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How I Was Able to Afford My Luxury Wristwatch

Siva is a risk manager, watch enthusiast, music lover, and wine student who likes to explore and travel the world through photography.

Watches Are Portable Wealth

We buy watches not just because we like them, but because they retain value. I would shy away from using the word "investment" here, but I see watches not just as wearable art but also as a store of value and wealth that is portable.

Below is the six-step process by which I acquired my watch. I paid for my watch using the cash flow from other assets. In other words, my watch has become a "free" asset that has been fully paid for. The Patek 5712R watch I bought in 2015 has appreciated 30% in the secondary market today.

My Patek Nautilus 5712R

My Patek Nautilus 5712R

1. Choose Your Watch

  1. Decide which watch you would like to buy.
  2. Identify both its retail price (after any discount) and its resale value. 99% of watches that are sold at a retailer lose value once you walk out of the shop. To find resale value, ask secondhand watch dealers what price they would pay for the watch, and check the price used watches are selling for on the market. Watch dealers make a profit on the difference between the buy and sell prices.
  3. If you would like to buy a watch that has low resale value, I would urge you to buy it on the secondhand market so your downside is limited. Bargain hard for a good deal.
  4. Here are some examples of watches that have strong resale values currently:
  • Rolex Steel sports watches (GMT, Submariner, Sea Dweller, Daytona, Sky Dweller)
  • Patek Philippe Nautilus and Aquanaut range
  • F.P. Journe Chronometre Bleu

In my case, I liked the Patek Nautilus 5712R, so I decided to buy it.

Patek Philippe Nautilus 5712R

Patek Philippe Nautilus 5712R

2. Don't Pay Cash Upfront

I didn't pay for the watch with cash upfront. I had the money to pay for the watch, but I chose not to use my hard-earned cash. Instead, I took advantage of the 0% interest installment plan offered by my credit card company and chose to spread out the cash payments over the loan payment period.

The cash payments I made each month came from the cash flow from my assets and not from my hard-earned salary. This concept can be extended to almost any purchase in life, even daily expenses.

3. Park the Cash in an Interest-Earning Account

As mentioned above, I had the cash to buy the watch, but instead of spending it on the watch, I chose to park the money in a high-interest-earning account.

For example, in Singapore, one can park this amount of cash in accounts that pay 2%. In the US, this could be higher (2–3%). Ringfence this account and do not touch it until the watch has been fully paid for. Assuming the watch costs $40,000, and you park $40,00 cash in an account that pays 2%, the account will give you around $67/month ($40,000 X 2% per annum) during the paydown period.

Patek 5712R at the cafe

Patek 5712R at the cafe

4. Take Advantage of the Dealer's 0% Interest Installment Plan

In my case, the AD (Authorised Dealer) partnered with a bank to offer a 40-month 0% installment plan. What that means is that if the watch costs $40,000, you will pay $1000/month for 40 months, with no interest added.

I chose to take advantage of this plan and spread out my payments, rather than paying the full amount in cash, because there was no discount for paying upfront. The price of the watch is identical regardless of whether you pay it with cash or credit card. Even if there was a discount, it wouldn't have been much, as watches in the Patek Nautilus range are extremely difficult to come by.

Take note that if you miss one of these $1000-per-month payments, the bank will charge you a hefty interest rate! So, it is important to make your payments on a timely basis. Discipline is key!

5. Use Cashflow From Other Assets to Pay for the Watch

This concept is similar to how property investors use rental income from tenants to pay for the monthly property loan interest. To pay down the $1000/month, I used the following sources:

  1. Interest income: $67/month from the high-interest account where I parked cash amounting to the price of the watch.
  2. Bank interest income from my savings.
  3. Royalty income: as an Exclusive Getty Images Photograph contributor, I get paid monthly when someone buys my pictures.
  4. Dividends from stocks.
  5. Precious metals trading (buying and selling of physical gold)
  6. Option income. I sell options on my favorite stocks and precious metals. Some of my favorite stocks are Microsoft, Bank of America, and Realty Income. Options are the largest contributor to my income as the returns are around 12% on average.
  7. Selling unwanted items from my house on Carousell (similar to eBay).

There are unlimited ways where one can find income sources. The key is using cash flow from these assets to pay for another asset. For example, the income received from writing Hubpages articles can also be used to fund your watch!

6. Practice Risk Management

If for some reason I was unable to pay the $1000/month for my watch, I planned to dip into the ringfenced account where the watch cash was warehoused. This was my worst-case scenario. However, I never had to do this; I had no problems obtaining the $1000 cash flow every month, and in many months I made way more than that. So, I actually paid off the watch in two years. As mentioned, financial discipline is key here.

A Suitcase of Portable Wealth

I intend to repeat the above process to acquire other watches that I like, and I hope to build a million-dollar watch portfolio in my lifetime. These will be watches that I can wear and enjoy on a daily basis and can that can be easily stowed in a suitcase as portable wealth.

The above approach appeals to me but may not appeal to everyone. Some may prefer to pay for their wearable art all in cash and not worry about it. My approach needs not only financial discipline but also assets to implement. Financial education is key in creating and understanding your cash flow machines.

© 2019 Sivakumar Sathiamoorthy


JoySantos on June 06, 2019:

Whoa!.. This system was my practice since 1996. Except for the precious metal and watches that was mentioned in the article. Do I know this author? Do I spoke with him on the said year? Surely Not. You will enjoy your life to the fullest Mr. Sathiamoorty with your lifestyle and discipline. I hope more people can read this article.

Sivakumar Sathiamoorthy (author) from Singapore on June 03, 2019:

Thanks Liz

Liz Westwood from UK on June 02, 2019:

This is an interesting article with some good tips.