Advertising
Advertising

A Beginner’s Guide to Investing in Wine

A Beginner’s Guide to Investing in Wine

Experts say “invest in what you know.” Well for me, one of the things I know and love is wine. I’m sure the rest of you winos reading this understand. One thing that you might not have known until now, is that it is possible to make some money off of your love affair with this fermented beverage from the gods.

Investing in wine is certainly not a new concept, however, it is one that is trending a bit more now that a push to get more Americans investing has begun. Interest in the stock market has seen a significant drop given the economic rough patch our nation hit back in 2008. However, it remains an important part of building the high risk/high potential funds you need to supplement retirement savings.

If you’re a wino looking to diversify your investment portfolio with a commodity investment, investing in wine could be a good option. Here is a beginner’s guide to investing in wine that might help you determine whether or not it’s a solid prospect for your next addition to your portfolio.

1. Start a sufficient savings

As you probably already know, investing in wine isn’t quite as simple as heading to the store to purchase a bottle slightly above the price you’d already buy then waiting for it to grow in value. Determining how much you’re planning to invest in wine depends on whether you’re doing it for the love of wine or the potential for serious money.

Advertising

If you’d prefer to simply start collecting the wines you enjoy out of your pure love of wine, Investopedia recommends treating your collection like a baseball card or stamp collection where you pick up wines that interest you as you go. Although the payout might not be as grand this way, you could still end up with some delicious wines to drink if they don’t sell.

2. Be prepared to wait

When it comes to investing in wine, you have to be patient for the right time to buy. You have to carry out research on what vintages and wine producers have done well in the past and what is expected to happen in the future. For example, the past few vintages of Bordeaux wine have not been great and an investment could have been a bad decision. However, last year thanks to the “Rule of Fives”, this year is looking like a great year to invest in Bordeaux according to wine experts.

Unlike certain stock investments, wine can take a while to grow in value. Although this might seem like downfall for some investors, it actually could be a good thing for investors who are getting in the game early and have the precious gift of time on their sides.

According to MarketWatch, investments in wine can take 10-20 years to yield a return. If you’re looking to diversify your investments to supplement your retirement funds, this might not be an issue. If you’re looking for quick money, wine is probably not your best bet.

Advertising

wine 2

    3. Look into professional storage options

    Storing wine that is intended for investment on your own is very risky. In order for wine to rise to its full potential, it must be stored at a temperature that is cool, but not too cool, in a dark area that doesn’t see much light, and away from shaking and excessive humidity. You could purchase a wine cooler, but experts in wine investing highly recommend professional storage in order to achieve higher perceived value upon selling. If you choose to go with a professional storage service, there are online guides that can help you find them in your area.

    If you choose to take the gamble and store your wines on your own, the Wine Spectator offers up a pretty solid guide to help you out.

    4. Purchase at least three bottles to get going

    According to Wine Folly, serious investors should plan to purchase at least three bottles to get started. These bottles should add up to at least $8,000 in value. This is recommended because when you consider the sizable cost of storing, insuring, and ultimately selling your wine, it becomes clearer that you should invest a sizable amount upfront to make the return worth the hassle.

    Advertising

    But, as I also mentioned above, it’s possible that you’d prefer to take a more modest approach to investing in wine and treat your collection more like a passion project rather than a serious money maker. If this is the case, you’ll more than likely want to buy at your own discretion.

    5. Understand market risks

    As with all investments, investing in wine comes with a certain degree of risk. As a commodity investment, you might notice that the market is a bit more volatile than others due to industry changes. This is why diversification in your investment portfolio is so important. You simply cannot rely on one form of investing alone whether it be wine, stocks, or even your 401(k).

    As with any market you plan to enter, you should do your research to understand where the market for wine investment has been, where it currently sits, and where it might be headed in the future. This will give you a better idea of where your potential risks and benefits lie.

    Advertising

    wine 1

      Now that you’ve got the basic information, does investing in wine sound like something you might be interested in adding to your investment portfolio? If so, use the resources throughout this post to learn a little more about the process. I might also recommend reaching out to an industry expert or two to find out how he or she got started and gather some professional insight. You never know, your love of wine could turn into a profitable skill if you play your cards right!

