I love wine. Who doesn’t? I’m sure you have seen in the headlines a number of high-profile investment managers and athletes investing in wine. I like the idea of investing in alternative assets to create wealth (not your entire net worth, but some). Here are some great tips for investing in wine.
Great Tips For Investing in Wine: Alternative Wealth Creation
Similar to stamps, jewelry and art, wine has a well-documented history and value which makes it an excellent collectible. Well, there are various factors that can influence how valuable a collection of wine can be and these include: the brand name, storage history, provenance as well as vintage.
Managing my cash flow and net worth is key. I like diversifying my asset base as much as possible because you never know what niche you can carve out with investing or you never know when certain asset classes will collapse in value.
I also like impact investing as putting money to work for a good cause feels amazing.
Luckily, through travel hacking, I’ve been able to learn a lot about wine in different regions.
How to Create Wealth by Investing in Wine
We gave you a guide on how to flip things for profit. For maximum profit, we are going to take you through these factors and show you how to start a fine wine and valuable collection that you can call your own.
Here are 7 tips on how to invest in wine to build wealth.
Look for Big Names
If you are looking to invest in wine with an aim of selling it at some point in the future, then it is advisable to focus on big names as they are more likely to offer a safe and better return.
There are numerous wine brands on the market that are worth investing in, but a few that are noteworthy include Romanée Conti, Cheval Blanc, Château d’Yquem, Château Mouton-Rothschild and Château Margaux.
Spotting a Fake
As with any other industry, you can expect numerous fakes in the world of wines and this is something that you should be especially wary about as a wine collector. It’s best to be cautious with any investment, so do not hesitate to ask questions or ask for more information and details. You should especially look out for wines that are known to be vintage as they have higher chances of being replicated.
Always compare the capsule and label to those of a known authentic bottle and ensure that the label is straight and centered. Checking the place of origin or provenance is a must and be weary of sellers who are not willing to provide information on the same. If you have any reason to be suspicious or are not certain what to look for, you should always seek advice from a professional before committing to the purchase.
Provenance
It is vital to the value of your wine investment to ascertain that you know the provenance as well as the quality of the wine that you are considering to buy. This includes the origin of the wine as well as confirmation that it has been stored in an ideal environment.
When buying wine, it’s always advisable to ask for this information as well as a copy of the seller’s purchase invoices. This will help further validate the information.
Wine Storage
You have to be very careful when storing wine. Poor storage can substantially affect its value and in the worst case scenario, ruin the wine. Prospects will usually ask about the storage conditions and some auctions even refuse to sell any wine without a certain storage history.
In order to store your wine properly, you should ensure these conditions are in place:
- A slightly damp atmosphere
- In addition, a dark room free of any light
- A constant temperature of around 10-14 degrees
- An environment that’s healthy, free of mold
Understanding Vintage
Wine’s vintage is simply the year in which the grapes of a particular wine were harvested. It is important to bear in mind that some vintages tend to be better than others. That’s because wine can vary significantly from year to year depending on an array of factors like the harvesting period and the weather conditions. To get a good idea of the quality of a certain vintage, it’s smart to assess the vintage charts which can be accessed from the sources below:
- La Revue du Vin de France– a monthly French publication dedicated for wines that dates back to 1927.
- Robert Parker through the Wine Advocate Publication which dates back to 1978.
- Gault & Millau – A French guide to hotels and wines in France
Assessing The Condition of Wine
When purchasing or selling wine, there are various factors you will want to look out for to make sure that you’re making the most out of your investment.
For instance, wine that comes in the original wooden casing is more desirable and valuable. Also, wines with corks, labels and capsules that are in excellent condition tend to be more valuable. The label’s condition is especially important.
Know When To Sell
It is important to know how your wine is drinking. Keep an eye on the trends and look ahead. Most people are usually into the idea of holding onto the investment for several years, but it’s essential to factor in insurance and storage costs and even the possibility of the wine becoming corked.
Wine Collection as a Form of Investment
Where will you go to find wine? Just a small portion of wine produced globally can be considered ideal for wine investments. There has been a substantial increase in the wine market in the past several years, with China fueling its growth.
Hong Kong unsurprisingly has become one of the most popular places for wine auctions, overtaking New York and London, and setting record prices regularly. Building a portfolio of wine is a lot different than a dividend portfolio.
Since the abolition of wine duties in the city back in 2008, the auction houses have tremendously grown in the past decade. A number of millionaires have been pouring (no pun intended) significant money into wine investing. Sometimes, it doesn’t hurt following money hacks from millionaires.
Related Resources
- Best Investing Apps to Consider
- Top Robo-Advisors Compared
- M1 Finance Review: A Completely Free Investing Platform
Are you ready to invest in wine? What do you think about my tips for investing in wine? Please let me know in the comments below. I’d love to hear from you.
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