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This post is sponsored by Vinovest. All opinions are my own.
Many investors are interested in adding alternative investments to their portfolio for diversification. Considering the recent volatility of the stock market, alternative investments are probably even more attractive than they were in the past.
While alternative investments are nothing new (typically, any investment outside of stocks, bonds, and cash would be considered an alternative), technology has helped to open up a lot of new opportunities in recent years. In the past, many alternative investments weren’t accessible to the average investor, but today, you don’t have to be ultra wealthy to benefit from some of the better options.
One of the more interesting alternative investment platforms is Vinovest. Through Vinovest, you can invest in fine wine while eliminating many of the common challenges that you would typically face if you wanted to invest in wine.
What is Vinovest?
Vinovest allows any investor (you do not need to be an accredited investor) to add some diversity to their portfolio by investing in wine. Thankfully, you don’t need to be a wine connoisseur because Vinovest has a team of experts that will handle things for you. The experts at Vinovest will select, buy, and store the wine for you.
Wine is an attractive investment not only because it provides diversification for your portfolio, but it also has an excellent track record as an investment. The Liv-Ex Fine Wine Investables Index tracks the price of wines commonly found in investment portfolios. The chart below shows the historical performance of the Liv-Ex Investables as compared to other types of investments, including the S&P 500, going back to 1988.
Not only has fine wine produced excellent returns for investors, it has also been more stable during extreme market volatility. The graph below shows the performance from 2007 – 2009.
The graph below shows how the value of wine dropped only slightly during February and March of 2020.
How it Works
Vinovest currently has two different offerings: Standard and Custom. Standard investors can get started with a minimum investment of $1,000 and Vinovest will create a portfolio of wines for you, purchase the wine, authenticate it, and store it. Their facility is secure and fully insured in case of an extreme natural disaster or some type of damage caused by an employee.
The Custom offering has a minimum investment of $50,000 and provides everything mentioned above plus some additional benefits like 1-on-1 expert guidance, access to rare wines, and a customized portfolio.
If you were to invest in fine wine on your own, you would be faced with challenges like authenticating and storing the wine. Storing it yourself introduces risk of damage, either by an accidental breakage or some sort of disaster like a fire, plus the potential of theft. Vinovest’s secure facility, insurance, and expert authentication process remove these risks.
When you decide that you want to invest, you can sign up online at Vinovest’s website to create your account in just a few minutes. They’ll create a portfolio for you and handle all of the details related to purchasing and receiving the wine.
As an investor, you’ll own actual bottles of wine, not a share in a collection or portfolio. You can even get access to your wines if you’d like. You can request a bottle to be shipped to you, and you can even drink it yourself if you want (although that certainly won’t help from an investment perspective).
You can login to your investor dashboard at any time to see the details of your investment. You can invest more or choose to sell whenever you choose. When you decide to sell, Vinovest will identify a buyer and handle the transaction. That process usually takes about 4-6 weeks.
It’s important to understand how and when you’ll make money from your investment. Ideally, fine wine will increase in value over a period of time because not only does it get better with age, but the supply also dwindles as more of the wine is consumed. With that in mind, most of the wines selected by Vinovest are meant to be aged for 30-50 years before they reach their peak drinking window.
As an investor, the value of your wine will likely increase with time, but you won’t actually see the return on your investment until it is sold. Of course, you can sell portions of your portfolio at different times if you’d like. The experts at Vinovest will recommend times to buy or sell wine (which is a major benefit of investing through Vinovest), but you’ll have the power to decide when to buy or sell.
There are less than 280 people in the world who have attained the title of Master Sommelier. Three of them are on Vinovest’s advisory Council, so you can be confident in the expertise behind the company.
Pros of Vinovest
Here are some of the main reasons why you might want to consider investing.
Open to All Investors
Some of the more attractive alternative investments are open only to accredited investors, but that’s not the case with Vinovest. Anyone can invest as long as you’re able to meet the minimum investment requirement of $1,000.
Low Correlation to the Stock Market
As the graphs above have shown, investments in fine wine are not directly impacted by the stock market. While it may not be 100% recession-proof, an investment in fine wine is likely to be much less volatile than the stock market. A recession isn’t going to stop people from drinking wine.
Provides Excellent Diversification for Your Portfolio
The main purpose of adding alternative investments to your portfolio is to get some diversification. Investing in wine through Vinovest is an easy way for any investor to achieve some diversification while having an investment with low correlation to the stock market and the potential for double-digit returns.
Fully Managed by Experts
Probably the main benefit of investing through Vinovest is the fact that it can be 100% hands-off. You don’t need to be a wine expert and pick the right wines to invest in because their experts will create a portfolio for you.
You won’t have to deal with challenges related to shipping or storing the wine safely. Vinovest has expertise in this aspect as well, and they’ll handle it for you.
It’s possible to invest in fine wine and never even handle a bottle of wine yourself.
Low Minimum Investment
The minimum investment of $1,000 is higher than some other types of investments, but very low compared to most other types of alternative investments.
Cons of Vinovest
Of course, any investment also has some cons.
Limited Track Record
Vinovest is a new company with a limited track record, which could be a concern for investors. If you’re looking for a track record, the Liv-Ex Fine Wine Investables (used for the graphs near the beginning of this article) shows that fine wine does have a strong track record.
Not 100% Liquid
Your investment with Vinovest can be sold at any time, but it does not offer 100% liquidity. When you decide to sell, Vinovest will find a buyer and facilitate the transaction and transfer, but they state that the process usually takes 4-6.
While the investment is not 100% liquid, the level of liquidity is still better than many other alternative investments.
Who Is It For?
Vinovest could be an ideal option for any investor who is looking to add some diversification with an investment that has low correlation to the stock market. Thankfully, it’s open to all investors, not just accredited investors, so it’s really for just about anyone.
Wine connoisseurs may have extra interest in this investments, but you certainly don’t need to have any particular knowledge or interest in wine to benefit from the investment.
Fees and Important Details
Vinovest charges a 2.85% annual fee, which covers their services for selecting and buying the wine, fraud prevention, storage, insurance, and ultimately selling the wine. While that fee is higher than traditional investments, it’s lower than some other alternative investments. If you consider everything that’s involved with storing and insuring the wine, the fee seems to be very reasonable.
As a summary, here are some other important details related to investing with Vinovest:
- Minimum investment: $1,000
- Open to accredited and non-accredited investors
- The experts at Vinovest select wines and create an investment portfolio for you
- You own specific bottles of wine, not shares in a portfolio
- You can track the value of your investment at any time through an online dashboard
- Vinovest handles all details related to shipping, authentication, storing, and insuring your investment
- You can sell your wine at any time (the process takes about 4-6 weeks)
To get more information or to start investing, please visit Vinovest.co.