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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.

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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.

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    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.

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    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.

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      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

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      Last Updated on January 21, 2020

      How to Develop a Millionaire Mindset in 6 Simple Steps

      How to Develop a Millionaire Mindset in 6 Simple Steps

      We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

      It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

      How do you go about developing that millionaire mindset? By following these simple steps:

      1. Focus On What You Want – And Take It!

      So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

      Millionaires play to win, not to avoid defeat.

      This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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      2. Become Goal-Orientated

      It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

      Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

      Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

      Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

      You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

      If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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      If you are to become a millionaire, you need to start accumulating money.

      Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

      3. Don’t Spend Your Money – Invest It

      The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

      Stop working for your money and make your money work for you.

      Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

      There’s not just the stock market — there’s also property, and your own education.

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      4. Never Stop Learning

      The best thing you can invest in is yourself.

      Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

      Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

      Learn everything you can about how economics works, how the stocks markets work, how they trend.

      Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

      Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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      5. Think Big

      While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

      There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

      Aim for the stars, if you fail you’ll still be over the moon.

      6. Enjoy the Attention

      To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

      Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

      If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

      Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

      More About Thinking Smart

      Featured photo credit: Austin Distel via unsplash.com

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