Considering making the jump into fine wine investment? Check these tips
Fine wine is a hot investment with great potential for valuable returns. However not everyone can make money with wine. Collectors that are serious about this type of investment have a vast understanding of the market; they understand it and they know when and if one should invest. Apart from being a “hobby” investment type, fine can also be profitable. It’s all about getting to know how the business works before starting to spend. Over the years, many connoisseurs with a passion for wine have become savvy investors. They’ve gotten to a point where they can appreciate the value of a good-quality type of product.
Selling and reselling wine can be a solid alternative investment. Even though the waiting period is long, in the end the returns obtained can be massive. As opposite to other types of assets, fine wine does not decrease in value. On the contrary, the longer you wait the better chances you have to see substantial returns.
The perks of a consumable, tangible product
As opposite to bonds and stocks, investing in wine comes with benefits you must learn to take advantage of. First and foremost, we have a type of investment that’s both tangible and consumable. Worst case scenario, you can always enjoy it. As a newbie investor, you have to know that not all wines have investment potential. Not all wines are investment grade wine. This might sound harsh, but out of millions of bottles produced annually, only 1% is investment worthy. When it comes to fine wines that come from the best wines regions (Bordeaux, Burgundy, Tuscany, California etc.), investors should know that these have the highest chances of appreciating in value over time. But then again, considering that the variety is so great, finding a case with investment potential can be tough.
Look for wine bottles with aging potential
Investment grade wines are meant to increase in value over time. The average growth rate is 15% per year. For an investor to maximize his profits, he will have to wait for about 10 years before he can reap any palpable and significant returns. The types that age the most beautifully are the reds. Of course, this doesn’t mean that white wines are not worthy of an investment. As far as the market is concerned, one must know influencers are ruling it. A single negative grade from an experienced wine critic or review (Wine Spectator, Robert Parker, Wine Advocate, etc.) can rapidly devalue your entire collection. To avoid a bad investment, you have to perform a thorough research concerning the type of wine you’d like to invest in. Your safest bet is to invest in ‘classics’ with scores above 95. This will help you build a trustworthy wine portfolio.
Even though historical data shows that Bordeaux wines are the best on the market, it’s always a good idea to keep searching. Focus your attention on California cult wins, Prestige Cuvees, Burgundies, and Super Tuscans. It’s up to you to decide, but whether you choose to play it safe and invest in red Bordeaux or you’re willing to risk is all by investing in an appealing Italian Barolo case, just keep in mind that in the wine business brand matters a lot. Purchase your cases from established wine makers with a track record and a bullet-proof reputation.
Stick to varieties with a stable record in terms of price appreciation, and get to know more about well-known wineries. This will boost your chances of seeing valuable returns in 5, 10, even 20 years. Focus on quality not quantity, and your fine wine investment deal with be well worth the initial sum invested.