Is Wine a Good Investment? Underground Cellar Explains
Wine is a very common investment and people have been using it as a store of value for years. It is easily appraisable, fairly liquid, and can stand the test of time. Not only that, but it can also appreciate. This on paper should make wine a great asset.
Of course, wine can also be delicious and make for a great conversation piece. It could even be used to entertain. A recent article we read spoke on blind tasting parties and how to host them. One piece of advice was to mix exclusive wines with cheap wines to try to trick people’s palates. How are you going to have this kind of selection unless you have a nice collection?
With that being said, let’s take a look at what the team at Underground Cellar have to say on wines as an investment.
Unless you have a knowledge of wine and you have a genuine interest in it, we wouldn’t suggest you invest money in wine. Some people will go as far as learning the entire science of winemaking before they start investing. This will be essential if you want to know which wines to buy. Those who have a good knowledge of different vineyards, grapes, and years will always have an advantage over those who get their advice from someone else. Even things like soil conditions can make a difference. Knowing the history of wines is another essential part of becoming a collector. All of this knowledge will allow you to spot winners, but also avoid getting swindled.
One of the benefits of wines as an investment is that they are much more stable than other assets. Yes, there is still volatility, but nothing like you would see with other assets like gold, for instance. The goal here is to find great vintages that are in high demand. There will always be a cap on the number of bottles of a certain vintage that will be available on the market, and as more people buy and consume it, it will become increasingly rare. This means that your investment will keep growing over time.
It’s estimated that wines offer returns of up to 10% on average. This is rather impressive when compared to other investments like bonds, stocks, and mutual funds, for instance. Few people invest all of their assets in wine too, and you could use wine to balance your portfolio’s volatility while maximizing returns.
Another great thing about wine investment is the tax benefits. With other financial instruments, you’ll usually have to pay various fees or capital gains tax. There’s none of this with wines. While you may have to pay to have the bottles stored by a professional, the only fees you’ll have to worry about are duties and tariffs on international trade as well as shipping costs.
If you were thinking of buying wine as an investment, know that it could be a great option. Just make sure that you’re up for the challenge and ready to learn.