As a consumer item, wine is surging in popularity as an alcohol of choice for everyday Americans. But wine isn’t all about “Rosé all day” and other mass marketing cliches. Top tier wines have a reputation as durable assets that appreciate in value over time.
One of your best investments could be inside of your liquor cabinet (although that “Two Buck Chuck” isn’t likely to increase in value). If you’re curious how to curate a wine selection that can serve as a portfolio for financial appreciation, you might want to consider the wine investment platform Vinovest.
In our Vinovest review, we explain how it works, what fees to expect, and why you may want to invest in bottles of wine.
- Create custom fine wine investment portfolios
- Vinovest handles wine storage and insurance
- Minimum investment to get started is $1,000
What Is Wine Investing?
The concept of investing in fine wine may sound strange to many people. Investing in fine wine is a bit like investing in jewelry, art, collectible coins, stamps, firearms or interestingly-shaped Cheetos.
In each of these cases, the goal is to find items that are likely to appreciate over time. Some people enjoy a lot of success investing in collectible assets. Vinovest says that fine wine, in particular, has yielded investors an annualized return over 13%.
In general, I caution people to be very careful when investing in any alternative asset class. These are investments where insider knowledge is often critical to success, which is why using a platform like Vinovest could be helpful.
According to Vinovest, most wines are meant to age between 35 to 50 years. That means that the value of the wine will generally continue to increase until you hit the 50-year mark. Of course, ultimately the value you receive for a wine will depend on a buyer’s desire to purchase it.
What Is Vinovest?
Vinovest is a technology platform that allows everyday people to invest or buy fine wine. The platform hires sommeliers (wine experts) who recommend the best vintages for your personal pallet and your investment portfolio.
Vinovest also provides the physical infrastructure required for storing wine. Their cellars protect your wine bottles from natural disaster and store them at optimal temperatures for aging. This allows you to gain the benefits of a wine cellar without owning a wine cellar yourself.
Since wine is a consumption item, it will be not be as easy to liquidate as other investments (especially stock market investments like mutual funds or ETFs). It could take a few months or longer to find a buyer for your wine. Of course, at any point, you could also choose to consume the wine yourself.
How Do I Invest Through Vinovest?
When you invest in Vinovest, you buy specific bottles of wine directly through the platform. The minimum investment needed to get started with Vinovest is $1,000 (which is soon expected to be reduced to $750).
A $5,000 portfolio would typically include between 45 to 60 bottles of wine, representing a variety of countries, years, and styles. Once you own a bottle of wine, Vinovest will hold it securely for you.
Vinovest charges a 2.85% annual fee (based on the value of your wine portfolio) for all of their services. However, the fee is reduced to 2.5% for portfolios larger than $50,000.
Wines can be held for a long period of time, but they do have a “shelf life”. You will need to sell or consume the wine at some point in the future. You can request for a bottle of wine to be shipped to your house at any time, so you can consume it.
Vinovest will issue you a 1099 if you sell more than $20,000 worth of wine in the future. Otherwise, it is up to you to track your buying and selling.
Is It Worth It?
Vinovest advertises some of the specific vintages it puts into investors portfolios. And, yes, it is possible to buy those wines from retailers yourself.
However, if you’re buying wine for investment purposes, there are four reasons to consider Vinovest rather than buying and storing it yourself.
- Infrastructure: Vinovest has secure wine cellars designed to protect the integrity of its wines.
- Insurance: Vinovest insures all of its wines. If they are destroyed, you can collect a payment for the full value of the wine.
- Expertise: Vinovest pays sommeliers and other experts to design investment portfolios. Few people have the expertise required to create these custom wine portfolios on their own.
- Savings: Because Vinovest is a larger buyer, it has certain financial advantages. It may qualify for lower pricing and pass the savings to its investors. It also can save you money by allowing you to avoid VAT taxation since it stores wines in the geographies where the wine is purchased.
For a $10,000 wine portfolio, Vinovest’s 2.85% annual fee works out to a cost of $285 per year. That would be a steal for the wine storage alone, much less the insurance and portfolio management that’s included as well. However, if you’re a wine connoisseur who already has your own wine cellar, Vinovest may not be worth the cost.
It’s generally best to choose investments that are easy to understand and maintain. The most reliable investments for most people include stocks, bonds, real estate, or startup money for their own business.
Most other investments should be considered “fun” money. If you can afford to blow a few thousand dollars on wine, you might enjoy building an investment portfolio through Vinovest. Get started with Vinovest.
That said, if you’re just getting started with investing, Vinovest isn’t the best investment platform to begin. The class is too niche and the fees too high for the average investing beginner. If you’re looking for more affordable investment options, these are the cheapest investing platforms and robots-advisors available today.
Portfolio Rebalancing Frequency
Average Time Required To Sell Your Wine
VAT or Excise Tax When Buying And Selling Wine
Only for investors with account balances exceeding $50,000