THE BRIEF
On another note, we bring you a quick lesson in wine investing.
- From 2003-2008, investment-grade wine delivered an annualized return of 12.4%, beating the 9.2% return by the S&P 500.
- Wine has traditionally been inaccessible to the average investor, complicated by networks of private auctions, wine brokers, and a high cost of investing. Launched in 2019, Vinovest is a trading platform that makes wine investing accessible with as little as $1,000.
THE EXPLANATION
What determines the price of wine? Region, production history, and reputation. Parts of the world enjoy better climate and soil for growing the grapes used in wine production. Investment-grade wine is the highest quality wine that makes up 1% of all wine produced. 80% of investment-grade wine comes from France, notably in the regions of Bordeaux and Burgundy. They have a long-standing history of producing high-quality wines with deep knowledge of production techniques.
PRO TIP: Only investment-grade wine will appreciate in value.
Why invest in wine?
- Wine gives investors a good portfolio diversification with a low correlation to the stock market. The overall wine market fell 1.35% while the S&P 500 fell over 25% in the March COVID stock market crash.
- It offers an opportunity to dive into the world of fine wines with lessons in the history and flavors behind your wine investments.
- When your friends are talking about their “index stock returns”, you can now bring up the 20-year old bottle of Pinot Noir that scored you a 737% return.
THE ACTION
Vinovest, a wine trading platform available in both the US and Canada, offers individuals a way to invest in fine wine with as little as $1,000 (annual fee of 2.85%). Investors choose a risk profile (conservative, moderate, or aggressive), and a team of experts design an investment portfolio of wines for the investor. Benefits of investing with Vinovest include:
- Vinovest stores the purchased cases of wine inside their facilities, savings investors the hassle of storage and transportation.
- All bottles of wine are insured, which covers the full price in the case of a broken bottle or accident to the facility.
- Bonus: investors can even opt to have their wine sent to them, although it’s never a good idea to drink your whole investment away.
