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What percentage of your net worth would you spend on a single watch?

38K views 109 replies 72 participants last post by  Steverino 417 
#1 ·
I know it is a crazy question. The standard party line answer will be whatever you want to spend, it's a free society. But yet there are guidelines to financial decisions. When you buy a house, the bank restricts you to certain percentages of your annual gross income if you need a mortgage.

There are also common sense guidelines. Someone living in a $200,000 house would not be driving a $350,000 Ferrari much less a $1 Million plus Bugatti.

So what percentage of net worth is appropriate for a single watch?

Let's say you are fortunate enough to be worth 1 million dollars. At 1%, this would put you on the $10,000 range: Rolex, nicer IWC, JLC, GO, etc. Up it to 3% and you get to play in the entry level Patek, Lange, Journe world. If you want to get really crazy, up it to 10% and you get upper end Lange, Patek chronograph/annual calendar, etc.

There are may tangents to this question. You could also apply this principle to your entire collection. What percentage of your net worth would you commit to your entire watch collection? We are all WIS's and want to own the best watches but we also have to have a minor degree of sensibility and meet our other responsibilities.

What say you?
 
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#2 · (Edited)
I'm not really worth anything so I can't answer that. Can anyone? What is " worth"? Value of assets less mortgage etc? I spend what the missus permits me to spend of whatever I've got left over after rent, council tax, food and beer. So not a lot.

This question has been asked in the past in various guises but it's impossible to get a consensus or common ground for an answer: some here make millions but spend it on their houses, cars, kids and have less disposable income then others who make less. Lots of variables.
 
#4 · (Edited)
Net worth is tough, as it can be quite tied up. I have happily spent in the region of one month's net income on a Rolex, which is probably easier to measure.
 
#5 ·
I don't think there is a static percentage one could use for this, but 1% doesn't seem unreasonable to me. I do think liquid savings would be a better basis than net worth though. The house comparison is a good reason why. In the San Francisco area, its difficult to own a house in an okay neighborhood worth less than $500k, meaning that a $600k net worth means you have no extra cash on hand. But I have family in Detroit, and around there where decent houses can sell for under $100k, a $600k net worth likely means a lot of cash on hand.

Maybe something like 5% of cash on hand would be a decent starting point.
 
#7 · (Edited by Moderator)
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#11 ·
hope this is a joke...

I think 1% of net worth is a great measure for a cap on any one watch purchase. That is to say any assets you have - cash, 401k, whole life policy, IRAs, other investments, equity in your home, etc. 1% of that. So if totals $1MM, then a $10k watch. I cant imagine spending 25% of my net income on a watch, so I must not be a WIS :)
 
#15 ·
There are also common sense guidelines. Someone living in a $200,000 house would not be driving a $350,000 Ferrari much less a $1 Million plus Bugatti.
You sure about that? Real estate isn't what is was worth a few years ago. Depending where you live, (midwest, for example) you can get a hell of a nice house for $200K.
 
#21 ·
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?!?!?!??
 
#23 ·
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?!?!?!??
But there's the counterpoint, in the sense that one should view one's primary residence, and the portion of your retirement account that is necessary to generate a reasonable retirement income as non-discretionary. The remainder of your net worth is then discretionary, and could then be spent on luxury items without impinging on your ability to sustain a reasonable quality of life in your retirement. As your net worth increases, the percentage of your net worth which is discretionary tends to increase, so it actually seems more appropriate to spend a larger percentage of your net worth on luxuries like watches as your net worth increases.
 
#25 ·
I wasn't really talking so much about what is prudent or practical, but more about MY personal preferences. There's a certain amount I simply wouldn't exceed on a watch, even as a watch fanatic. At that point it would go to cars, houses, and traveling the world to no end.

If I find myself in the position of being worth much more than I need in my older age, I'd also like to leave some security for my family that I'd leave behind.
 
#27 ·
I wasn't really talking so much about what is prudent or practical, but more about MY personal preferences. There's a certain amount I simply wouldn't exceed on a watch, even as a watch fanatic. At that point it would go to cars, houses, and traveling the world to no end.

If I find myself in the position of being worth much more than I need in my older age, I'd also like to leave some security for my family that I'd leave behind.
I get your point ......EXCEPT.......I don't believe you'd hold true to your word the minute you had an extra $10 million in the bank. Really $50k isn't a lot of money. So it's relative until you are actually in the position. I guarantee watch tastes change dramatically along with other things.

