Recently we have added about 4% of our portfolio to wine. We have an extremely aggressive portfolio as outlined by my article showing exactly what we have invested and why.
I want to discuss the importance of having wine as an investment, how you can purchase fine wine, and the economics of this decision.
First off, I use Vinovest for our wine investing. The reason is because they made it very simple to invest in fine wine without needing to know much about the wine industry. It’s a great way to both learn about wine, and have experts assist you with the process. You can also schedule consulting calls to get more information about why wine is a good investment, their entire investment process, and any other questions you may have.
Because of Vinovest, I don’t need to store my wine, I don’t need to find the best wines for aging long term, and I don’t need to spend my weekend going to wine auctions. Clearly this is a passive way to invest in wine. If you are a wine advocate and want to spend a lot of time researching individual wines yourself, or if you consider it a fun hobby, it may be best to do everything yourself, it may also be much more expensive to do it yourself. They also will let you know when the peak time is to sell your wines, which can also be beneficial if you are not a wine expert.
I currently do not have the time or resources to do all of these things currently. Another bonus is that you only need $1000 to start investing with them. You do not have to buy an expensive wine fridge or have a cellar, or pay a wine storage facility, Vinovest covers all of this through their flat rate fees. You can dump 1k into Vinovest, they will buy you a nice case of wine (which you now own), it’s insured, and it’s done by experts. You can also have this wine shipped to you at any time, and can drink the bottles. But that would be a poor investment decision.
I’m sure there are other options for wine investing, that is just the company I personally choose, do your own research. If you want 3 months of no investing fees (basically a 3 month test phase) you can use my link to sign up. I also get 3 months free if you sign up with that link.
I first decided to get into wine because I don’t want all of my assets tied up into the stock market. I chose Bitcoin as a monetary store of value. I would choose gold if gold could travel the speed of light around the world at zero cost. Wine is an investment that is not correlated with the stock market, and it’s a physical asset I can drink, hold, and sell to other wine lovers. It’s the trifecta, and with modern platforms I don’t actually need to store any of these in my home if I do not want to.
Now, let’s get into some basic economic reasons for me choosing wine. First, supply and demand. Wine naturally becomes more scarce over time. Certain bottles get ruined by bad storage methods, some get drank, and others people won’t sell and hold in their person collections. On top of that you cannot create new wine from a previous year (unless you can create a time machine) and you cannot create more wine on limited land. For example, Bordeaux wine can only be created in Bordeaux, there is no way to create Bordeaux wine in California. As demand goes up, the price goes up. As the supply goes down, the price goes up.
The next reason is that it’s a physical asset. When investing in wine, you are buying a bottle of liquid. This bottle of liquid has demand for drinking and its supply is limited. The bottle of wine cannot go out of business, the bottle of wine cannot have a scandal or commit fraud causing its price to crash, like an equity. Even if the bottle of wine drops in price 50% because you ended up purchasing an undesirable case, you can still keep it and hope for the price to go back up, drink the physical bottle, or sell it for a loss. Physical assets that you own, have access to and can touch is an essential for my investment strategy. Real estate could also fill this slot, however RE has annual taxes and maintenance costs that can eat away your returns.
I want physical assets (wine, RE and art), cash flowing companies (like dividend stocks), and a hedge against catastrophic events (Bitcoin). Real estate will eventually be added as a cash flowing physical asset that can be leveraged.
This can be done with art, cards, lunch boxes, wine, or gold. I believe the only criteria is you have to have access to the asset, it has to be scarce, and desirable (I believe Bitcoin could also fall into this category if you own the private keys).
A Gold ETF for example does not fall into this category in my opinion because you don’t have access to that gold. Many would disagree with this analysis and from an investment perspective they are right but if a catastrophic event happens they will not have access to that gold they ‘own’ in the ETF. Buy some gold and store it in your home safe or a banks vault if you want a hedge and you think gold is the best store of value.
My last reason is that it does not follow the usual market forces. If the stock market falls, wine is not correlated. If bonds crash, wine is not correlated. Wine is a phenomenal non-correlated asset. I like having an asset that does not rely on the major market forces, or the economy as a whole.
Wine is a hedge against a crash in the stock market and inflation, allowing me to have some safety during bad times in the market, it also has out performed the S&P 500 in the last decade, which is also quite nice. Plus I can drink the wine if I feel like it. I can’t say the same thing about gold bars.
Here is some information on why I use Vinovest.
Traditionally to invest in wine you would need to find a wine broker. For a good broker to work with you they would usually require $10,000 of investment each year at a minimum. Many people don’t have that option. $10,000 to invest in wine as a minimum every single year is a lot of money.
Vinovest allows everyday people to have the same opportunities which is why I like using their platform, and the only reason I can afford to have wine as a ‘diversification strategy’. $1,000 minimum isn’t too bad.
Wine investing can allow you to enjoy fine wine for nearly free. You can do this by purchasing a case of fine wine, letting it go up in value, selling most of the bottles for profit, and once you break even you will then be able to drink the remaining bottles for “zero” cost.
For example, buy a case of wine with 6 bottles for $1000. In 10 years that becomes worth $2000. You can then drink 3 bottles and sell 3 bottles to re-coup your original $1000 while being able to drink 3 bottles of world class fine wine.
We plan to allocate more and more to wine, possibly bringing up our investments to 10% wine (depending on how our other investments grow). I don’t like balancing my investments for an arbitrary percentage that may end up killing future grown potential. 10% wine, 10% cash, 30% stocks, and 50% bitcoin is a good portfolio for me and likely sounds crazy to you.
That would mean we have about 20% “safe” assets. 30% investing in companies, and 50% in the future currency of the world, which I believe will be the fastest growing asset for the next few decades.
I am not recommending anybody follow this strategy. Many people would consider this reckless and risky. Like I said in my other post, this portfolio development works well for me and has been crafted with hundreds of hours of reading and research. I could be wrong and I’m ok if thats the case, I just don’t think I am.
None of this is investment advice. It is just how I personally choose to invest and how I choose to invest in a market that is traditionally only available to people that have 10k+ per year to put into the asset class.
Wine investing allows you to dig into an extremely fun industry. Learn about the world, about vineyards that are thousands of years old, learn about food and flavor, of course you can get a little tipsy in the process, and make some money.
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