk of counterfeits, especially on the secondhand market.
In some cases the watch case is genuine but only the movement inside is fake.

Unless you are a watch professional yourself, it is probably difficult to judge whether a watch is genuine, including the movement inside.

Even dealers who buy and sell Rolex watches say there are cases where they fail to spot a fake and end up buying it.

Rolex watches circulate in large numbers, so these dealers handle a great many watches, yet they say some fakes still slip through.

Many counterfeits on the market are so skillfully made that nothing feels off, including their weight and appearance. So trying to protect your assets by buying luxury watches on the secondhand market carries the risk of buying a fake.

It is true that there is also a risk of buying fakes with precious metals and stones (gold, silver, gems), but these do not have as many parts and components as a watch, so it takes less effort to check whether they are genuine.
With watches, there are even cases where only some of the parts are fake.

2. Hard to buy right away from authorized dealers

Luxury watches are popular all over the world, so popular models with high resale value in particular cannot be bought right away.

If you have built a relationship of trust with an authorized dealer, so that they know you are not a reseller, they may be willing to sell you the models you want to some extent whenever you ask. Even then, there is no guarantee that the model you want will be in stock and that they will let you buy it immediately.

3. Security risks

Walking around town wearing a luxury watch also carries the risk of being robbed.

There has been well-known, shocking news of a robbery in which the victim's arm was cut off with a machete.

Such cases are probably rare, but news of watches being stolen is common.

There is also the concern that resale value will drop somewhat if the watch gets a lot of scratches.

An easygoing person might not mind covering a top-tier luxury watch in scratches, but most people who have built that level of wealth probably think carefully about resale value as well.

4. Maintenance is required

Mechanical watches are said to need an overhaul every 5 to 10 years.

Modern watches are said to perform better, but even so, if left untouched for many years, the parts inside will likely deteriorate.

A watch's condition can also deteriorate due to humidity and temperature, so you need to pay a certain amount of attention to maintenance for as long as you own it.

So what is suitable for asset protection?

- Assets whose authenticity can be verified

- Assets you can buy fairly quickly when you want to

- Assets that tend to gain value by the time you sell
(If your gain on sale is large, it may be subject to heavy taxation (income tax) in Japan)

Final thoughts

I have explained why top-tier luxury watches are not the best defense against a property tax or deposit freeze, but this applies only when you look at them as a means of protecting assets.

Luxury watches bring the joy of ownership, and some rare models are not available to just anyone.
*My apologies to any luxury watch owners who may have been offended.

There is also the view that true watch enthusiasts do not care about asset value.

I believe watches have an appeal beyond being financial assets, and this is also a matter of personal values.