The 2008 global financial crisis was a testament to the risks associated with traditional financial markets. Both individual and institutional investors have started hedging their risks by embracing alternative investments. The market for nontraditional investments is projected to be worth $14 trillion by 2023. Among these nontraditional assets, many investors have been adding fine wine to their portfolio.
Fine wine investing has been around in some form for roughly 300 years. However, many barriers to entry have made it inaccessible to retail and institutional investors with limited capital. These include:
- Storing the wine required an expensive climate-controlled room
- Identifying the best investment-grade wines was difficult for laypeople
- Selling the wine was complicated due to marketplace and supply chain issues
- Creating wine portfolios was difficult for investors that couldn’t clearly understand their investing goals
However, Vinovest has created a solution to these problems. Many investors are calling Vinovest the Robinhood of wine investing due to how easy they make it for both retail and institutional investors to invest in fine wine.
How to Invest in Fine Wine
Vinovest is a startup that specializes in helping investors maximize their returns and diversify their portfolios through wine. Investing in fine wine has historically been very difficult, which is an issue that Anthony Zhang, the co-founder of Vinovest, wanted to address.
Zhang and his team recognized that investors could increase their annualized returns and reduce their risk by diversifying their portfolios through wine. However, he realized that many investors had trouble overcoming the barriers to entry that surround the fine wine market. Therefore, he launched Vinovest to address this need. Vinovest allows investors to buy/sell their wine without ever having to touch a bottle or store the wine themselves. The user experience is very similar to Robinhood in the sense that users can get signed up and make their first investment within minutes.
On Vinovest, users sign up, take a short quiz that assesses their risk tolerance, and then can begin investing based on the suggested wines given to them by an algorithm that assesses their answers to the quiz. Or, at a higher level, investors can hand-pick the wines that they would like in their portfolio.
Vinovest solves all of the challenges that typically prevent individuals from investing in fine-wine, which is why many investors are embracing the platform; here are some unique solutions that Vinovest provides investors.
Helping Investors Outline Their Goals
As an investor, there is always a trade-off between risk and return. Good financial advisors help investors decide how much risk they want to take and what returns they are looking for.
This is one of the greatest benefits of the Vinovest platform. Vinovest offers a detailed survey to new investors. This survey uses sophisticated algorithms to come up with a personalized investing strategy.
Individualized Recommendations for Every Investor
After helping users establish their investing goals, Vinovest offers unique recommendations to them. The website helps match investors with brands and varieties that are most likely to gain value in the future–without exceeding the investor’s budget and while complying with the level of risk that the investor is comfortable with taking on.
Storing Wine for Investors
The biggest obstacle that prevents many individuals from investing in wine is the cost and risk of storage. Wine can last for over 20 years if it is stored in optimal conditions. Unfortunately, building a climate-controlled wine cellar can be very expensive.
Investors also have to worry about the wine getting stolen or damaged. Property insurance can cover these losses, but dealing with the insurer can be a hassle. Also, insurance premiums will likely be very steep if the investor hasn’t taken adequate security measures.
Many investors don’t want to deal with the headaches of storing wine themselves. Vinovest assumes this responsibility for its customers. They have a state-of-the-art climate-controlled storage room, so their investors never have to hold on to wine themselves.
“Our distributed storage model means that customers can buy and sell wines without physically having to ship them. This allows us to reduce hundreds of tons of CO2 emissions annually, and we have implemented a carbon offset program as well,” said Zhang.
Expert Recommendations From Trusted Sommeliers
Even the most resourceful investor won’t become a wine connoisseur after reading a few articles online. Even most lifelong wine snobs don’t know enough about the nuances of fine wines to identify the most profitable varieties.
Vinovest has a team of expert Sommeliers who provide expert recommendations. Three of the experts have earned Master Sommelier credentials. Another is rated as an Advanced Sommelier. Due to their impeccable understanding of the world’s highest quality wines, they can provide the best recommendations for investors.
The Returns on Wine Investment
Historical market data proves the secondary market for fine wines is a haven for investors that are skittish about stocks, gold, and other investments. The annualized rate of return for investment-grade wines has consistently beaten the S&P 500 for many years. The average ROI of wine investors has been 13% over the past 15 years, while the historical returns of the S&P 500 have been around 10%. The wine market was more stable during the March 2020 market crash and had lower volatility than gold.
Vinovest is a great lifeline for both novice and experienced wine investors.
Wine has become a very popular investment in recent years. Investors have earned compounded annualized returns of 13%, which is higher than most traditional asset markets. Wine is also more stable than most other investments during periods of global economic downturn; however, many investors face challenges investing in wine themselves. Fortunately, Vinovest offers an excellent platform for investors that want to find the best trading opportunities. On top of that, it is easy to get started with Vinovest. Once you sign up, you can add fine-wine to your portfolio in minutes–and given the Black Swan event that is Coronavirus and the effect that it’s had on global equity markets, you probably want an allocation to fine wine!