      Featured photo credit: perfectinsider via perfectinsider.com

      More by this author

      6 Ways to Get Out of a Creative Rut 5 Incredible Underrated Locations to Spend a Year 5 Smart Moves For Millennials To Boost Retirement Savings 5 Ways To Boost Your Website’s Success In 2017 How to Tech Out Your Home With DIY Security

      Trending in Money

      1 13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget 2 How to Set Financial Goals and Actually Meet Them 3 How Being Smart With Your Money Leads to Financial Success 4 17 Practical Money Skills that Will Set You Up for Early Retirement 5 25 Things to Sell to Make Extra Money Easily

      Read Next

      Advertising
      Advertising

      Published on October 8, 2018

      13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

      13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

      Are you having trouble sticking to a family budget? You aren’t alone.

      Budgeting is difficult. Creating one is hard enough, but actually sticking to it is a whole other issue. Things come up. Desires and cravings happen. And the next thing you know, budgets break.

      So how can you stick to a family budget? Here are 13 tips to make it easier.

      1. Choose a major category each month to attack

      As the saying goes, “Rome wasn’t built in a day.” With that in mind, one approach to help you get into the habit of sticking to a budget is simply starting slow.

      Spend too much on Starbucks runs, eat out too often, and have an out-of-this-world grocery bill? Choose one bad habit and attack.

      By choosing one behavior to focus on, you’ll prevent yourself from being overwhelmed. You’ll also experience small victories, which help you gain positive momentum. This momentum can then carry over into your overall budget.

      2. Only make major purchases in the morning

      If you’re making large purchases in the evening, there’s a good chance you’re doing so after a long day and you’re probably tired.

      Why does this matter? Because our judgement tends to be off when tired – our willpower is compromised.

      Instead, only make major purchasing decisions in the morning when you’re energized and refreshed. Your brain will be firing on all cylinders and your resolve will be high. You’re less likely to give in and settle at this point.

      3. Don’t go to the grocery store hungry

      Have trouble with impulse buys at the grocery store? If so, there’s a good chance you’re going grocery shopping while hungry.

      The problem here is that when you’re hungry, everything looks good. So you’re more likely to make split decisions on things that aren’t on your grocery list.

      Advertising

      Instead, make sure you eat prior to your grocery store trip. Then take your list, along with your full stomach, and go shopping. Notice how food doesn’t look quite so good when you’re not fighting cravings.

      4. Read one-star reviews for products

      Is there a product you just have to have (but maybe not really)? Check out the one-star reviews.

      By reading all the horrible reviews, you may be able to basically trick yourself into deciding that the product isn’t worth your time and money.

      Next thing you know, you didn’t make the purchase, you saved the money, and you feel good about the decision.

      5. Never buy anything you put in an online shopping cart until the next day

      If you are making a purchase online, it’s typically a two-step process. First, you click “Add to Cart” and then you go in to review your cart and pay.

      The problem is that there not typically much reviewing during step two. It’s generally click pay and there you go. However, this is the perfect point to stop for reflection.

      Once you add to your cart, your best bet is to step away until the next day. Let the item sit there and grow cold, so to speak.

      This gives you a night to “sleep on it” and decide if you really want and need to spend that money. If you wake up the next day and still find the purchase viable, then perhaps it’s time to go for it.

      6. Don’t save your credit card info on any site you shop on

      One of the other pitfalls of shopping online is that fact that most sites ask you to save your credit card information.

      While the sites will frame it as a method of convenience, the truth is they know you’ll spend more money in the long run if your credit card information is saved.

      The “convenience” takes away one last decision-making point in the purchasing process. True, it’s a pain to get out your credit card and enter the information every time. But guess what? That’s the point. If that inconvenience helps you stay on budget, then it’s worth it. Which leads into the next tip.

      Advertising

      7. Tape an “impulse buy” reminder to your credit card

      Credit cards make spending much easier than cash. When you spend cash, you can literally see your wallet emptying. A credit card comes out, then goes back in. No harm, no foul.

