4 Luxury Items To Avoid Buying in 2024

Insurance and finance expert John Crist, founder of Prestizia Insurance, has spent a quarter-century assessing the value of luxury items and analyzing their depreciation rates, resale value and long-term ownership costs.

“Understanding the true cost of luxury items and considering their impact on your financial goals is crucial. It’s not just about the initial price tag. It’s about considering all associated costs and how that money could be better utilized in securing your financial future,” he said.

“In my experience, focusing on financial security and growing your wealth through more traditional investments often yields a more stable and rewarding financial future,” Crist said. “Instead of spending on depreciating luxuries, consider investing in vehicles that offer potential for appreciation or provide tangible benefits to your financial health. Starting an emergency fund, investing in the stock market, or contributing to retirement accounts are all examples of financially prudent moves that can provide security and growth over the long term.”

Avoid these luxury purchases in 2024.

Few things advertise wealth more conspicuously than flashy cars — but they’re rarely worth the cost of turning heads on the highway.

“In my 25-plus years in the insurance industry, I’ve seen the financial aftermath of splurging on luxury items without considering the long-term impact,” Crist said. “For example, while high-end cars like Ferraris or Lamborghinis can be tempting acquisitions, they come with steep depreciation rates, soaring insurance premiums and hefty maintenance costs. From a financial planning perspective, these luxury cars often lead to a significant loss in value, making them a poor investment for most people.”

A 2023 iSeeCars study found that nearly every one of the 25 fastest depreciating cars was a high-end luxury vehicle, from the Cadillac XT5, which lost 53.9% of its value ($31,737) over five years, to the Maserati Quattroporte, which shed 64.5% of its value, or $90,588.

These are not anomalies. The publication wrote, “Luxury cars always depreciate faster than mainstream models, with the latest data confirming luxury cars lose an average of 48.1% in value after five years. This compares to the industry average of 38.8% and 36.8% for non-luxury cars. The worst offenders are luxury sedans and luxury SUVs.”

Some spendthrifts like to drive their money instead of banking it. Others like to wear it, usually with the same monetary outcome.

“Designer clothing and accessories can be a pitfall for personal finance,” Crist said. “These items are not just about high initial purchase prices. They also tend to have a very limited lifespan in terms of fashion relevance. Unlike classic pieces that can be wardrobe staples for years, trendy designer items may only be ‘in’ for a season or two, leading to a cycle of continuous spending without real long-term value.”

According to Marine Depot Direct, “owning a boat doesn’t have to be expensive,” citing an average annual ownership cost of just $2,000. But high-end status-symbol boats have purchase and ownership costs that are anything but average.

“Investing in luxury boats is another area where consumers should tread carefully,” Crist said. “Aside from the considerable upfront cost, ownership comes with ongoing expenses like docking fees, maintenance and insurance. Boats depreciate quickly and the niche market can make them hard to sell. During my tenure, we’ve provided insurance for numerous luxury boats and while they bring great joy to some, they’re not a wise financial decision for everyone. The joy of ownership must be weighed against the total cost of keeping such a luxury.”

There’s nothing wrong with buying shiny things to complement your wardrobe, but there’s jewelry you can justify and jewelry that you can’t.

“We all love a bit of sparkle, but let’s be honest,” said Rhett Stubbendeck, finance and insurance expert and CEO of Leverage Planning. “That huge markup on bling? Not our friend.”

According to The Diamond Pro, diamond jewelry typically has a resale value of as little as 20% of the original purchase price. That means if you buy some ice in 2024, you can expect to get back just one dollar for every five you spent, even if you sell it just a few months later.

Also, it can be hard to assess the long-term value of expensive jewelry because the resale market is notoriously fickle. For example, prices on the secondhand luxury watch market have spent the last year in freefall, disappointing many buyers who expected their Rolexes to appreciate, as they’ve been known to do in the past.

Business Insider wrote, “The costliest timepieces suffered the worst declines. Those in the $50,001 to $100,000 price bracket slumped over 10% in the past 12 months, while the $10,001 to $20,000 group fell about 7%.”

So if you want to buy diamonds, a luxury watch or any similar shiny thing, buy it because you like it and can afford it — not because you expect it to gain value as some pieces have in the past.

“Think of it more as a sentimental buy rather than a money-maker,” Stubbendeck said. “There are smarter investments out there.”