1. Fine Wine Diversifies Your Assets
A well-diversified portfolio is something that every investor is familiar with. Not only is micro diversification important such as assets within an asset, but macro diversification where your assets are in a variety of markets is also important. Here, a variety of traditional investment avenues along with alternative investment avenues is important. If you are investing in only traditional investment markets, then your investments will always be connected to the success of the stock market. The beauty of alternative investment opportunities such as fine collectibles is that they are not tied to the stock market, and their value often comes strictly from age and quality.
Wine as a diversification strategy is a great opportunity as the exposure to risk is very low. Wine has historically returned a minimum of 8% annually for the past 125 years. In 124 years of those 125 years, investing in fine wine was limited to people who had large sums of capital. These investments were limited to those with giant collections, sourcing connections, and expert knowledge in the field. Now through wine investment platforms, investors can invest in whatever size they feel comfortable with through fractional ownership, along with the help of experts in the field for a fraction of the cost.
2. Fine Wine Protects Against the Recession
The beauty of alternative investment opportunities such as collectibles is that they are an asset that is not connected to the traditional stock market. Even in times of an unstable market, when MSCI indicated that the world equity dropped by 24% in 2022, collectibles such as fine wine experienced double-digit increases. How can this be? Investment in fine wine is based far more on time, quality, and age, than what the market is doing. Throughout history, market crashes have occurred, while fine wine has remained an avenue of sustainability. During the crash of the S&P 500 in 2008, wine only dipped a small .6% while the rest of the market dipped ~30%. Even this year, in the first half of the fiscal year of 2022 while the Nasdaq dipped ~25%, fine wine actually increased by 11.1%.
Storing value in uncorrelated assets to the stock market such as fine wine can be the missing puzzle piece to protecting your money. The lack of large undulations has kept high-end investors running back to the wine industry for the past 125 years as it can protect value in the short term and can earn more quickly in the long term in a low-risk environment.
3. Fine Wine is a Low-maintenance Investment
Most people probably assume that you have to be some kind of wine sommelier in order to have wine as an investment asset. Thankfully, that could not be further from the truth. Investing in wine through a platform such as Vint can equip you with different collections to choose from that are chosen and researched by industry experts. Platforms such as this take the pressure off as they notify you and keep you updated on your account’s changes, so you can sit back and not have to keep a sharp eye on local or international news. Fine wine investment is low maintenance because it’s not reliant on the stock market. It allows you to trust that as long as the wine in your collection is quality it is doing its job simply by aging.
Investing through wine investment platforms can be a very low-maintenance way to make your start in the industry. Luckily, many platforms provide you with all the support and research you need while not charging management fees. These platforms allow you to invest in collections curated by experts and allow you to buy shares and receive your proceeds upon making a sale easily without lifting a finger.
4. Fine Wine has a Strong Supply & Demand Relationship
Wine is something that can be found worldwide. It is not limited to a specific culture or country. Despite this, wine production takes up a very small percentage of total global production. Because of the scarcity, and the fact that wine improves with age, the value appreciates over time. Each wine is made in a limited batch each year, with no guarantee that it will be made by the following year. Years, where the crop thrived, become prized collectibles. This capped supply is a great avenue to rely on the appreciation.
Desirability also increases when the wine reaches its prime maturity period. Wine of that collection from that year is also most consumed during that time, meaning that there is less available in the collection during this time. This leads to basic supply and demand principles which increase the value of your asset.