Alternative investments have gained a lot of popularity recently as the stock market continues to prove just how unpredictable it can be. While many alternative assets like commercial real estate, artwork and fine wine have historically been reserved for institutional investors, a few innovative companies have made some of these asset classes accessible to retail investors.
One alternative investment with little correlation to the stock market and strong historical returns has been fine wine. Investors with connections to the top wineries around the world and access to the exclusive wine marketplaces have realized extraordinary long-term gains on the bottles that wine enthusiasts are eager to get their hands on.
Vinovest, a modern wine investing platform, has made it possible for the everyday investor to gain access to these top wineries and markets, and makes investing in wine virtually effortless. But why would you want to add investment-grade wine to your portfolio? Here are just a few reasons.
Wine has Strong Historical Returns
Over the past 20 years wine has outperformed the S&P 500 with the Liv-ex Fine Wine 100 index rising 270.7%. Certain wines, like the DRC La Tache (2009), have seen returns of over 800%. A bottle of this wine was purchased for $693 in 2010 and sold for $6,851 in 2020 for a total return of 888%.
There were just under 22,000 bottles of the DRC La Tache 2009 produced, meaning there’s a limited supply for any connoisseurs that want a taste of this award winning wine.
Each time a bottle is consumed the supply is further limited, making it even more scarce. This is the main driving force behind wine's long-term appreciation.
Wine is a Tangible Asset
When you invest in wine, you're buying a tangible asset that has been valuable in all parts of the world for thousands of years.
The wine a particular producer puts out can vary greatly from one year to the next, so each batch of fine wine is unique. The winery can't simply release more bottles to match demand, so values don't become diluted like a stock does when companies issue new shares.
Wine Provides more Liquidity than Other Alternative Assets
The downside to most alternative assets is that they offer little to no liquidity. For example, most real estate investments require you to keep your money tied up for five or more years.
While wine should be looked at as a long-term investment in order to realize maximum returns, it can be sold relatively quickly at almost any point.
However, finding somebody to pay you the full value of your investment wine can be difficult without the proper resources. Vinovest has access to a worldwide marketplace of wine buyers, so investors on its platform can typically receive the full market value of their bottles when they choose to sell their wine.
Wine is a Hedge Against Recession
Wine has historically been resistant to recession. During the 2008 financial crisis when the S&P 500 fell 38.5%, the Liv-ex 1000 declined only 0.6%. Likewise, when the S&P 500 declined more than 23% at the start of the COVID-19 pandemic, the Liv-ex 1000 only dropped by 4%.
The main reason wine has been able to hold its value so well during recession is because its value isn't dependent on future financial performance like with a company or real estate.
You Don’t Have to Be a Wine Expert
Vinovest has made it possible for the average investor to take advantage of the benefits that wine investing offers. This asset class previously required a unique skill set to choose wines that would appreciate in value and strong relationships to gain access to the wineries that produce them.
Vinovest has some of the world's top wine experts on staff to choose bottles that will provide maximum appreciation, and the company has relationships with the top wineries around the world. The collective buying power from the investors on Vinovest's platform gives each investor the same access to investment grade wines as the largest buyers in the market.
Fine wine also has to be stored under very specific conditions to age properly and maintain its value. Bottles need to be stored in a place with the right humidity and temperature and limited exposure to light.
When you invest with Vinovest, you also gain access to the company's network of secure wine storage facilities that provide the perfect aging conditions.
Vinovest also closely monitors the wine market so you can keep track of your portfolio's value in real time. When you're ready to sell you'll have access to a worldwide market, and Vinovest will handle the process of transferring the wine to the buyer.
If at any time you want access to your wine, you can also have your bottles shipped to you to enjoy.
How to Invest in Wine
Vinovest provides the easiest way for most people to start investing in wine. The platform has a minimum investment of $1,000 and creates a portfolio for you based on your investment preferences and risk appetite.
Vinovest’s master sommeliers combine their expertise with quantitative investment models to curate your wine portfolio. You can then monitor your portfolio as it grows in value, buy more wine and sell bottles whenever you wish.
It's free to sign up and see your recommended investment plan. When you're ready to invest, simply fund your account and let Vinovest curate your portfolio.
You can learn more about wine as an investment through the Vinovest platform here.
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