Of course just my opinion. I may be wrong LOL....
 
#26 · (Edited)
Focusing on the percentage of net worth paid for one watch could work IF that was the only watch purchase. For a collector a more useful guage of reasonableness could be the proportion all watches are as a percent of net worth. Focusing on single purchases will hide an overspending problem. Ultimately the best indicator of whether luxury purchases (watches included) are appropriate is whether all the important financial responsibilities have been taken care of first.
 
#29 ·
I inherited far more than I earn but most of it is accounted for on the other side of the planet from where I mainly live.
It's always been there in the background but because I have little interaction with it, it almost isn't part of my life.

On the other hand, what I actually earn is more "real" to me and most of my spending habits are based on that and not my net worth. I think the most I would comfortably spend on a single watch would be £4000-5000. With that said, there are plenty of watches in the £5000-8000 that I like and I don't see there being much of push required to nudge my comfort zone that way if it really came to it.

But how much I would spend is rather fluid and depends on how much I like the watch in question.
I keep thinking I'd like a Seiko SNZH55 and at £100-130, it really is next to nothing but I have thus far put off from buying one for the past two years. On the other hand, I have spent more than that on several times over on other watches that were only to serve for breaking for parts.

As you Americans would say; go figure.
 
#37 · (Edited)
Hard to say. I think for things like watches, most people would look at disposable income instead of net worth. A watch is money spent that will most likely never be recouped. We like watches, but it's like buying a TV or a toaster. It's losing value the minute you buy it. Additionally, the purchase is going to be so small in terms of net worth, It's hard to consider a percentage. It's like buying milk. What do I prefer and can afford. How am I doing in life and am I buying my milk at the $1 store or Frank's Organic Goods?
 
#46 ·
Just buy a really nice watch but gently used, that way your 25K watch can possibly be had for 15K. Makes it easier to swallow regardless of your net worth.
To me watch buying is done in increments. When I 1st started the 100 dollar Swatch was a huge deal then I slowly graduated to nicer watches, eventually moved on to automatic watches and have been building things up ever since. So right now at this moment could I spend 20K on a watch, sure I could, would I do it....NO just because I have other priorities like putting my kids through college and paying off my house as fast as humanly possible. Will I one day spend 10K or more on a watch, maybe but if I see something I like for 1500 bucks then I will just grab it and feel good with myself. I also see watches as something I will pass on to my kids so to me the price is part of the equation but there is more to it than that.
 
#48 ·
I feel OP's question is incorrect to begin with. There's no right or wrong answer. I dont really see a correlation between net worth and how much one is willing to spend on a watch. There are so many variables including lifestyle, financial discipline, sentimental value towards the watch, personal beliefs etc.

I have a friend who makes good coin but lives his life to the fullest without trying to actively save every dollar he can. He has a huge collection of luxury watches - watches he adores and wears with pride. Do I think he has saved enough for a rainy day? No. On the flip side, I have another friend who also loves watches but his most expensive watch is a MM300 although he has 4 investment properties, a lucrative engineering business yet a modest lifestyle.

I fall somewhere in the middle where I'm financially responsible having saved aggressively for years while also enjoying the finer things in life (in moderation, of course). Yet, I have spent about 30k on 6 watches in my collection. But I'm not worth anywhere near 3 million. However, I felt my watch purchases would not set me back substantially from my future financial goals as I had planned my finances around these purchases.

In short, it's relative. Whats more important to the person based on their personal beliefs, life experiences and what makes them happy.
 
#49 ·
Net worth is way to complicated to factor in as a marker for what you can or should afford for a watch - or any hobby. Cash flow and level of debt factor in. On paper, I should be able to afford a luxury watch, but with kid's college looming and other expenses, my financial advisor would never recommend a Rolex [emoji16]
Straight out of college, I had a tiny income and my living expenses were very modest. I should have bought a Rolex back then and suffered through top ramen for a year. I was only responsible for myself.

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#51 · (Edited)
I guess people spend what they are comfortable with according to their ideals and goals... Some even spend money they don't have on watches and go in debt, others spend way less than what they can really afford to spend. I believe hardly anyone would see this in the way of a percentage of net worth.
 
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