There are various forms of investments that people can explore throughout their lifetimes/ There are the more traditional methods of investing such as stocks, bonds, cash, and real estate. People generally tend to view these forms of investing as the safest avenue.
This assumption has been tested throughout recessions, however, and it seems that investing in these methods because you believe they are the safest would be a major fallacy. Stocks can tank and the market is often more unstable and unreliable than investors would hope. An alternative to investments that rely heavily on an unstable market is collectible investments. The world of collectibles is vast and can include things such as art, stamps, wine, and musical instruments.
A key point that many financial advisors will impress upon you is to diversify your assets. Simply investing through one mode can have unfortunate consequences, so it is far wiser to spread your investments throughout various forms and avenues. So why are investors so interested in the fine wine industry right now? We’ve consulted some leading titans in the industry and compiled a list of why investing in wine in an unstable market could be the perfect choice for you.
Wine Holds Its Value, Even in a Volatile Market.
Morgan Stanley Capital International (MSCI) is an investment research firm that in 2020 indicated that the world equity had dropped by 24%. While the rest of the world’s market was dropping dramatically, collectibles such as fine wine experienced double-digit increases. The beauty of alternative investments is finding a collectible good that is not linked to the stock market. Fine wines give a sense of security to investors because based on time and age they continue to age and increase in value no matter what the unpredictable market is doing.
Wine as an asset has classically not been connected to the traditional market. Even in various cases throughout history of unreliability and market crashes, fine wine has remained an avenue on which investors have relied as a place to maintain wealth rather than lose it. In the case of the crash of the S&P 500 in 2008, wine only dipped a small .6% while the rest of the market dipped ~30%. In the first half of the fiscal year of 2022, while the Nasdaq dipped ~25%, fine wine actually increased by 11.1%.
Collectible Investments can be Tangible and Broaden your Scope of Influence.
Alternative investments don’t require sitting in offices and going over numbers. Instead, they bring you out into the real world and diversify your assets to include quality collectibles that make you a more well-rounded, educated, and diverse investor with good taste. Investment meetings can happen over a glass of wine or at an exclusive tasting session instead of in a stuffy financial office. For investors who are used to a more formal environment, investing in a reliable collectible such as wine can be a breath of fresh air compared to more traditional measures of investment.
Diversifying your assets is crucial because as other markets such as real estate, automotive, or technology decrease and lose revenue, a market in a completely different field could be skyrocketing. The global wine market is anticipated to reach $473 billion United States dollars.
For comparative purposes, Facebook’s parent company Meta is expected to be at $490 billion United States dollars this year. For the past 121 years, wine has returned by at least 8% annually. The resilience of this collectible good has kept high-net-worth investors’ eyes on the wine industry for years.
Fine Wine Investment is a Low-maintenance Investment.
Wine investment is low maintenance in that once you purchase, you can sit back and relax. Most platforms in which you can invest will actually notify you and keep you updated on your account’s changes. This is nice because you won’t have to keep a sharp eye on the local or international news.
Furthermore, if you know nothing about wine, many investment platforms have packages of their most successful and popular wines to invest in, researched by experts in the industry. Fine wine investment is low maintenance because you don’t have to be a sommelier to be successful in this industry.
Adding wine and spirits securities to your portfolio does not require knowledge of the world of wine. Building an initial collection is made easier by platforms that don’t have management fees, whose collections are curated by experts, and where you can buy shares and receive your proceeds upon making a sale.