Investing In Wine

08/12/2019  \\\  Posted by Jennifer O'Neill  \\\  Wine 101

For many of us, fine wine is a passion. One that can also be turned into a lucrative investment. Now’s the perfect time to start investing in wine since it boasts an average inflation-adjusted price appreciation of 3.7% annually, compared to just 2.9% for the overall collectibles class, USA Today reports. Although a level of risk is involved, wine investment can diversify your portfolio and supplement your income or retirement fund nicely. It’s important to think through your options carefully in order to successfully invest in wine which ends up rising to its full potential.

Understand the risks

In wine investment, end profit depends on several volatile factors. A bad harvest, for instance, makes production challenging and prices are therefore increased — which isn’t good news for first-time investors. But this simply highlights the importance of diversifying your investment portfolio to yield higher returns. So, first make sure wine investment is the right choice by weighing up potential risks and benefits. Take a look at the current market and where the profits lie. Bordeaux and Burgundy, for example, both increased in value by 40% over the past year.

How much can you afford?

Wine investment requires ample money to get started — at least $10,000. If you need to save up for this amount, set a savings goal complete with a clear timeline to help keep accountable and on track. Meanwhile, you should also do research into the best wines to invest in — rarer, vintage wines from renowned regions (like Tuscany, Napa Valley, Burgundy, and Bordeaux) are highly-sought after and highly-valued. If you’re not so much focused on profit, feel free to collect wines that you’re simply most interested in. While your eventual payout may be smaller, you’ll have delicious wine to enjoy if they don’t sell.

Protect your investment

Storing your wine correctly is essential. Incorrect storage can change the flavor and spoil the wine over time. It’s recommended to store wine at temperatures between 45° F and 65° F. You could invest in a wine cooler to keep in your closet or basement. However, paying for local professional storage will give you ultimate peace of mind. You’ll make your money back once you sell your investment. You may also want to purchase wine insurance to protect against theft, natural disasters, and accidental damage.

When it comes to making a profit, patience is the name of the game. It generally take ten to twenty years to make a return. While wine is no quick win investment, it’s ideal if you’re looking for an enjoyable way to diversify your investments to supplement your income or retirement savings.