During shelter-in-place, alcohol sales skyrocketed as millions of Americans entertained themselves at home. The rise in alcohol sales got me thinking about whether there is an investment opportunity in wine. After all, when times are good, people drink. And when times are bad, people might drink even more!
It just so happens there is a way to invest in fine wine via a platform called Vinovest. As someone who is a fan of wine and lives only 1.15 hours away from Napa Valley and Sonoma, I am excited to learn more about their platform.
Vinovest Review: Investing In Fine Wine
Investing in the stock market over the long term is a tried and true way to invest for your future. However, the stock market is volatile. As a result, some investors have turned to alternative investments to diversify their portfolios.
Fine wine investing has gained visibility recently as it is now an asset class available to everyday investors. During the first quarter of 2020, wine prices grew +1.10% while the S&P 500 tanked.
Thanks to the aging process of wine, there is a nice tailwind when it comes to investing in wine.
Investable wines are intended to age between 35 to 50 years, generally increasing in value during this time period. However, price will obviously also depend on buyer demand.
Vinovest states that “wine has outperformed the S&P for the past 30 years, including during downturns.”
Below is a graphic from Vinovest that shows how fine wine performed against other asset classes during the 2008 recession.
There are ultimately three factors that drive wine values over time:
- Brand equity
What Is Vinovest?
Vinovest is a new online platform that provides opportunities for any investor to invest in bottles of wine through their networks and partnerships with established wineries.
Their team includes world-class wine experts (sommeliers), software engineers and designers, and data scientists. They recommend the best wine options for your individual pallet and investment portfolio preferences.
In addition to the technology and personnel, Vinovest provides the infrastructure you need to for storing wine. They ensure that your wine investments are kept in safe conditions at optimal temperatures. So by investing, you essentially have the use of an off-site wine cellar.
|Annual Fee||2.5% to 2.85%|
|Average Liquidity||4 to 6 weeks|
|Advisor Access||Investors with account balances above $50,000|
How Does Vinovest Work?
If you want to get started with Vinovest, here are the steps to follow:
- Step 1: Set aside a minimum of $1,000 for their standard offering or a minimum of $50,000 for their custom offering investments.
- Step 2: Sign up online in minutes and share your risk and investment preferences.
- Step 3: Choose your bottles of wine on the platform or have sommeliers make the choice for you, and make your purchase.
- Step 4: Store your wine with Vinovest or request to have it sent to you to enjoy.
- Step 5: Monitor your portfolio and make requests on their online platform.
- Step 6: Years down the line, you can sell your investments to achieve the best return possible.
Vinovest says their team and their algorithm is actively looking for wines from established wine growing regions such as Bordeaux, Burgundy, Napa as well as up-and-coming regions and newer wineries all around the world.
Here are a couple of strong performers over the past year:
- Armand Rousseau Chambertin Grand Cru 2013, up 114% in the last year
- Sassicaia 2015, up 55% in the last year
Pros of Vinovest
Here are some important reasons to consider investing in wine with Vinovest.
1) Uncorrelated Asset
The stock market has a low correlation with fine wine investment performance, which means that movements in the stock market tend not to affect the returns from Vinovest. This is beneficial for those who want a less volatile addition to diversify their portfolio.
2) Portfolio Diversification
Alternative investments like fine wine make a unique addition to any investment portfolio. Vinovest provides the chance to diversify your portfolio in something typically less risky than the stock market with a history of exceeding returns.
3) Expertise Meets AI
By combining some of the world’s best wine experts with AI technology, Vinovest helps you make data-driven decisions on the best wines to add to your portfolio while also taking your risk tolerance, investment time horizon, and investment amount into account. You can be completely hands-off if you’d like to be, without even touching a bottle of wine.
4) Safety and Storage
Vinovest provides world-class facilities you need to store your wine over time. It is climate controlled and monitored 24/7.
