Investing in fine wine has been around forever, but it is now becoming more popular as an alternative investment for those who may not have previously considered it as an option. Investing in wine as an alternative to traditional markets is relatively low risk and provides steady returns.
If you want to know why fine wine makes a good alternative investment and how to start wine collecting keep reading.
Your Investment is more than just a piece of paper.
You own nothing except perhaps a digital certificate when you invest in stocks, bonds, shares, or cryptocurrency. If there is volatility within the stock market, all can be lost. Investing in tangible assets can provide a safer alternative and one that you can enjoy if all else fails. You can relish drinking a bottle of Romanée Saint Vivant Grand Cru 2008 and revel in driving a 1960 E-Type Jaguar. Even if a wine investment company goes bust tomorrow, you still own every bottle in your wine portfolio.
The other beauty of investing in tangible assets is you can choose if and when you want to enjoy them or sell them on once they have appreciated. You can quaff wine investments; you cannot drink shares in Coca-Cola HBC.
Wine Investment Provide Stable Returns.
There is a very good reason those with means have always invested in wine and often have wine cellars at their country house. It is because fine wine investments tend to provide strong returns and do not suffer the volatility other equity’s do. Wine investing is not for those who want a rapid return; as the wine slowly matures, so do wine investments. On average, an investor can expect to double their money approximately every seven years. The global fine wine investments market returned 13% for 2020 according to the Knight Frank Luxury Investment Index.
“More than ever, this year has been about timing in the capital markets and, if you got that wrong, the chances are you got it expensively wrong. Not so for wine. Unlike after the global financial crisis, the wine market has held its nerve, merchants did not mark down prices and the market has been stable. Investors are about, and even Bordeaux prices feel like they are firming up.”
Of course, just as with any other type of investment, it is important to diversify your portfolio to help mitigate the risks, especially if you are considering becoming a wine investor or collector. The stock market is always vulnerable with the inflation of interest rates. However, with wine investments inflation and interest rates are not a concern. Wine prices are impacted by their popularity and the decreas in vintage wine supply. These are the reasons why fine fine is considered to be a good alternative investment, because wine can even be recession proof.
Wine is being consumed and more popular than ever.
It is well publicised that wine consumption shot up exponentially during the global pandemic. Wine subscription services certainly played their part in this increase. Thanks to the surge in global wealth, more people can afford to invest in wines whether for drinking or collecting. Vintage wines will continue to be a smart investment choice and that comes down to supple and demand. Eventually there will be less supply and therefore, greater demand. Rarity is always increases the value of wine.