      That’s why it’s a good idea to tape a reminder to your credit card. Customize a message that is something along the lines of “do you really need this?” or “does it fit the budget?”

      That way when you pull out the card, you get one last reminder to help you question your decision and stick to your budget.

      8. Only use gift cards to shop on Amazon

      Amazon is probably the easiest place online to blow money. It’s just so easy to click and buy. However, one way you can slow the process down is buy only using gift cards. Here’s how it works.

      If you plan on making a purchase on Amazon, go to the grocery store and purchase a pre-loaded Amazon gift card of the proper amount. There’s no convenience fee, so you literally pay for the money you’ll spend.

      Now take that gift card home and load it to your Amazon account. There’s your money to spend.

      Why does this help? It makes you have to purposely go to the score and purchase the card in order to purchase the item. That’s a pretty deliberate thing that takes some time, commitment, and thought.

      This process will effectively kill the impulse buy.

      9. Budget using cash and envelopes

      As mentioned earlier, it’s a lot harder to spend cash than swipe a credit card. You can take this even farther by using only cash, and separating that cash by budget category.

      Create an envelope for each category and stick the cash in there at the beginning of each month. When the envelope is empty, no more spending on that category, unless you borrow from another (be careful of that approach).

      This can be pretty helpful for people that have a hard time following transactions in their checking account, or keeping a budgeting spreadsheet.

      Advertising

      The envelopes simplify the tracking process, leaving no room for error. Nothing hides from you because it’s tangible in the envelopes in front of you.

      10. Join a like-minded group

      Making the decision to stick to something like budgeting is difficult. It takes long-term commitment.

      You’re going to feel weak sometimes. And sometimes you may fail. That said, support from others can help strengthen resolve.

      Support can come from a spouse or a friend, but they won’t always have the exact same goal in mind. That’s why it’s a good idea to join a support group that’s likeminded.

      No need to pay here, as there are tons of free communities that fit the bill online.

      For example, reddit has multiple subreddits that deal with budgeting and frugal living. You can follow, subscribe, and get active in those communities.

      This will open your eyes to new tips and strategies, keep your goal fresh on your mind, and help you realize there are others dealing with the same struggles and being successful.

      11. Reward Yourself

      When you set a budget, it’s usually with a large goal in mind. Maybe you want to be debt free, or perhaps you want to see $10,000 in your savings account.

      Whatever the case, the end goal is great, but the end is often far away, making it hard to see the end of the tunnel.

      With that in mind, it’s a good idea to set mini-goals along the way. This helps you still look at the big picture but have something that’s attainable in the short-term to help with momentum.

      But don’t stop there – set rewards for yourself when you reach that small goal. Maybe it’s an extra meal out. Or a new pair of shoes.

      Advertising

      Whatever the case, this gives you something in the near future to look forward to, which can help with the fatigue that can result in pursuing long-term goals.

      12. Take the Buddhist approach

      You don’t have to be a Buddhist to recognize some of the wisdom in the teachings. One of the tenets of the philosophy involves accepting that we can’t have everything we want. And that’s okay.

      Sometimes you won’t feel good. Sometimes you’ll have cravings. You can’t deny them. But you can recognize them, accept them, and let them pass by. Then you move on.

      Apply this to the times you want to do things that will break your budget. You’re going to have the desire to eat out when you shouldn’t. You might want to stay out and spend too much at happy hour with your work friends.

      The feelings will come. Recognize them, accept them, but let them go.

      13. Set up automatic drafts to savings

      If you wait until you’ve spent all your budgeted money to deposit money into savings, guess what? You probably aren’t going to put any money into savings.

      It’s too easy to see that as extra money and end up using it to treat yourself.

      Instead, set up automatic savings withdrawals. That way, the money is marked and gone before you can even think about it. It becomes a non-issue. It’s no longer “extra.” It’s just savings.

      Conclusion

      Sticking to a budget can be difficult. No one is denying that.

      However, if you can do a few things to set yourself up for success, and put some practices in place to curb impulse buys, then you can (and will!) be successful sticking to your family budget.

      Featured photo credit: rawpixel via unsplash.com

      Read Next