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I think for a single watch 1% is a very rough starting point, but in my opinion the two would not correlate directly. There is a point of diminishing marginal returns on luxury items. For a net worth of $1M I could easily see spending $10K on a watch, but if I was worth $50M, there's NO WAY I would ever spend $500K on a watch. Honestly, I don't think I'd spend over $100K on a single watch even if I was worth $500M. On the other hand, I could see a situation where you're financially stable, with a net worth under $1M, and for it to be reasonable to buy a $10K Rolex, it really depends on your circumstances.
For my entire collection, which I DO view in terms of an asset with a particular market value, I probably wouldn't want to exceed the 5-10% range, but the higher your net worth, the less and less I would deem an appropriate amount to have in a watch collection. Imagine using the 10% estimate, that means it would be reasonable for Bill Gates to have a watch collection worth roughly $6-7 BILLION?!?!?!??
For my entire collection, which I DO view in terms of an asset with a particular market value, I probably wouldn't want to exceed the 5-10% range, but the higher your net worth, the less and less I would deem an appropriate amount to have in a watch collection. Imagine using the 10% estimate, that means it would be reasonable for Bill Gates to have a watch collection worth roughly $6-7 BILLION?!?!?!??