Somewhere on the balance sheet of almost every high-net-worth family is a line that doesn’t behave like the others. A cellar of first-growth Bordeaux. A vintage Ferrari under a cover in the garage. A watch that took two years on a waitlist to acquire. The industry has a tidy name for these things — “investments of passion” — and that phrase is doing a lot of quiet work. It smuggles a financial promise into what is, for most people, an emotional purchase.
So it’s worth asking the unsentimental question directly: are collectibles actually a good investment?
The most recent data offers an answer that is more interesting than a simple yes or no.
The headline number that hides everything
The Knight Frank Luxury Investment Index — which tracks ten passion-asset categories from watches and wine to art, classic cars, and colored diamonds — declined just 0.4% in 2025, after falling 2.7% in 2024 and 3.3% in 2023, according to Knight Frank’s 2026 Wealth Report. Read quickly, that reads like stability. A basket of luxury collectibles that barely moved while public markets did their usual heaving.
But the composite is the least useful number in the report, because almost nothing inside it behaved like the average.
Watches rose 5.1%, led by demand for the hardest-to-source Patek Philippe and Rolex references. Impressionist art surged 13.6%, lifted by single-owner sales such as Gustav Klimt’s Portrait of Elisabeth Lederer, which sold for $236.4 million — the highest price ever paid for a modern work at auction, per Knight Frank’s index results. Fine wine, meanwhile, went the other way: the Liv-ex Fine Wine 100 fell 2.5% on the year and now sits down roughly 25% from its 2022 peak.
A 0.4% “decline,” in other words, was actually a 14-point spread between the best and worst categories. That is the first thing the word investment obscures. You cannot buy the index. You buy one watch, one painting, one case of wine — and the dispersion within a single asset class is wider still.
When “rare” stops being rare
For a cautionary version of the same lesson, look at what happened to the diamond.
For most of the last century, the diamond’s entire value proposition rested on scarcity — natural, finite, irreplaceable. Then the supply assumption broke. Lab-grown diamonds, which are chemically and optically identical to mined stones, now cost roughly 73% to 83% less than their natural counterparts, according to jewelry-insurance data firm BriteCo. A one-carat lab-grown stone that retailed near $3,410 in 2020 sells for somewhere around $750 to $1,000 today — a drop of roughly 74% — as production flooded the market, TheStreet reported in April 2026.
The resale picture is more sobering still. A lab-grown diamond now typically retains only about 30% to 40% of its purchase price on the secondary market, per analysis from Goodstone. The thing marketed as an enduring store of value turned out to be, for many buyers, a depreciating consumer good.
The point is not that diamonds are bad and watches are good. It’s that “rarity” is a claim, not a guarantee — and claims can be repriced overnight when supply, technology, or taste shifts. The categories that held value in 2025 shared specific traits: genuine scarcity, documented provenance, and deep, liquid secondary markets. Momentum and marketing were not on the list.
The costs that never show up in the return
Even the asset that appreciates rarely appreciates as cleanly as the auction headline suggests. A passion asset has to be insured, stored, maintained, and authenticated. Provenance — the documented chain of ownership — can command a meaningful premium, which is another way of saying that an identical object with a thinner paper trail is worth less. And when it’s time to sell, the spread between what a dealer will pay and what the next collector will pay can be wide, and the timeline can be long.
None of this appears in a ten-year index return. All of it appears in your actual experience of owning the thing.
The return that doesn’t show up on the index
Here’s the reframe worth sitting with. If you bought a watch, a painting, or a bottle purely for the financial return, the data above should give you pause — the outcomes are dispersed, the costs are real, and the “store of value” promise is fragile. A diversified portfolio is designed to spread risk across a range of investments, and it doesn’t need to be insured against theft or stored at the right humidity.*
But that framing misses what these assets are actually for. A stock can outperform. A bond can mature. Neither can be worn to a dinner, passed to a child with a story attached, or enjoyed every single day for thirty years. That layered, non-financial return is the one the index can’t measure — and, for most collectors, it’s the one that turns out to matter most. The strongest passion assets tend to be the ones bought from genuine connection rather than with an exit already in mind.
That’s not a reason to treat collectibles as serious portfolio holdings. It’s a reason to be honest about which job they’re doing. Understanding what you’re actually optimizing for — return, or meaning, or both — is the whole game. And it’s a conversation best had alongside your financial, legal, and tax advisors, not in the heat of an auction.
On the latest episode of Quarter Over Quarter, “Beyond the Balance Sheet,” Jarred Kaplan of Provident Jewelers joins Tom Moran and Don Drury to go deeper on exactly this — how to tell a durable collectible from a speculative one, what provenance really buys you, and why the most enduring value in a passion asset is so often the story behind it.
Watch or listen to the full conversation on the Moran Wealth Management® YouTube channel, Apple Podcasts, or Spotify.