When the economy struggles, many of us step away from investing in traditional bonds and funds and instead turn to alternative commodities. Gold, for instance, often becomes extremely popular with investors when economies struggle. While there has been immense improvement over the past few years, many investors are still seeking to diversify.
An investment avenue that has become increasingly popular over the past few years is wine. Wine can be extremely profitable, and certain bottles and vintages can go for thousands of dollars. If’ you’re thinking about popping the cork on a new investment, there are a few things about wine you should know before beginning:
- Make sure you understand the difference between investment wine and regular vino. Just because California and Australia vineyards have become extremely skilled at making wine doesn’t mean you’ll make money from such investments. With a few exceptions, investment wine only originates from five areas: Bordeaux, Champaign, Tuscany, Burgundy, and the Rhone. The gold standard in the industry is Bordeaux. Wine from anywhere else won’t cut it.
- Make sure you can afford to store the wine. Unlike many other investments, wine requires care, and improper storage can cause damage, harming your investment. Wine storage can cost around $18 a month for a case, which adds up quickly if you’re dealing with multiple cases.
- Be aware of exit strategy with wine. You could potentially have extremely high-value wine, but nobody to purchase it. Wine investments are not as common as bonds, and it’s not likely you can sell them when returns are low. Exit strategy can be an issue with wine investments.
- Beware of fraud. Since wine is worth so much, it’s no surprise it’s attracted the attention of shady individuals. During the early 2000s, Rudy Kurniawan auctioned off fake bottles of wine for millions of dollars, which ended up negatively impacting the wine market.
- Be ready to go big or go home. Most people who invest in wines go in with large sums of money in hand. Esposito, a popular wine fund, has a minimum investment of $50,000, so wine investing is generally left to the extremely wealthy.
For those who are willing to put in the time to educate themselves about wine, it can be a fantastic investment that pays off bigtime. Accreditedinvestronews.com can help guide you in the right direction with alternative investments. Exercise prudence and educate yourself about the market beforehand. Though, at the end of the day… worst case scenario, you can always drink it!