5) Guarantee and Insurance
Vinovest inspects every bottle for authenticity so that they can guarantee your wine’s source. Additionally, Vinovest insures each bottle of wine at full market value to protect your portfolio from catastrophic events or other unforeseeable circumstances.
6) Non-Accredited Investors Welcome
An accredited investor “is a person or business entity who is allowed to deal in securities that may not be registered with financial authorities.”
A person or couple must meet one of the following specifications to be considered an accredited investor:
- Individual income of $200,000, or joint income of $300,000 for the last two years and expect to earn the same amount or more in the current year
- Joint or individual net worth above $1 million
- Individual is a general partner, executive officer, director or combination of these for the entity issuing the unregistered securities
These stipulations are very hard to meet for the average person, which is why Vinovest welcomes non-accredited investors to their platform. This breaks down the barrier of entry to provide stock alternative opportunities to a greater population. Individuals are able to diversify their portfolios with as little as $1,000.
Cons of Vinovest
Here are some disadvantages to investing in wine with Vinovest. Depending on your time horizon, risk tolerance, and asset allocation, this may deter you to look elsewhere for a stock market alternative.
Vinovest charges a 2.85% annual fee on your portfolio value, which is reduced to 2.5% for portfolios larger than $50,000. A $5,000 investment in fine wine would result in a $142.50 annual fee from Vinovest.
If you compare this to a stock market index fund, it is much higher. Compared to other alternative investments, the fee is in-line. The fee includes setting up sufficient wine storage with the proper humidity and temperature control. In addition, the fee also covers the cost of dealing with shipping logistics all around the world.
Wine is not as easy to liquidate since it is a physical item. You might have to wait to find a buyer or consume the wine yourself.
However, if you want to capitalize the value of your wine investment, Vinovest will handle the transaction for you in about 4-6 weeks due to their connections with networks of other professional investors, funds, importers, distributors, and retailers. This grants you access to the global demand for wine.
You may have heard the saying that wine gets better with age. That’s why investing in fine wine is meant for investors who would ideally like to invest for a minimum of three years. This allows enough appreciation on the bottles to occur due to becoming more scarce because of global consumption.
Vinovest recommends wines that age for 30 to 50 years before they reach their peak drinking window. This means that the wine will likely increase in value over time and you won’t see your return until part or all of your portfolio is sold.
While the sommeliers at Vinovest will recommend the best times to buy and sell wine, you’ll ultimately have the final decision.
4) New platform
Wine investing for all has not been available to the mass market for very long. Vinovest started in 2019.
Who Is Wine Investing For?
Vinovest opens its fine wine opportunities to all investors, making this an ideal option for anyone who wants to diversify their portfolio and offset stock market volatility.
While wine connoisseurs may already have a passion that urges them to pursue these investments, an investor does not need to have any knowledge about wine in order to get started. Vinovest can help you either way.
If you’re looking for a nice bottle of wine to enjoy with family and friends, try a local store. But, if you’re looking for a long-term alternative investment that’s uncorrelated from the stock market, Vinovest may be the right choice to diversify your portfolio.
You won’t get updates on their value by the minute, daily or monthly, but it is good to know that fine wine has averaged 11.6% returns for investors since the mid-1980s.
While you shouldn’t put all of your wealth in fine wine, it may be worth it to those who want to add alternative investments to the mix. You can choose from a variety of brands, types, tastes, and aromas that match your choices in time horizon, risk tolerance, and asset allocation.
If Vinovest sounds worth it to you, you can get started here.
Readers, are there any wine buffs out there who have been investing in wine for years or decades? How you decide between wanting to drink your wine and letting it appreciate in value as it ages? What are some of your favorite wine investments and wines to drink at a reasonable price? I’ve asked Vinovest to answer any questions in the comments section.
Vinovest Review is a Financial Samurai original post. I really enjoy investing in private funds. Private funds are less volatile so you can better life your life without distractions.
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